Let’s try for the fancy [academic peer-reviewed] journal.--Eight year old Anna Ayres
If you (highly) discount future rewards, you’re less likely to be willing to invest in human capital; why give up leisure/consumption today for something in the future about which you don’t care very much? Of course, if your discount rate is too low, you will sacrifice most of today’s pleasures for the prospect of even modestly greater rewards in the future. I want my kids’ discount rate to be low, but I don’t want it to be zero. I don’t want them to sacrifice all of today’s pleasures for some future pie in the sky. ... If you had to choose your child’s discount rate, what number would you choose, and why? How much pleasure would you want them to sacrifice now in exchange for more pleasure in the future? How low would you go?--Ian Ayres
America is on a path to bankruptcy. It's easy to get bogged down arguing about lots of small cuts, but we'll only make progress by abolishing whole departments and entire missions. I hope the public understands it has to be done.--John Stossel
... the current talk about municipal bankruptcies is designed to fix the past problems - obligations we've already rung up - but doesn't address the underlying problem which, uncorrected, will guarantee that we have this discussion again in 15, 30 or 50 years. That problem is defined benefit pension plans which are based on overly aggressive underlying return assumptions.--Kid Dynamite
Although my mandate was to cut back, I spent more time fighting new proposals than getting rid of old ones. The staffs wanted more, not less. Whenever I met acquaintances from other agencies the invariable comment was "You won't believe what they want to do now." ("They" were the permanent staffs.) The current regulatory agencies are not going to hire or promote people like me. Without managers with a strong interest in deregulation and with the backing of senior administrators, there will be no serious power to buck the staffs. The current executive order seems to impose cost-benefit analysis, but it has enough loopholes ("equity, human dignity, fairness") so that agencies will be able to do whatever they want. Deregulation was hard even under Reagan. I am afraid it will be impossible under Mr. Obama.--Paul Rubin
I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion. ... The healthcare reform bill passed last year increased government spending to cover the uninsured, but it also reduced the budget deficit by increasing various taxes as well. Because of this bill, the advocates say, the federal government is on a sounder fiscal footing. Repealing it, they say, would make the budget deficit worse. So, by that logic, giving me $1 billion is fiscal reform as well.--Greg Mankiw
Suppose someone - say, the president of United States - proposed the following: We are drowning in debt. More than $14 trillion right now. I've got a great idea for deficit reduction. It will yield a savings of $230 billion over the next 10 years: We increase spending by $540 billion while we increase taxes by $770 billion. He'd be laughed out of town. And yet, this is precisely what the Democrats are claiming as a virtue of Obamacare. During the debate over Republican attempts to repeal it, one of the Democrats' major talking points has been that Obamacare reduces the deficit - and therefore repeal raises it - by $230 billion.--Charles Krauthammer
It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of Government.--Ronald Reagan
After all, what ultimately ails the world is its inherent imperfectability — its fallen character, if you’re a Christian; its irreducible complexity and tendency toward entropy and dissolution, if you’re a strict materialist. This is true on all the great issues of the day. No matter how many lives may be saved or lost because of health care policy, no lives will be saved forever, and every gain will be an infinitely modest hedge against the wasting power of disease and death. No matter the wisdom of our politicians or the sagacity of their economic advisors, no policy course can guarantee universal wealth or permanent economic growth. And no matter the temperature of our discourse, the state of our gun laws, or the quality of our mental health care, nothing human beings do can prevent the occasional madman from shooting up a crowded parking lot.--Ross Douthat
Perhaps one strong outside indicator that a contrarian view is right is when the media goes out of its way to say that it is opposed by a “scientific consensus”!--Robin Hanson
I think it’s so unfair of people to be against Jack because he is a Catholic. He’s such a poor Catholic.--Jackie Kennedy
... although extraverted leadership enhances group performance when employees are passive, this effect reverses when employees are proactive, because extraverted leaders are less receptive to proactivity.--Academy of Management Journal
I once heard a senior European official remark that the trouble with democracy was that George W. Bush was its cheerleader. He had a point. Iraq had recently descended into bloody chaos. As long as the then US president was proselytizer-in-chief, democracy was a pretty tough sell. Western values have been out of fashion ever since. First came the post-Iraq realization that it is not that easy to impose them at the point of a cruise missile. Then it dawned on neoconservatives and liberal internationalists that there is more to all this than a ballot box. There are small matters such as the rule of law, an independent judiciary and robust institutions. All these have to fit the cultural circumstances. The lesson from Afghanistan is that the west lacks the stomach for nation-building. ... One of the striking things about today’s world is that it is full of despots pretending to be democrats. Even regimes that disdain anything that smacks of a western model want to claim the legitimacy conferred by democratic choices. --Philip Stephens
Friday, January 21, 2011
Quotes of the day
Thursday, January 20, 2011
Quotes of the day
Real eyes
Realize
Real lies.--Anonymous
... the insatiable love of riches is a desire that brings far more torment to the soul than their enjoyment brings refreshment.--Bernard of Clairvaux
If you think health care is saving your life, then it doesn't seeem outrageous for it to cost as much as your rent, or your car payment. But because the cost is disguised for so many people--hidden in employer accounts or taxes--people don't understand that it actually is quite costly. Especially in the individual market, where both adverse selection and very high administrative costs take their toll. So it may be that the people who we expected to be covered by the high risk pools either can't afford it, or won't afford it--simply won't pay what they think are outrageous prices. And yet neither of these explanations is very satisfying. People with disabling chronic conditions are indeed often too poor to afford health insurance, but they're also disproportionately likely to end up on disability and thus Medicaid. Certainly, I wouldn't be surprised to hear that uptake had been depressed by the pricetag of insurance in the individual market. But I don't think this explains why 98% of the potentially insurable population is missing.--Megan McArdle
How, then, does the Affordable Care Act magically convert $1 trillion in new spending into painless deficit reduction? It's all about budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.--Douglas Holtz-Eakin, Joseph Antos and James Capretta
... most Americans don’t actually disagree strongly about whether we should have a stronger safety net or a more limited government. They think, in a vague and none-too-consistent fashion, that we should have both at once — low taxes and expensive entitlements, subsidies for me but not for thee, a go-go free market when G.D.P. is rising but a protective government ready to save us from our foolishness when the economy goes bad, and so on. ... The shouters are sincere, but they’re also strategic: Framing the choice in stark, apocalyptic terms can feel like the only way to persuade the vast American middle to sit up and pay attention.--Ross Douthat
