If we're following this correctly, it seems that starting in 2006 JP Morgan allowed investors to make bets on the performance of hedge funds that invested with Bernie Madoff. This basically means that JP Morgan was institutionally short Madoff, which is interesting in itself. What made JP Morgan think it could beat the guy who had over forty-years of steady results?Even more interesting is the fact that JP Morgan initially hedged this bet against Madoff by investing $250 million of its own money with Madoff. And then, as late as last fall, it decided to take off this hedge. What happened in the fall of 2008 to make JP Morgan believe that the bets it had made against Madoff were now so safe that they didn't need to be hedged?
Perhaps the most tantalizing idea is that JP Morgan's withdrawal might have triggered the collapse of Madoff's fund. Recall that although Madoff claimed to be managing tens of billions of dollars, he actually had only a tiny fraction of those assets under his control. A seemingly small withdrawal the size of JP Morgan's $250 million could very well have left Madoff without liquidity to keep up his fraud.
Friday, January 30, 2009
John Carney on JPMorgan's Madoff investments
More middle class Manhattan
Previous thoughts rounded up here. Here is a post where I determine that buying 1 house in California is equivalent to buying 14 houses in Iowa.Is a $112,000 average Wall Street bonus excessive? Not to me. In the greater New York area, the tax rate is effectively 50% which leaves you about $56,000. That won’t even cover the average annual rent of $60,000 for a two bedroom apartment in Manhattan.
But consider that the median price of a U.S. home is about $175,000 and you can understand why the rest of America feels differently than me.
No change yet
UPDATE: Oh the White House press office has changed. But not for the better.First, he gets caught fibbing that good government groups don’t oppose the administration’s spate of ethics waivers for ex-lobbyists:
“He can’t be talking about us,”said CREW’s executive director Melanie Sloan. “We don’t believe in a never-ending list of waivers. The waivers indicate the administration cannot live with its own policy. Ergo, they should revise the policy and stop pretending they are not hiring lobbyists.”
As Sloan sees it, the Obama administration is trying to have its cake and eat it too, claiming the ethics high road except on occasions when it doesn’t suit their interests.
Whoops.
Then he brought untold grief upon the President by explaining the sloppy dress code in the White House. You see they take off their jackets in the Oval Office because the President keeps it so darn hot in there. Uh oh. Doesn’t mesh with the global warming hectoring and his campaign rhetoric about keeping the thermostat at 72 degrees. All this the day after he lectured his fellow Washingtonians about lacking “flinty Chicago toughness.”
Improving the NFL distortion
of the overtime coin toss, by the one-and-only Tim Harford:
If the Super Bowl goes into overtime for the first time ever, it's fairly certain who will be victorious: the team that wins the coin toss. In the first round of the playoffs, the Chargers beat the Colts 23-17 in OT, marching down the field for a touchdown after winning the toss. In the 14 overtime games that produced a winner this season, the coin-toss victor won 10 of the games, more than 70 percent. Since 2002, the team that's gotten the toss has won more than 60 percent of overtime games.Photo link here.
With a little ingenuity, there is a way for overtime to be both fair and fast. One solution is usually associated with cake-cutting: one person divides, the other chooses which half to take. In a football overtime, the divide-and-choose rule would dispense with the kickoff and just give the ball to one side. The coin-toss loser would decide how far forward the offense would start—say, the 30-yard line. The coin-toss winner would then decide whether to take possession or let the coin-toss loser have the ball at the 30. The nice thing about these rules is that they would naturally adapt to the game's changing dynamics. The current system, by contrast, seems to have been fair when introduced in 1974, but as field-goal kickers became more accurate, possession has become more valuable."Divide and choose" isn't perfect. The coach who divides is at a small disadvantage, because what he does gives a hint about his thinking and his concerns—all sorts of imponderables from his kicker's form in training to the morale of his defensive lineup. The other coach, however, can keep his cards to his chest until the last moment.
An even more elegant solution to the overtime problem was proposed in 2002 by Chris Quanbeck, an electrical engineer (and Green Bay Packers fan). Quanbeck's idea was to auction off possession of the ball in the natural currency of the game: field position. The team that was willing to begin closest to its own goal line would receive the privilege of possession.