I liken being a conservative at the NY Times to being chief rabbi at Mecca.--David Brooks
I am not sure how much the portraits of researchers are intended as positive, but overall I take away from [A History of Autism: Conversations with the Pioneers] the message that many of them are arrogant and also partially incompetent.--Tyler Cowen
The New England Journal of Medicine and 13 other research publications may force scientists who submit studies to disclose payments from hedge funds in the wake of insider-trading probes involving a drugmaker and technology companies.--Alex Nussbaum
... lawyers themselves prevent bankers from saying anything. Bankers' public disclosure documents and courtroom testimony read like Vogon VCR manuals for the simple reason that all substance, spirit, and fact has been thoroughly and religiously bleached out of them prior to their release by an army of lawyers: bankers' in-house lawyers, client counsel, and even attorneys on the other side of the deal. ... If the world were not populated with flesh-eating securities litigators chomping at the bit to prove malfeasance because a banker was caught on record alleging the sun is hot, we bankers wouldn't have to wrap our every public utterance in 50 pounds of cotton wool. Physician, heal thyself.--Epicurean Dealmaker
The reason Hu Jintao decided to visit the U.S. this month is that the Chinese leader wants to know when the U.S. economy and its currency will be stable and strong again. It’s good the Chinese are known for patience because Hu may have to wait a while. At least that’s the view according to John Taylor, a Stanford University economist who has influenced Federal Reserve policies in the past. Fed officials often refer to the Taylor Rule, a formula devised by Taylor that shows how a central bank should manage interest rates in response to inflation and other data. At a recent joint lunch of the American Economics Association and the American Finance Association, Taylor, a Treasury undersecretary in President George W. Bush’s administration, delivered a second, equally interesting, rule. Taylor Rule II doesn’t have math. And it doesn’t say what the Fed should do. It predicts what the central bank will do. Taylor says a period of less Fed intervention and stable strong growth will come, along with a strengthening dollar. But by the time this happens, Hu, now 68, might be approaching 80.--Amity Shlaes
There has been a recent upswing in conservative articles discussing the idea of going back to some sort of gold standard. I don’t think people realize how dangerous this idea is. You can’t just “give it a shot” and see how it works out. It’s like marrying the daughter of a Mafia chieftain–you need to be very sure you are willing to commit. A true gold standard (not Bretton Woods) allows Americans to buy or sell gold. If you are not 100% committed to staying on gold, but instead hint you might devalue the dollar at some point, people will dump dollars and buy gold. The increase in demand for gold will raise its value, or purchasing power. This is deflationary under a gold standard, where the nominal price of gold is fixed.--Scott Sumner
The Wilders trial has also inflamed feeling everywhere in Europe about the place of Islam in European society. In France, the burqa has been banned; in Switzerland, the prohibition of new minarets was passed by referendum; in Sweden, the results of the elections last September were called a “catastrophe” by Muslim leaders because of the gains of the Swedish Democrats, an anti-Islamic party; in Germany, a party officially “inspired” by Wilders’s Freedom Party has been organized. Almost certainly, then, the Wilders trial backfired, and not just in Holland. Yet this may only be the beginning. Now that new trial judges will be appointed, it is possible that new witnesses—such as Mohamed Bouyeri, the murderer of van Gogh—will testify, verifying Wilders’s claim that Islam is a fascist political ideology rather than a religion. Not only Wilders but Islam itself may thus stand trial in Holland. Opponents of Islamism have long said that the trial should never have been held in the first place; but apologists for Islamism may come to regret that they ever pressed for it.--Thierry Baudet
... a student who entered college in the 50th percentile of students in his or her cohort would move up to the 68th percentile four years later -- but that's the 68th percentile of a new group of freshmen who haven't experienced any college learning.--Scott Jaschik
I started a garden last summer. It went to weeds, and then the weeds grew parched under the relentless Kansas sun, and then they withered and died. I traveled more than I’d anticipated, and when I was home other things competed for my time, if only fatigue. I think on that garden and I fear it will be my fatherhood — ground broken with good intentions, but scorched and barren all the same. All we parents begin with dreams of what our lives will mean. We dream that our children will be healthy and safe, that they will learn good things from us, that our God will be their God. We dream that when they are older they will be people we like, and that they will in turn want to be near us. Lately I have wrestled with bouts of panic. I fear I am too far behind, already, in this father’s race.--Tony Woodlief
... find the simplest title not yet taken for your papers. One word titles are the best. Second, before you get started on a paper, think about the title. If you can’t come up with a short title for it then its probably not worth writing.--Jeff Ely
Wednesday, January 19, 2011
Quotes of the day
... football by its nature is animalistic, raw, a bloody piece of meat. That’s what fans want, as close to the bygone days of the Roman Coliseum as we can position ourselves. It also sells.--Buzz Bissinger
If teacher salaries reflect the will of the people, then why does the union have to engage in political activity at all?--Arnold Kling
The brain benefits from being used, so that, in a neat circle, resistance training may both demand and create additional brain circuitry. Imagine what someone like Einstein might have accomplished if he had occasionally gone to the gym.--Gretchen Reynolds
A more reliable gauge of the banks’ health, then, would be not the bottom line of the income statement but rather the top-line revenue, which is not affected by rainy-day reserves. Here, the picture is less rosy. Industrywide, revenues are off 17 percent from their peak in 2007, and the latest figures are flat or declining.--Eric Dash
... Goldman’s decision is likely to step up the scrutiny of nonpublic markets for common stock. The fact that Goldman was unwilling to sell these [Facebook] shares to domestic investors but give the opportunity to foreign ones will raise some outcry to liberalize the rules for offering stock on these markets. This outcry will be countered by claims that the Facebook media fury is unique. These markets should not exist unless the kind of information made available for a public company is made available for private companies or only investors who can truly assess the risks should be allowed to participate. This is a real debate and should spur a rethinking of how we want these markets to be regulated.--Steven Davidoff
... if you listen to the rhetoric very carefully and press them particularly on what I'm describing—the Secretary of the Treasury speaks not to defaulting on our outside creditors, he speaks not about being able to pay our outside obligations and so when people talk about a default, what they are really talking about is defaulting on our outside creditors—the people holding our debt. That's how it would affect our bond ratings in the financial markets for the most part. And what I'm telling you is if we force the Treasury to pay those obligations first through the legislation I'm advocating for that default would not occur. And that scare tacit they are using would be off the table. We need to address the more meaningful reforms like the obligations the government owes within itself between various accounts. That's the heart of the matter here. The crisis is not paying the outside creditors. Its about whether we can pay all the operating costs of the federal government- that's the real crisis.--Tim Pawlenty
The reason why it was so easy to sell securities rated triple-A -- like the higher tranches of the now notorious collateralized debt obligations -- was not that every potential buyer was a true believer in the theory of efficient markets. It was because financial regulators insisted a triple-A rating was necessary for many of the investments made by pension and mutual funds, which the regulators would never have done had they been convinced that the market would take care of these investment decisions by itself. If the market is always right, why insist that investors choose highly rated assets? So the problem was not that market failure was thought to be impossible, but the much more sinister belief that someone else was going to take care of it when it happened.--Paul Seabright
Practicing a piece of music for four hours requires focused attention, but it is nowhere near as cognitively demanding as a sleepover with 14-year-old girls. Managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group — these and other social tests impose cognitive demands that blow away any intense tutoring session or a class at Yale. Yet mastering these arduous skills is at the very essence of achievement. Most people work in groups. We do this because groups are much more efficient at solving problems than individuals (swimmers are often motivated to have their best times as part of relay teams, not in individual events). Moreover, the performance of a group does not correlate well with the average I.Q. of the group or even with the I.Q.’s of the smartest members. Researchers at the Massachusetts Institute of Technology and Carnegie Mellon have found that groups have a high collective intelligence when members of a group are good at reading each others’ emotions — when they take turns speaking, when the inputs from each member are managed fluidly, when they detect each others’ inclinations and strengths. Participating in a well-functioning group is really hard. It requires the ability to trust people outside your kinship circle, read intonations and moods, understand how the psychological pieces each person brings to the room can and cannot fit together.--David Brooks
The reasons that I have for wishing to go to Harvard are several. I felt that Harvard can give me a better background and a better liberal education than any other university. I have always wanted to go there, as I have felt that it is not just another college but is a university with something definite to offer. Then too, I would like to go to the same college as my father. To be a “Harvard man” is an enviable distinction, and one that I sincerely hope I shall attain.--John F. Kennedy
... creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing. We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money. We're looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way. ... This is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.--President Obama
It really is not conceivable that a shift of power from technocrats to legislators would help. Instead, I think that the only solution is to shift power to smaller units of government, and to make it as easy as possible for people to choose the manner they are governed using exit, rather than voice.--Arnold Kling
And to prove that his admiration of capitalism has nothing to do with naked political expediency, Obama signed an executive order that will "root out regulations that conflict, that are not worth the cost, or that are just plain dumb." Sounds rather subjective, though, don't you think? How do we gauge excessive regulation in the Age of Obama? I can't recall a single federal program, legislation or proposal in the past two years that was initiated to ease the burden on consumers or businesses. (If you know of any, please send specifics to sorry@dowelooklikesuckers.com.) Obama doesn't have to look far, if he's serious. Nor does he need an executive order. Right now the EPA is drafting carbon rules to force on states, even though a similarly torturous 2,000 pages on a cap-and-trade scheme intending to make power more expensive was rejected. Maybe there's something in that pile of paper to mine? Right now, the FCC is shoving net neutrality in the pipeline — again, bypassing Congress — so government can regulate the Internet for the first time in history, though the commissioners themselves admit that, as of now, any need for rules are based on the what-ifs of their imaginations. There exists no legislation more burdensome and expensive than the "job-crushing" (not "job-killing," because, naturally, we can't stand for that kind of imagery) "Patient Protection and Affordable Health Care Act," formerly known as Obamacare and presently being symbolically repealed by House Republicans.--David Harsanyi
We are seeing fewer jobs where there is the external discipline of the time clock and the assembly line. The human robot that was once needed to lift and pound in a factory continues to be replaced by non-human robots. Instead, we are seeing more jobs where internal discipline is required. I suspect that this explains some of the wage differential that shows up for college graduates. Graduating high school shows that you can submit to external discipline. Graduating college shows that you can operate under internal discipline. In the 1920's, the boom (or bubble) in stocks helped raise perceived wealth. This maintained demand for agricultural products, which allowed some Jeffersonian agriculture to persist longer than it would have otherwise. The 1930's forced a rapid transition. Similarly, the housing boom earlier in this decade helped to raise perceived wealth and maintained demand in many sectors. This allowed many nine-to-five jobs modeled on the industrial form of organization to persist longer than they would have otherwise. The crash forced a rapid transition.--Arnold Kling
How else could anyone paint immigrants as "intruders" when their landlords, employers, and grocers are delighted to see them? You might think that it would be easy to persuade conservatives to reject the Overlord Argument. It's basically a single-issue rationalization. And it's a slippery slope to most of the policies conservatives abhor: If your employer can require health insurance as a condition of employment, why can't your government require health insurance as a condition of citizenship? Alas, doublethink is no monopoly of the left.--Bryan Caplan
Krugman’s moral stance is not only incoherent but it isn’t even a moral stance.--Tibor Machan
I’d stop following myself [on Twitter]. In fact I have.--Don Miller
Tuesday, January 18, 2011
I never thought I'd ever type these following words
I disagree with Gary Becker.
I believe that subsidies are responsible for hyperinflation in college education consumer costs.
Just like we end up paying multiples* for other subsidized goods and services, such as sugar, corn, healthcare, and real estate in Manhattan.
For example top Canadian universities charge half of the top U.S. schools' rates, and I don't think that McGill or Waterloo, just a couple lakes over from Becker, are merely half as good as U. Chicago (despite the assumption that Canada also subsidizes its college sector).