What happened to Larry Summers and President Obama
Throughout 2008, Larry Summers, the Harvard economist, built the case for a big but surgical stimulus package. Summers warned that a “poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured.” So his proposal had three clear guidelines.This reminds me of George Stephanopoulos' "The President kept all the campaign promises he intended to keep."
First, the stimulus should be timely. The money should go out “almost immediately.” Second, it should be targeted. It should help low- and middle-income people. Third, it should be temporary. Stimulus measures should not raise the deficits “beyond a short horizon of a year or at most two.”
Summers was proposing bold action, but his concept came with safeguards: focus on the task at hand, prevent the usual Washington splurge and limit long-term fiscal damage.
Now Barack Obama is president, and Summers has become a top economic adviser. Yet the stimulus approach that has emerged on Capitol Hill abandoned the Summers parameters.
It was the Yankees, Joe Torre and "Boomer" Wells
Say what, say what, say what?
The New York Yankees are considering whether to ask for confidentiality clauses in future contracts with managers and coaches following Joe Torre's book on his 12 years with the team.Photo links here and here.
...
In [his] book, Torre says, "The difference between Kevin Brown and David Wells is that both make your life miserable, but David Wells meant to."
...
"I've always said if you weren't Joe's boy, he could care less about you," Wells said. "He ran his tight ship the way he wanted to. Don't get me wrong, he is not a bad manager. I just thought he was a bad individual, because of the fact he didn't treat everybody the same. He had his boys. He let certain guys do their thing. He wouldn't let other guys do other things." Still, Wells said he would buy the book. "I'd like to go buy the book," Wells said. "He can have his 27 bucks. It doesn't matter to me. Just to read it to see how much BS is in that."
Quotes of the day
The same man who shines at the second level is eclipsed at the top.--Carl Von Clausewitz
... “carbon caps” may actually destroy forests based upon my observation that when jobs become scarce, Third World populations often return to the land, frequently clearing forests with slash-and-burn techniques. By discouraging job creation, so-called environmental policies may inadvertently push people in subsistence economies back onto the land where they must resort to unsustainable, short-term activities to survive.--Richard Fernandez
As each legislator and Congressional committee and the Fed and the President try to help improve the economy (or bail out a favored constituency) the stress on the whole system grows. Every once in a while I think we can come out of this mess. On a day like today, I start to think we're going to have a profound economic collapse.--Russell Roberts
If the intent of the [stimulus] plan is to alleviate unemployment, why spend over half of the money on sectors where unemployment is lowest?--Alan Reynolds
I'm shocked to see Paul Krugman complaining that people are assuming the jobs created by the stimulus will only last a single year in calculating the cost of creating them--back when the Bush tax cuts were proposed, he got very, very angry at . . . . people who assumed that the jobs created by the stimulus would last longer than a year. --Megan McArdle
A man who flies in a private jet paid for exclusively with taxpayer funds (Air Force One) scolds other persons for flying in private jets paid for only in part with taxpayer funds.--Don Boudreaux
... as Obama continues to insist his policies should be followed because “I won,” it will be applauded as an impressive sign of strength and a recognition of political reality. Of course, when Bush said anything close to this, it was said to be an example of his “my way or the highway” arrogance.--Peter Wehner
No question, the president is right. The next time it snows, we would like to invite him to help us make the decision. His involvement will make it much easier to explain to our students why they won't be able to spend the day sleeping and sledding. Or, I suppose Sidwell Friends could merge with Punahou, move our classrooms to Hawaii and never worry about the weather again.--Ellis Turner, Associate Head of Sidwell Friends School
Maybe Carter [and UN ambassador Andrew Young] shouldn’t have trusted Mugabe.--Richard Fernandez
The Harvard Business Review editor’s blog contemplates the unthinkable: perhaps college is not working. Nonsense. Our entire economy is based on the production of unreadable and unread papers on gender, race, and the evils of capitalism. We need more, and we need them faster.--pwyll at Carnal Reason
Thursday, January 29, 2009
The best depression-fighting President
With Harding’s tax and spending cuts and relatively non-interventionist economic policy, GNP rebounded to $74.1 billion in 1922. The number of unemployed fell to 2.8 million — a reported 6.7 percent of the labor force — in 1922. So, just a year and a half after Harding became president, the Roaring 20s were underway. The unemployment rate continued to decline, reaching an extraordinary low of 1.8 percent in 1926. Since then, the unemployment rate has been lower only once in wartime (1944), and never in peacetime.