I think the esteemed Becker is human, like everyone else who wants more competition and less subsidies in every other industry save his own. Those who advocate for "green jobs", greater entitlement programs, agricultural subsidies pretty much make the same arguments that Becker is making in his pro-education subsidy piece. I'd guess I'd agree more with whatever James Buchanan might say in countering Becker's opinion.
But this is a tricky subject. While I am a big believer in school vouchers (patterned after the less distortive food stamps program) for K-12 education, I think that we are minting more college grads than we have college-grad jobs. I've told my wife that only one of our three children needs to go to college. Unsurprisingly, my more educated spouse completely disagrees. Maybe if she had gotten a Ph.D in econ instead of a J.D. ...
The trouble for me is, which kid? Can't 'favor' one kid over the others.
So I guess a bachelor's degree is an expensive option (to grad school, to higher employment, to meeting hotter mates, whatev).
*Prices over what the rest of the world pays.
I believe that subsidies are responsible for hyperinflation in college education consumer costs.
Just like we end up paying multiples* for other subsidized goods and services, such as sugar, corn, healthcare, and real estate in Manhattan.
For example top Canadian universities charge half of the top U.S. schools' rates, and I don't think that McGill or Waterloo, just a couple lakes over from Becker, are merely half as good as U. Chicago (despite the assumption that Canada also subsidizes its college sector).
I think the esteemed Becker is human, like everyone else who wants more competition and less subsidies in every other industry save his own. Those who advocate for "green jobs", greater entitlement programs, agricultural subsidies pretty much make the same arguments that Becker is making in his pro-education subsidy piece. I'd guess I'd agree more with whatever James Buchanan might say in countering Becker's opinion.
But this is a tricky subject. While I am a big believer in school vouchers (patterned after the less distortive food stamps program) for K-12 education, I think that we are minting more college grads than we have college-grad jobs. I've told my wife that only one of our three children needs to go to college. Unsurprisingly, my more educated spouse completely disagrees. Maybe if she had gotten a Ph.D in econ instead of a J.D. ...
The trouble for me is, which kid? Can't 'favor' one kid over the others.
So I guess a bachelor's degree is an expensive option (to grad school, to higher employment, to meeting hotter mates, whatev).
*Prices over what the rest of the world pays.
Quotes of the day
... there's an old sayin' amongst gamblers: 'If you look around a room and you can't find the mark, you're the mark. ... I've been swindled out of quite a bit quite a bit of money on the stock market. And I bought a lot of Enron stock once. And I got swindled. I bought a lotta WorldCom stock, got swindled. I bought a lotta Tyco stock. I got swindled--Billy Walters
[Billy Walters is] the most dangerous sports better in the history of Nevada, history of the world.--Kenny White
Sports betting is a fool's errand, given the wide spreads and limited markets (due to legistalative constraints). But it is helpful medium for learning how to trade futures contracts in legitimate markets. Trade sports small (or just paper trade them, no losses)--Cav
It sounds crazy, but making mid-five-figures monthly income when I was 25 years old was probably the worst thing that could've ever happened to me. It was a brief run, but its amazing how quickly one gets themselves accustomed to "having money." Lifestyle inflation happens swiftly - especially when you're young.--ChicagoSean
Suppose you wanted to create your own digital ghost to live for eternity in the Internet and maybe do some haunting. What would that look like?--Scott Adams
... most people do not really see themselves as members of a large multinational unit, global citizens, or "mass consumers." Instead the drivers of history remain the essentials: the desire to feed one's family, support the health of the tribe, and shape the immediate community. The particularistic continues to trump the universalistic. ... The end of the Soviet Union, it turns out, did not usher in a wider embrace of universal capitalism so much as engender various forms of ethnicity-based irredentism and, in Russia itself, a renewed Slavic nationalism. ... The new tribalism is also increasingly evident in Europe. Just a few years ago Europhiles like French eminence grise Jacques Attali or left-wing author Jeremy Rifkin could project a utopian future European Union that would stand both as a global role model and one of the world's great powers. Today, Rifkin's ideal of a universalistic "European dream" is collapsing -- a process accelerated by the financial crisis -- as the continent is torn apart by deep-seated historical and cultural rifts.--Joel Kotkin
Three years after bad home loans helped trigger the recession and six weeks after the government cashed in the last of its $45 billion Citigroup investment, the New York-based bank is still selling mortgages that violate quality standards, according to an internal Freddie Mac review obtained by Bloomberg.--Bob Ivry and Bradley Keoun
Commercial banks controlled by the government hold more than 90 percent of China’s domestic financial assets. The government, not a financial market, also decides both lending and deposit interest rates and broadly instructs the banks to lend to favored sectors. In short, banks are passive entities that absorb all the credit, interest and market risk involved in the government’s policy decisions. If, for example, inflation were to grow rapidly, the value of existing bank assets would be decreased. In a closed financial system like China’s, banks must inevitably be the institutions at risk. ... the business model of these banks in effect destroys capital. History has shown time and again that state enterprises, the principal borrowers, are not reliable borrowers. Despite the appearance of profitability, the banks don’t create sufficient capital given their high growth rates, dividend payouts and credit losses. This has been clearly underlined by this ongoing round of equity offerings. ... if China’s banking system today – a nonconvertible currency combined with government designated loan and deposit rates as well as policy-directed lending – represents such a strong model, why hasn’t it been exported or adopted by other countries, many of which are in dire need to thorough reforms?--Carl Walter
Investors in mainland China are clearly expressing concerns over inflation and slowing growth that the USA and much of the rest of the world is comfortable ignoring for now. The Shanghai Composite fell -3% on Monday to close almost -16% off its November highs. Investors are increasingly concerned over the government’s ability to contain inflation and steer the economy towards a soft landing.--Cullen Roche
Superbowl Futures, part 8
New England let me out of my big short (sniff). I expired my short NE, short ATL, long BAL, and long SEA. Also unwound my long GB, and got short.
*Market prices sourced from Matchbook latest odds quotes.
UPDATE: I've never gotten hit so much by Jets fans over a single game--via text, email, in the office--than Sunday's win over the Patriots. Even when not counting my favorite broker or favorite management consultant, who have pointed me to material for the blog, and are big Jets fans.
People expect me to be mournful. I was disappointed and surprised by the outcome. But as you can see, I was short the Pats in my trading exercise, for the simple reason that I thought the bettors were overvaluing them. (As impossible as it sounds and seems, I try to trade for my bank, my personal account, and paper trade as much in the same way as possible).
And qualitatively, I've been saying for whole season that this team, as surprisingly good as they were, were not as strong as the 2007-8 team. And on Sunday night, I started thinking that this Jets team is better than the Giants Superbowl team that beat the Patriots. What about them is better? The head coach. The running backs. The receivers. The defensive line. The secondary. Mark Sanchez looked as poised on Sunday as Eli Manning did in XLII.
The Jets may not walk away with the Lombardi Trophy. But if they do, don't ask me if I'm surprised.
UPDATE: Joe Posnanski notes an interesting statistic about the NFL bye teams performance since changing to the current playoff format:
UPDATE: This is the MOST surprising quote yet:
| P/L | Team | Position | Paid | Market | Exposure |
| $96.03 | GB | -1 | 152% | 56% | $ (56) |
| ($26.82) | PIT | -1 | 22% | 49% | $ (49) |
| $13.38 | NYJ | 1 | 9% | 22% | $ 22 |
| $9.21 | CHI | 1 | 7% | 16% | $ 16 |
| $21.11 | -1 | 21% | 0% | $ - | |
| $5.08 | 1 | -5% | 0% | $ - | |
| $25.18 | -2 | 13% | 0% | $ - | |
| ($8.75) | 7 | 1% | 0% | $ - | |
| ($7.69) | 1 | 8% | 0% | $ - | |
| ($9.72) | 4 | 2% | 0% | $ - | |
| ($16.70) | 2 | 8% | 0% | $ - | |
| ($7.02) | 1 | 7% | 0% | $ - | |
| $18.25 | -1 | 18% | 0% | $ - | |
| ($3.85) | 1 | 4% | 0% | $ - | |
| ($10.44) | 3 | 3% | 0% | $ - | |
| $107.69 | Total | 143% | $ (66) |
*Market prices sourced from Matchbook latest odds quotes.
UPDATE: I've never gotten hit so much by Jets fans over a single game--via text, email, in the office--than Sunday's win over the Patriots. Even when not counting my favorite broker or favorite management consultant, who have pointed me to material for the blog, and are big Jets fans.
People expect me to be mournful. I was disappointed and surprised by the outcome. But as you can see, I was short the Pats in my trading exercise, for the simple reason that I thought the bettors were overvaluing them. (As impossible as it sounds and seems, I try to trade for my bank, my personal account, and paper trade as much in the same way as possible).
And qualitatively, I've been saying for whole season that this team, as surprisingly good as they were, were not as strong as the 2007-8 team. And on Sunday night, I started thinking that this Jets team is better than the Giants Superbowl team that beat the Patriots. What about them is better? The head coach. The running backs. The receivers. The defensive line. The secondary. Mark Sanchez looked as poised on Sunday as Eli Manning did in XLII.
The Jets may not walk away with the Lombardi Trophy. But if they do, don't ask me if I'm surprised.
UPDATE: Joe Posnanski notes an interesting statistic about the NFL bye teams performance since changing to the current playoff format:
In 2002, the system changed — but it didn’t seem a particularly big change. The league expanded to eight divisions. So that meant there were now eight division champions instead of six. To compensate, the NFL wisely (methinks) eliminated two wild-card teams, going back to four. So that meant there were still 12 teams getting into the playoffs. And four of those 12 — the two division winners with the best records in each league — got a first-round bye.As usual, Joe comes up with some interesting theories behind the trend, and also makes some interesting cultural observations. Read the whole thing.
On the surface, it would not seem the system should change much. The same number of teams were making the playoffs. Two of the wild-cards were replaced with division winners … but that just seems to be cosmetics. In 2002, everything looked about the same. The four bye teams all won their first playoff games and by a total of 115-52. Only one of those games — Tennessee’s 34-31 overtime win over Pittsburgh — was even remotely close.
But something kind of bizarre has happened since 2003. That something might just be a fluke or a statistical anomaly, but that doesn’t make it any less fascinating.
Since 2003, bye teams have gone just 18-14 in their first playoff games.
Since 2005, it’s even more stark — bye teams are just 12-12.
Think about that for a moment. Bye teams have:
(1) The best regular season records.
(2) Home field advantage.
(3) An extra week to rest and prepare.
That’s a pretty sizable advantage, isn’t it? You take what looks like the superior team, you play the game at their stadium in front of their fans and you give them an extra week’s preparation. You would expect that team to win almost every time wouldn’t you? But the past six years, the bye team has lost as many times as it has won.
UPDATE: This is the MOST surprising quote yet:
I didn’t out-coach Belichick. There’s no way. Our players out-played their players. That’s really what it came down to. There was nothing schematically I did to win that game. Our guys were prepared to play and that’s my job… But to say that I out-coached Belichick, I would not agree with that. I think it’s almost a joke. I don’t think anybody out-coaches Belichick.--Rex Ryan
Friday, January 14, 2011
Superbowl Futures, part 7.5
Had to buy some SEA before the weekend.
*Market prices sourced from Matchbook latest odds quotes.
Part 7 here.
| P/L | Team | Position | Paid | Market* | Exposure |
| ($95.67) | NE | -2 | 13% | 60% | $ (121) |
| $6.80 | PIT | -1 | 22% | 15% | $ (15) |
| $5.49 | ATL | -1 | 21% | 16% | $ (16) |
| $4.83 | CHI | 1 | 7% | 11% | $ 11 |
| $13.11 | GB | 2 | 7% | 14% | $ 28 |
| $13.24 | BAL | 1 | -5% | 8% | $ 8 |
| ($4.33) | NYJ | 1 | 9% | 5% | $ 5 |
| ($0.67) | SEA | 7 | 1% | 1% | $ 9 |
| ($7.69) | 1 | 8% | 0% | $ - | |
| ($9.72) | 4 | 2% | 0% | $ - | |
| ($16.70) | 2 | 8% | 0% | $ - | |
| ($7.02) | 1 | 7% | 0% | $ - | |
| $18.25 | -1 | 18% | 0% | $ - | |
| ($3.85) | 1 | 4% | 0% | $ - | |
| ($10.44) | 3 | 3% | 0% | $ - | |
| ($83.93) | Total | 131% | $ (90) |
*Market prices sourced from Matchbook latest odds quotes.