Who pays for the stimulus
What this means that, if your household earns between $200 - 500,000 (in 2005 income), it will be on the hook for roughly $30,000 of the stimulus bill.
And those tax cuts are not going to you, they are going to the households who do not pay taxes. How does that work? Well, a "credit" to a non-taxpayer counts as a "cut" in tax accounting.
David Berstein calls public health "experts" on their awful batting average
Via Prawfsblawgs, I discover that the paper authored by several "progressive" law professors criticizing Cass Sunstein contains the following extraordinary statement, defending the precautionary principle: "It is difficult to think of a single public health or environmental threat that with the benefit of additional research has not proven even more dangerous over time."
Now that's a fun game! Let's see, off the top of my head, here are some things that turned out to be a lot less threatening than many, including at least some "experts," thought:
Mercury in vaccines; Bendectin; Silicone breast implants (and medical grade silicone in general); PCBs; Asbestos in buildings; Flouride in water; Birth control pills; Occasional marijuana use; High fat diets; Exposure to low level nuclear radiation; New carpet fumes; "Toxic waste dumps"/Superfund sites; Moderate overweightedness; Moderate alcohol consumption; Spermicides; Metal fillings (for teeth); Cancer from physical trauma; Masturbation; Predictions in the 1970s of worldwide food shortages; "Overpopulation"; Global Warming (the predictions of the level of man-made warming have decreased dramatically, even among strong advocates of the theory); Miscarriage from video display monitors; Cancer from electromagnetic field radiation; Radon; Dioxin; Pesticides commonly used on fruits and vegetables causing cancer to "eaters";
And much, much more in the comments. Goes to show you the ever widening gap between curing/lifesaving measures, and access to them. And to think beyond our borders, DDT may have saved the lives of 10 million African children who succumbed to malaria.
A better stimulus idea
Under the proposed law, any taxpayer who wrote “Rangel Rule” on their return when paying back taxes would be immune from penalties and interest.
Quotes of the day
Not a single House Republican voted in favor of the stimulus bill. It may well be the third inning of nine -- this is a Robert Gibbs analogy -- but it's Democrats who are crowding the plate--Marc Ambinder
... simply removing "toxic" assets from bank balance sheets will not directly cause banks to increase lending. Lending standards have tightened dramatically, and there is an unavoidable restructuring of risk taking place. Such causes money to come out of the system and lending to contract, with or without this "bad bank" structure. Lower asset bases, higher credit losses, and bloated expense structures will continue to pressure banks' earnings power and capital creation.--Meredith Whitney
Actors who have tried to play Churchill and MacArthur have failed abysmally because each of those men was a great actor playing himself.--William Manchester
What is Nassim Taleb smoking?
[Nassim] Taleb had some fighting words for Wall Street that surprised many in the room. He said, “I was happy when Lehman went bust,” explaining how he had shorted the company and literally danced when he heard the news. (The dinner was off the record, but Mr. Taleb and some of the others said they were so passionate about the issues that they could — and in Mr. Taleb’s case “should” — be quoted.) He went on to say, “I hate traders” and explained that the business of creating and trading derivatives is solely about finding a way to take advantage of clients.How did you put your short on, Nassim, if you loathe traders? And weren't you a big trader a few years ago, before shutting your hedge fund down:
Mr. Taleb's previous fund, Empirica Capital, which used similar tactics, shut down in 2004 after several years of lackluster returns amid a period of low volatility. The strategy may face another test after the current bout of market turmoil.DISCLOSURE: I am a trader.
Wednesday, January 28, 2009
Those New York banker weasels
The favorite activity of New Yorkers who are not in the banking industry is complaining about New Yorkers who are in the banking industry. I certainly joined in when I was a New Yorker. They outbid us for housing, they tipped too much, and in public places the younger ones often had a movie star's sense of entitlement without the easyness on the eyes, much less the ability to be consistently entertaining. Or so we used to whine.
Then there would be a recession, and everyone in New York would realize that all those overpaid weasels were, um, paying our bills. Bloomberg estimates that the cumulative tax loss to the city and state from the 2008 fiasco will be at least $33 billion--mostly in corporate income taxes, but $1.3 billion of that is just taxes on bonus income that evaporated in 2008.
Did Maria Bartiromo just step on a mine?
Possibly:
Turns out she and [John] Thain both pay public relations guru Ken Sunshine to represent them, and he apparently helped set up the exclusive. "It's a huge conflict of interest. It's incredible she didn't disclose this over the air, but she thinks she's above it all," one broadcast insider told Page Six. "And she was really kissing Thain's ass during the interview." Sunshine admitted to us he represents both Bartiromo and Thain, the latter having hired him just recently. "The relationship between John and Maria long precedes our relationship with him," Sunshine insisted. But he had no comment on whether he had a hand in lining up the interview. CNBC didn't get back to us.Link to photo, by Martin Scholler, here.
From the Dark Ages to Renaissance
The problem is that macro time series are nonstationary and have low statistical power. Go back to the table on labor force composition I gave earlier in this post. There is no way to estimate a model in a way that is robust to such dramatic structural changes.
Because the data are not powerful enough to reject any hypothesis against an interesting alternative, the macroeconomic "scientists" divorced themselves from the "engineers," who continued to use macroeconometric models. In my view, neither the scientists nor the engineers accomplished anything. The scientists did mathematical masturbation, with some occasional, isolated empirical work that satisfied journal referees based on whatever fads were taking place at the moment but had no lasting persuasive impact. The engineers provided forecasts and policy simulations that were precise in form and totally unreliable in substance. In any case, the engineers were kept out of economics departments.
This generation of academic macro wankers managed to achieve consensus, primarily by avoiding discussing the fundamental issues of macro--how labor markets fail to clear and how financial markets affect real activity. So we get Olivier Blanchard's smug pronouncement
a largely shared vision both of fluctuations and of methodology has emerged. Not everything is fine. Like all revolutions, this one has come with the destruction of some knowledge, and suffers from extremism, herding, and fashion. But none of this is deadly. The state of macro is good.
Now that we are in a financial crisis, this "shared vision" is turning out to be nothing of the sort. Christina Romer and Larry Summers have gone back to trusting macroeconometricians, treating model multipliers as if they were fact rather than fiction. On the other side, Fama and others seem to have gone back to some pre-Keynesian view that simply ignores the possibility that there can be such a thing as unemployment.Unfortunately, just because mainstream macroeconomists wasted their efforts the past thirty years does not mean that the answer is to rediscover macroeconomics as it stood in 1970. The pre-Dark-Age macro is not some mystical treasure map. It has a lot of theoretical and empirical gaps that make it unsatisfying.
I find myself incorporating strands as disparate as Hayek's information theory and Minsky's risk preference cycles into my thinking. I wish I had more professional company. I agree that macroeconomics has been through a Dark Age. But I think it has a way to go in order to experience a Renaissance.
Better and cheaper drugs for all?
Once admired as an engine of American innovation, drug companies are now treated like Big Tobacco on Capitol Hill. The phantom drug safety crisis conjured by the Vioxx and antidepressant controversies has made the industry a piñata for Democrats like Henry Waxman and Bart Stupak.and
The stated political goal is to reduce the cost of health care so the government can afford to pay for benefits for more people, which inevitably means controlling access to new drugs. Blueprints are being drawn up for Medicare to "negotiate" drug prices by leveraging its quasi-monopolistic power or simply by fixing the prices through reimbursement. The influence of such policies will only be magnified if Democrats create a Medicare-like program open to the under-65 set.
This political ferment can't help but distort the investment decisions of companies like Pfizer, which need to balance projected profits against the cost of clinical development. Biotech medicines hold the promise of significant health benefits but come at a price, reflecting the difficulty of developing them. But if starved of R&D money -- whether through politics or industry gambles that don't pay off -- innovation will wither.