Part 7 here.
Quotes of the day
... when I think of New York city abstractly, I think of a city that doesn't work. Taxes are high, there are too many crowds, people are pushy and unfriendly, etc. Then, when I actually experience New York, I see how well it works. People are trying to give me what I want, at a fairly low price. The immigrants I run into--and there have been many over the last two days--don't seem to have come here for welfare but for opportunity to get wealthier. And people are friendly. Why are people friendly? Partly because I love people and I'm friendly to them. But also partly because they are paid to be friendly; they do better by being friendly to customers. As I laid out in The Joy of Freedom: An Economist's Odyssey, markets create virtue. Part of virtue is simple friendliness and helpfulness. I remember talking with my friend, the late Roy Childs, on a 1988 visit to New York, about how well New York works, even with all the big government institutions around. The metaphor he came up with is that government is not a cancer; it's more like a leech. It sucks blood but there's still a lot of blood left.--David Henderson
The Fed bloated its balance sheet by $2.3 trillion to allegedly create 3.5 million jobs. My math suggests it takes $657,142.86 in balance sheet additions to create a single job.--Michael Shedlock
With the "sunset" of the Assault Weapons Ban in 2004, gun control groups predicted murder would soar. The opposite happened. Re-instituting parts of the ban limiting clip size won’t lower crime. No research by criminologists or economists found that the ban or clip size restrictions reduced crime. Clips are easily made small metal boxes. The benefits of not exchanging the clips is true for law-abiding citizens, police and criminals. If only criminals get the larger clips, they have an advantage.--John Lott
My simple yoga plan had turned into a shopping experience. Regular readers of this blog know that for me, shopping feels like being beaten to death with a salted porcupine. This was bad. This was very bad. I suggested that we randomly select one of the classes and just see what happens. But this, my friends, is not how shopping is done. First you read each of the descriptions then you read them again. Then you read them aloud. Then you discuss. Then you narrow it down to two. Then you forget what the other three were, and wonder if maybe they were better than the two you had first selected, so you start over. Halfway through this process, my tension could have powered a Chevy Volt. I was red and vibrating. I wasn't getting any of my cartooning work done, we would be late for the Apple Genius Bar, and I was shopping in my own home.--Scott Adams
In short, heteroscedasticity makes you hot.--Alex Tabarrok
Xiao-Li Meng told me once that in China they didn't teach Bayesian statistics because the idea of a prior distribution was contrary to Communism (since the "prior" represented the overthrown traditions, I suppose).--Andrew Gelman
I grant that Foucault takes his own method too far in the anti-individualist direction, as did Hegel.--Tyler Cowen
Aaron Hernandez and Rob Gronkowski … or, as they'll be known when we combine them in my fantasy league next year, Aarob Gronkandez. Any time you can team up Gronkandez and Ben-Danvis Greenwood-Ellishead, you have something special.--Bill Simmons
Another example of how science falls short in wrestling with ethics
in this case, rape:
Just don't expect an empiricist to answer honestly about your next ethical dilemma.
... dilettante followers may still be inclined to detect a misogyny in these investigations that simply is not there. As University of Michigan psychologist William McKibbin and his colleagues write in a 2008 piece for the Review of General Psychology, "No sensible person would argue that a scientist researching the causes of cancer is thereby justifying or promoting cancer. Yet some people argue that investigating rape from an evolutionary perspective justifies or legitimizes rape." The unfortunate demonization of this brand of inquiry is rooted in the fallacy of biological determinism (according to which men are programmed by their genes to rape and have no free will to do otherwise) and the naturalistic fallacy (that because rape is natural it must be acceptable). These are resoundingly false assumptions that reveal a profound ignorance of evolutionary biology.Morality is difficult to quantify. Faith--confidence in what we hope for and assurance about what we do not see--is still required to model good and evil. And I'm not saying there isn't failure, even with faith.
Just don't expect an empiricist to answer honestly about your next ethical dilemma.
Thursday, January 13, 2011
Terrell Suggs is envious of Tom Brady?
Sounds like:
I liked Christian Fauria's response to Antonio Cromartie even better:
Cromartie's teammate, Jason Taylor, mused:
UPDATE: Image link here.
[Steve] Phillips: “But what is it about Brady that brings that reaction out in people? Antonio Cromartie has had things to say. Obviously, Rex Ryan has had things to say. You’ve had your own issues with Brady. Does he actually point to the sideline, to the opposition, when his team scores? What is it that kind of provokes that kind of a strong emotional response from the opposition?”
Suggs: “Uh, I don’t know. I don’t know. Maybe because he is Tom Brady and he dates supermodels. That can have a lot to do with it, like, dang, this guy’s got the world, he’s winning Super Bowls and dating supermodels. It don’t get much better than that.
I liked Christian Fauria's response to Antonio Cromartie even better:
Hey, don't be mad at Tom [Brady] because you have, like, ten kids.
Cromartie's teammate, Jason Taylor, mused:
I came from a school where, if you don’t want somebody to celebrate, don’t let them score.
Quotes of the day
We have become increasingly clear about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the U.S., the likelihood of a negative outlook over the next two years will increase.--Sarah Carlson, senior analyst at Moody's Investors Service
The view of markets is that the U.S. will continue to benefit from the exorbitant privilege linked to the U.S. dollar [to fund its deficits]. But that may change. We can't rule out changing the outlook [on the U.S. sovereign debt rating in the future]. No triple-A rating is forever.--Carol Sirou, head of Standard & Poor's Corp. France
As a result of this [Supreme Court decision against a debtor in bankruptcy], people who buy cars they can afford will be unable to claim an allowance for the expense of keeping up their cars . But people who buy cars they cannot afford to pay for and for which they have to take on a loan, will be able to claim a $471 monthly allowance. There's nothing in the law that instructs the court to import the IRS's rule about when to permit a car expense allowance. The justices just decided that the law made more sense with the debt requirements. It's a shame that only one justice noticed how ridiculous it is to punish ownership and reward indebtedness.--John Carney
... those who aspire to hop from the 30th percentile to the 35th percentile [of income] would need to increase their cash income by $4,000 annually (or by about 17 percent); those who aspire to hop from the 91st percentile to the 96th percentile would require an increase of $57,900 (or 35 percent).--Catherine Rampell (NOTE: This seemed off-base, and sure enough, when I looked at the table Rampell later provided, her numbers needed correction. UPDATE: Rampell got back to me and confirmed the error. She had originally intended to compare 94th and 99th percentiles.)