Quotes of the day
It's like watching Jeter morph into A-Rod.--Curly Haired Boyfriend, on Tom Brady
Just don't make God look bad.--Alexandra Pelosi
There are two groups of people who like to be photographed with children: dictators and aid officials.--David Rieff
The communion between reviewer and his public is based upon the presumption of certain possible joys in reading, and all our discriminations should curve toward that end.--John Updike
They had better pass the stimulus bill quickly, before more people read it.--Arnold Kling
I have said many times that while there may be a social purpose in promoting home ownership, it is far from clear that there is a social purpose in promoting mortgage indebtedness. If you're increasing the supply of mortgage credit, you're reducing the supply of credit elsewhere in the economy. It's not clear that we should be aiming for that.--Arnold Kling
One final irony is that the global depression Mr. Obama will spend his administration fighting likely will produce decreases in CO2 output and energy consumption beyond the wildest dreams of the interns who drew up his campaign promises. Mr. Obama will devoutly wish it wasn't so.--WSJ Editorial Board
The irony now is obvious: George W. Bush as a force for emancipation in Muslim lands, and Barack Hussein Obama as a messenger of the old, settled ways. Thus the "parochial" man takes abroad a message that Muslims and Arabs did not have tyranny in their DNA, and the man with Muslim and Kenyan and Indonesian fragments in his very life and identity is signaling an acceptance of the established order.--Fouad Ajami
WSJ look at the stimulus package
... only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren't likely to help the economy immediately. As Peter Orszag, the President's new budget director, told Congress a year ago, "even those [public works] that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."Read the whole thing. My similar take here.
Tuesday, January 27, 2009
John Updike passes away at 76
Make no mistake: if He rose at allfrom Seven Stanzas at Easter by John Updike.
it was as His body;
if the cells’ dissolution did not reverse, the molecules
reknit, the amino acids rekindle,
the Church will fall.
Photo link here.
More evidence that tax cuts are better than stimulus
2009: 29.0
2010: 115.8
2011: 105.5
2012: 53.6
2013: 26.5
2014: 13.0
2015: 6.9
2016: 3.0
2017: 1.6
2018: 0.9
2019:0.4
Total: $356.0 billion
So only 8 percent of this spending occurs in budget year 2009, and only 41 percent occurs in first two years.
And Thomas Sowell says:
Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.
Quotes of the day
We fiercely debate domestic spending bills that waste affluent taxpayers’ money with a few millions on a bridge to nowhere, so why should we be NICE when the head of the world’s premier aid agency outlines virtually zero accountability for helping the world’s poorest people?--William Easterly
But the Democrats are still insufficiently ashamed of the work they have done for so many years before that and, in the case of many, even after, on behalf of the unions and the ed schools and against the kids. I gather that the spectacularly gifted and dedicated young teachers that Whitman and Mathews describe are unaware of this or untroubled by it. But perhaps one should just be satisfied that so much brilliant and pioneering work has been done—even if those who have worked so hard to feather their own nests and, effectively, have prevented inner city kids from learning don't get their due.--Michael Barone
Like the Bible or the Constitution, a CBO report can apparently mean lots of things to lots of people.--Conor Clarke
The sad truth is that we economists don't know very much about what drives the animal spirits of economic participants. Until we figure it out, it is best to be suspicious of any policy whose benefits are supposed to work through the amorphous channel of "confidence."--Greg Mankiw
U.S. farm programs cost taxpayers billions each year, significantly raise the price of commodities such as sugar (which is protected from competition from other producers in other countries), undermine world trade agreements, and contribute to the suffering of poor farmers around the world. It’s bad public policy, especially in these troubled economic times.--Reason's Hit and Run
No one has pleaded as earnestly for Congress to pass a Colombia free-trade pact as Caterpillar. Now, with earnings down and 20,000 American jobs to be lost, it's obvious why. Trade would have cushioned this blow.--IBD Editorial Board
Had [Timothy Geithner] not been nominated for Treasury Secretary, it’s doubtful that he would have ever paid these taxes.--Senator Robert Byrd
Bush wanted transcripts online because he expected the press to filter what he said. Obama doesn’t want transcripts online . . . because he expects the press to filter what he says.--Glenn Reynolds
[Kurt] Warner's teams have reached the Super Bowl every time he started all 16 regular-season games. That tells you Warner can be a great quarterback when he's healthy enough to play a full season.--Mike Sando
Nancy Pelosi says that people are a liability
Who's going to pay for your programs, Ms. Speaker, if not people?She added: "The states are in terrible fiscal budget crises now, and part of what we do for children's health, education and some of those elements are to help states meet their financial needs. One of those -- one of the initiatives you mentioned, the contraception -- will reduce costs to the states and to the federal government."
The notion that a larger population will produce a lower standard of living can be traced to the 18th-century economist Thomas Malthus. But during Malthus's own lifetime, his prediction was proved false, as he later acknowledged. Population and living standards rose simultaneously, and have continued to do so.
Ms. Pelosi's remarks ignore the importance of human capital, which is the ultimate resource. Fewer babies would move the U.S. in the demographic direction of Europe and Asia. On the Continent, birth rates already are effectively zero, and economists are predicting labor shortages in the years ahead. In Japan, where the population is aging very fast, workers are now encouraged to go home early to procreate. Japan is projected to lose 21% of its population by 2050.
Monday, January 26, 2009
Never Say Yesterday Never Dies
Photo links here and here.
Two good Americans talk on CNBC this morning
It matters little if you are right about a topic
UPDATE: Via Eddy Elfenbein:
andWell, Dr. Doom has predicting disaster for several years now, and what we're seeing now isn't quite what Schiff predicted. Jonas Elmerraji of the Rhino Stock Report writes:
While Schiff has proved himself as an economist, his ability to parlay those predictions into profits for his clients was questionable for 2008. For the last few years, he’s been betting big on overseas investments and precious metals – two areas that got hit as hard or harder than the S&P last year.
Mish breaks it down in list form:
12 Ways Schiff Was Wrong in 2008* Wrong about hyperinflation
* Wrong about the dollar
* Wrong about commodities except for gold
* Wrong about foreign currencies except for the Yen
* Wrong about foreign equities
* Wrong in timing
* Wrong in risk management
* Wrong in buy and hold thesis
* Wrong on decoupling
* Wrong on China
* Wrong on US treasuries
* Wrong on interest rates, both foreign and domestic
Quotes of the day
... as a research-driven company grows larger, everything scales except research productivity.--Derek Lowe
Far from indicating a country on the ropes, the foreigners seeking both legal and illegal entry into the U.S. in the last decade are a market signal pointing to a nation doing far better than elite thinking around the world has suggested. Simply put, countries that attract the washed and unwashed the world over are pictures of success; the countries that lose their limited human capital are failures. Cuba, North Korea and Zimbabwe do not have immigration "problems."--John Tamny
[Organized public works] are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.--John Maynard Keynes
Larry Summers famously said that in order to be effective, fiscal stimulus must be "timely, targeted, and temporary." The Democrats' plan is none of those things. Instead, it is an enormous Galbraithian transfer from the private sector to the public sector. While I can understand their enthusiasm for this transfer, I cannot share in their glee.--Arnold Kling
However, this demand [for government debt] can be satisfied in far greater quantity, much more quickly, much more reversibly, and without the danger of a fiscal collapse and inflation down the road, if the Fed and Treasury were simply to expand their operations of issuing treasury debt and money in exchange for high-quality private debt and especially new securitized debt. --John Cochrane
Nobody cared that most of those CIA excesses were done under orders from American presidents, that it was really the sainted John F. Kennedy who spilled the blood that splashed on Dad. It didn't fit into the sixties script: The hard old men were the bad guys, and, by repudiating them, America would somehow become innocent again.--John H. RichardsonThe Golden Globes were stained for years by awarding Pia Zadora one of its gleaming statuettes. Now, the Oscars risk a similar stain if they give their highest honors to two deeply undeserving actors (Brad Pitt and Angelina Jolie), at least for their 2008 work.--Christian Toto
Gary Becker and Richard Posner are not very worried by the Employee Free Choice Act
I doubt that the Act would have a great effect on unionization. Unions have been in steady decline in the private sector for decades and now account for only about 7 percent of nonfarm workers in that sector (farm workers are not covered by the National Labor Relations Act). Elaborate government regulation of workplace safety and health has reduced the value of unions to workers, as has greater job mobility and the increasingly technical and individualized character of many jobs, which makes it difficult for workers to agree on the terms and conditions of employment that they should be seeking. International competition has reduced the power of unions to extract supracompetitive wages, benefits, or work rules, as has the deregulation movement, which has made the formerly regulated industries, such as transportation, more competitive. Unions have little power in a competitive industry, because a supracompetitive wage, by increasing the employer's cost, will shift his output to competitors. We are seeing this happen in the automobile industry, where union intransigence has been a factor in the decline of the Detroit automakers, now on federal life support.Becker writes:
From the 1930s to the 1960s, unions enjoyed considerable popularity in public opinion. I remember being surprised when a graduate student to hear the arguments by Milton Friedman and some of my other teachers that unions were often monopolies that benefited their members at the expense mainly of other workers. As various arguments hostile to unions became more common during the past half-century, public opinion shifted against unions. Unions are considered too selfish, sometimes corrupt, as with the well-publicized troubles of the teamsters union, and they are no longer believed considered necessary to protect employee interests.
Given this radical shift in public opinion, and the fundamental economic and social forces that contributed to the decline of unions, it is unlikely that the new Congress and new President would push for radical pro-union legislation, despite the impressive victory in the past election of the Democratic Party, and the strong financial and other support the larger unions gave to this party.
Friday, January 23, 2009
Why is the Obama administration less diplomatic towards China than the Bush Administration?
Greg Mankiw calls Joe Biden to account
As a logical matter, I can think of only four possibilities:I have no idea which of these hypotheses is correct. I suspect it is either the first or last. But any one of them should make us uneasy about how well the new administration's economic decision making apparatus is working.
- Biden knew what he was saying was false.
- Biden was saying what he believed to be true and somehow got this incorrect idea in his head without talking about the issue with the very talented team of economists working for the new administration.
- Biden talked to his economic advisers about the issue, and they purposefully misled him into thinking that there was a consensus among economists, even though there isn't.
- Biden's advisers were themselves mistaken. They expected an overwhelming consensus of support for their fiscal plans and were surprised at the number of prominent economists on the opposite side the issue.
A case against stimulus
Some of his views:
- Government is inefficient, and the haste in implementing stimulus will make it less efficient
- Attempting to make stimulus investment will also make government less efficient
- Positive Keynesian multipliers assume that only "idle" resources are exploited, which is not the case in real life
- With government borrowing, taxpayers will save instead of spend in order to pay future taxes
Thanks to David Henderson for the pointer, who also summarizes a point by John Cochran, that given that the problem is a lack of investment, having the government spend money that it borrows must crowd out some investment.
UPDATE: As long as we are on the topic of less efficient government, Megan continues her series on deadweight information technology.
Quotes of the day
My work always tried to unite the True with the Beautiful, but when I had to choose one over the other, I usually chose the Beautiful.--Hermann Weyl
Investors, workers and employers need to have a sense of where tax, spending and regulatory policy are headed, or they will postpone decisions and further weaken the economy.--Michael Boskin
Beware. The mere ability to write, from the sidelines, "it should be done like X" doesn't eliminate the lessons of public choice economics.--Tyler Cowen
The anti-stimulus economist is attacked by pro-stimulus economists. But the pro-stimulus proponents are focused on attack. They are not putting up comparable empirical evidence of their own for the efficacy of fiscal policy and there is a reason for that, namely that the evidence isn't really there.--Tyler Cowen
All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves.--Warren Buffet
I confess to a deep curiosity about how closely the watchdogs who bashed Bush on principle will actually hold Obama to account for his promises.--Megan McArdle
Most of the "green" stuff is verging on a gigantic scam. Carbon trading, with its huge government subsidies, is just what finance and industry wanted. It's not going to do a damn thing about climate change, but it'll make a lot of money for a lot of people and postpone the moment of reckoning. I am not against renewable energy, but to spoil all the decent countryside in the UK with wind farms is driving me mad. It's absolutely unnecessary, and it takes 2500 square kilometres to produce a gigawatt - that's an awful lot of countryside.--James Lovelace, who pioneered the ozone-layer work that led to the global chloroflourocarbons ban
Of course it's a violation of international law, that's why it's a covert action. The guy is a terrorist. Go grab his ass.--Al Gore, on extraordinary rendition, or having other countries torture terrorists for information
Thursday, January 22, 2009
Good thing for Barney Frank
That others are giving him lots of cover for this:
Troubled OneUnited Bank in Boston didn't look much like a candidate for aid from the Treasury Department's bank bailout fund last fall.