... it is well known that if your father had high income, you are more likely to have high income than if you father had low income. According to this study (which I found thanks to a pointer by Paul Krugman), the elasticity of son's income with respect to father's income is about 0.5 in the United States. How do you interpret this fact? Some people might be tempted to see it as evidence against equality of opportunity. After all, it shows that it matters where you started. Rich parents can buy better schools, expensive tutors, fancy summer camps, and all sort of other great stuff for their kids. How fair is that? But what strikes me about that 0.5 number is not how large it is but how small it is. As I understand it, that 0.5 estimate is roughly the correlation between father and son income. That means that the fraction of variance of son's income explained by father's income--that is, R-squared--is only 0.25. This last number is sometimes called the "heritability" of a characteristic. By contrast, the heritability of IQ is usually estimated to be much larger than that. ... The study cited above points out that economic mobility is greater in some European countries. That fact does not surprise me, as those are nations with less inequality. Moving up and down a short ladder is a lot easier than moving up and down a tall one.--Greg Mankiw
I don’t know what led me to do it, but one day I decided the company would become more grateful. I bought several boxes of thank-you cards and gave one to each member of the staff (we were tiny, so this was no big deal) and asked if we’d be willing to write a thank-you card to somebody every day until our boxes were empty. The staff loved the idea. We wrote cards to our customers, to our vendors, even to our delivery guys. I wasn’t expecting anything to happen, except maybe to let the people who supported us know how grateful we were, but to my surprise, we saw a fairly significant boost in our business. No kidding. I don’t know if our business increased because we sent out thank-you cards, but it certainly didn’t hurt. There’s something inherently powerful in saying thank you to somebody.--Don Miller
Everything Obama did right during his presidential campaign he did right last night: It may not have been the best speech of his life, but it was the best speech of his presidency.--Ross Douthat
Having used divisiveness to push through Obamacare and other expansions of government, Obama now wants everyone to come together and lower the volume.--William Jacobson
Want to ferret out if someone at work is a Christian without straight up asking? Chances are, if they have a Bible verse tattooed in Hebrew, they are a Christian. (Or they’re Angelina Jolie. It’s one of the two.)--Jon Acuff
Wednesday, January 12, 2011
A government official complains about mistrust of the government
But provides a basis for that mistrust. Sherriff, meet mirror.
UPDATE: The WSJ has copies of more than 10 police/department of safety complaints against Loughner, the first alleged incident occurring on Feb 2 2010.
UPDATE: The WSJ has copies of more than 10 police/department of safety complaints against Loughner, the first alleged incident occurring on Feb 2 2010.
Superbowl Futures, part 7
I expired IND, KC, NO, and PHI, and also sold 1 GB.
*Market prices sourced from Matchbook latest odds quotes.
Part 6 here.
| P/L | Team | Position | Paid | Market* | Exposure |
| ($95.67) | NE | -2 | 13% | 60% | $ (121) |
| $6.80 | PIT | -1 | 22% | 15% | $ (15) |
| $5.49 | ATL | -1 | 21% | 16% | $ (16) |
| $4.83 | CHI | 1 | 7% | 11% | $ 11 |
| $13.11 | GB | 2 | 7% | 14% | $ 28 |
| $13.24 | BAL | 1 | -5% | 8% | $ 8 |
| ($4.33) | NYJ | 1 | 9% | 5% | $ 5 |
| ($7.69) | 1 | 8% | 0% | $ - | |
| ($9.72) | 4 | 2% | 0% | $ - | |
| ($16.70) | 2 | 8% | 0% | $ - | |
| ($7.02) | 1 | 7% | 0% | $ - | |
| $18.25 | -1 | 18% | 0% | $ - | |
| ($3.85) | 1 | 4% | 0% | $ - | |
| ($10.44) | 3 | 3% | 0% | $ - | |
| ($83.26) | Total | 129% | $ (99) |
*Market prices sourced from Matchbook latest odds quotes.
Part 6 here.
The 2010 Global Warming Exchange question has been closed
here. (See above right as well, for quotes and link).
2010 was a warm year, despite record snow and ice in highly populated areas. Here is the message I provided on the expiry:
I will list the 2011 question shortly. Many thanks to Inkling Markets for their generous hospitality.
2010 was a warm year, despite record snow and ice in highly populated areas. Here is the message I provided on the expiry:
The NASA GISS GLOBAL Land-Ocean Temperature Index for 2010 averaged out to 0.6325 Celsius above baseline. The winning prediction is 'greater than 0.6 Celsius (>0.6)'. Congrats to the winners, and to all participants for nudging closer to the truth.
I will list the 2011 question shortly. Many thanks to Inkling Markets for their generous hospitality.
Quotes of the day
The number of workers at banks and underwriters declined by 262,000 in the past 12 months, or 3.9% of all positions, according to recent data requested from the Bureau of Labor Statistics. The only reason that the industry unemployment rate did not spike in step was because an even greater number of workers quit the business altogether, jumping to other industries or retiring. The finance and insurance experienced labor force, which counts both employed workers and unemployed job seekers, fell by 344,000 or 4.8% in the last 12 months.--Kyle Stock
... being smart is a great way of getting in to a lot of trouble as an investor. In order to make money in the markets, you need a weird combination of arrogance and insecurity. ... There’s a lesson here for hedge funds looking to pick up brainiacs like [Peter Thiel and] Larry Summers—another smart, arrogant, and well-connected person with big financial ambitions—when they exit the government’s revolving door. Summers made a hefty multi-million-dollar salary when he was at DE Shaw, but it’s worth remembering that when he was actually in charge of running money himself, he put Harvard into a series of disastrous interest-rate swaps which ended up losing the university $1 billion. If you want positive investment returns, rather than proximity to people with geek-celebrity status, the likes of Thiel and Summers are probably best avoided.--Felix Salmon
The themes of Existentialism are freedom of choice, authenticity, and alienation. These are themes cast aside by the Internet age in general – the cloud, the hive, the redefining of humans as parameters of a database, the programs that confine our imagination – and Facebook as a particular. ... So my bet – a long term bet because it will take the force of cultural change to accomplish – is that Facebook will become marginalized. It will not disappear, it will remain a repository for factoids about one's collection of friends, but the reality of what Facebook friends really are will become evident, as will the effects of standardization of the individual, the cost to individuality of giving up privacy, and the frustration with having Facebook friends that are increasingly fictionalized and flattened versions of their real selves.--Rick Brookstaber
His parents blame themselves. Perhaps they should. Perhaps they shouldn’t. Neither will make their boy not a monster.--Tony Woodlief
One heritable trait which increases the reproductive success of sons significantly more than that of daughters in the ancestral environment is the tendency toward violence and aggression. I therefore predict that violent parents have a higher-than-expected offspring sex ratio (more sons). The analysis of both American samples and a British sample demonstrates that battered women, who are mated to violent men, have significantly more sons than daughters.--Journal of Theoretical Biology, Volume 239, Issue 4, 21 April 2006, Pages 450-459
And seat belts, at about $25 a pop, are one of the most cost-effective lifesaving devices ever invented. In a given year, it costs roughly $500 million to put them in every U.S. vehicle, which yields a rough estimate of $30,000 for every life saved. How does this compare with a far more complex safety feature like air bags? At an annual U.S. price of more than $4 billion, air bags cost about $1.8 million per life saved.--Steven Levitt and Stephen Dubner
In last couple of centuries or century and a half, some of the most important developments was really the discovery, if you like, of the ability to put a food in a container and sterilize or pasteurize it. This came in the era of Napoleon in France, and one of his scientists developed the method to really can food and sterilize it, so that Napoleon can actually transfer the food to his armies and therefore can move forward to longer and longer distances. So Nicolas Appert and the invention of putting food in a jar or can, closing it and sterilizing it, is probably the most important invention probably in the last couple hundred yrs with respect to food because it completely transformed how we consume food, how we preserve, food how we ship food, and how we really interact with each other. ...In some respects it was [a dividend of war], yes, became a lot more sophisticated later on, but I think the major need at the time was really to feed the army.--John Floros
Then where does the greatest difference between the US and China ultimately lie? My personal opinion: churches. Only in this area is the difference between China and the US not a question of numbers, but rather an essential difference between presence and absence. In the US, the spires of churches are more numerous than China's banks and rice shops. On a street near Harvard Square, I once stood and looked around to find that in three different directions there were three churches. Truth be told, from the east coast of the US to the west coast, from towns to cities, in any place you look you will find that this country's most numerous structure is none other than the church. Churches, and only churches, are Americans' center; they are the very core that binds Americans together. Americans are not idiots. Their need for churches is overwhelming, and churches provide something in answer to their call — there is definitely some principle at work.--Peter Zhao Xiao
Tuesday, January 11, 2011
Quotes of the day
Where’s that toxic rhetoric coming from? Let’s not make a false pretense of balance: it’s coming, overwhelmingly, from the right. It’s hard to imagine a Democratic member of Congress urging constituents to be “armed and dangerous” without being ostracized.--Paul Krugman
If they bring a knife to the fight, we bring a gun. Because from what I understand folks in Philly like a good brawl.--President Obama
We should and do condemn people for their crimes, not for their metaphors.--Greg Mankiw
... "structural" unemployment may account for up to three percentage points of total unemployment. In other words, were it not for construction, the US unemployment rate would be 6.5% – a far healthier situation than today.--Raghuram Rajan
When I worked for an economics department, I quickly learned what a lame business we were in. Our stated purpose--to forecast the economy to allow people to make better decisions--was different than our actual purpose--to provide rationales for decisions already made, to serve as an excuse to have a get together. The sad thing is that a Big Lie needs many little lies, as the stated goal of forecasting accuracy could not be discussed openly and honestly, because if one did the stated purpose becomes untenable, and then the unstated purpose becomes unworkable. It's one of those phony little kabuki dances that seems so quaint in primitive cultures, but just as common in our own. A problem in this field is that accuracy spells extinction because no one wants to listen to an honest forecaster, they don't purport to know enough. Rather, listen to someone who can make you rich! In selling forecasts to the masses, honesty is a strictly dominated strategy.--Eric Falkenstein
The traditional bookstore is doomed by e-readers and online sales of hard copy books. I use the word “doomed” in the same sense that online digital sales of movies and music have doomed movie rental stores, movie theatres, and stores that sell albums of music. Doomed does not mean that these stores will quickly, or ever fully, disappear, but that they have received deadly blows from Internet competition. Joseph Schumpeter, an outstanding economist in the first half of the 20th century, originated the term “creative destruction” to describe new technologies and other forms of new competition that wreak havoc on older and established industries. The process is creative because it provides consumers and producers with more effective ways of satisfying their wants. The process is at the same time destructive because it greatly reduces the value of services and products provided by older industries.--Gary Becker
Of the top two dozen or so elite universities in America only one has managed both to avoid the craziness of the post-60s intellectual fads, and to establish something pretty close to a pure meritocracy -- California Institute of Technology, which has not received the general recognition among academics that it clearly deserves.--Russell Nieli
Surely, if you can't pay back a debt there should be a way to avoid slavery, and we have that now, it is called bankruptcy. To simply repudiate loans, as with the whole 'robo-signer' pretext, is a naive, populist remedy that has always been regretted. The basic problem is, by getting rid of debt you get rid of savings, and without savings, you have no investment.--Eric Falkenstein
Blame is a way of simulating control: if we can just identify who was at fault, we can stop it. The problem is, when we can't identify any very plausible target, we too readily go after implausible ones: Freemasons poisoning the wells, or Federal Reserve bankers plotting to monetize the national debt. At worst, this tendency is dangerous, corrosive; at best, it leads us to make unproductive policy choices.--Megan McArdle
So should we subsidize or tax research into time travel?--Tyler Cowen
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