The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.
Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.
Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.
Paying one's fair share is not just a problem for Tim Geithner
In May of last year, the Gallup polling organization asked 1,200 American adults about their giving patterns. People who called themselves "conservative" or "very conservative" made up 42% of the population surveyed, but gave 56% of the total charitable donations. In contrast, "liberal" or "very liberal" respondents were 29% of those polled but gave just 7% of donations.
These disparities were not due to differences in income. People who said they were "very conservative" gave 4.5% of their income to charity, on average; "conservatives" gave 3.6%; "moderates" gave 3%; "liberals" gave 1.5%; and "very liberal" folks gave 1.2%.
A common explanation for this pattern is that conservatives are more religious than liberals, and are simply giving to their churches. My own research in the past showed that religion was a major reason conservatives donated so much, and that secular conservatives gave even less than secular liberals.
It appears this is no longer the case, however: The 2008 data tell us that secular conservatives are now outperforming their secular liberal counterparts. Compare two people who attend religious services less than once per year (or never) and who are also identical in terms of income, education, sex, age and family status -- but one is on the political right while the other is on the left. The secular liberal will give, on average, $1,100 less to charity per year than the secular conservative. The conservative charity edge cannot be explained away by gifts to churches.
Perhaps you suspect that the vast political contributions given to the Obama campaign -- $742 million, according to the Center for Responsive Politics, versus $367 million for the McCain campaign -- were crowding out charitable giving by the left. But political donations, impressive as they were this year by historical standards, were still miniscule compared to the approximately $300 billion Americans gave charitably in 2008. Adding political and charitable gifts together would not change the overall giving patterns.
But here's where the charity gap really starts to make a difference for the recession of 2009: Conservatives don't just give more; they also decrease their giving less than liberals do in response to lousy economic conditions.
Quotes of the day
For four hundred years since Bacon and Descartes led the way, science has raced ahead by following both paths simultaneously. Neither Baconian empiricism nor Cartesian dogmatism has the power to elucidate Nature's secrets by itself, but both together have been amazingly successful.--Freeman Dyson
Desperate to preserve the value of asset prices inflated by this huge liquidity bubble, policy makers have avoided the painful solution. The liquidity injections, the bailout programs, and the fiscal-stimulus packages try to sustain asset prices, when these prices need to fall to market levels so they can be cleared. The policy makers have just prolonged the crisis.--David Roche
The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.--Robert Barro
On wiretaps, interrogations and now Gitmo, the new Administration is discovering that the left-wing attack lines against Bush policies are mostly simplistic illusions. Now those critics are Mr. Obama's problem.--WSJ Editorial Board
We really shouldn't be surprised if Congress approves Geithner's appointment, given ethical standards of Congress.--Pillard, in comment to CNBC
[Timothy Geithner] acknowledged signing an IMF statement at the time that he understood he had been reimbursed to pay those self-employment taxes, adding that he should have read the statement more carefully. Millions of Americans have said the same thing about the tax code during an IRS audit, earning less forgiveness.--WSJ Editorial Board
Would you answer my question rather than dancing around it -- please?--Senator Jon Kyl, in questioning Timothy Geithner about still not paying back all of his back taxes
I actually saw Bill [Belichick] fly once, which was just incredible to see,” Light deadpanned yesterday. “He literally hovered, then flew almost Superman-like across to the other side of the practice facility. You can write that down. I saw it happen.--Matt Light
Bush policy outcomes
Iraq is now on the mend, the war is on the path to victory, al Qaeda has been dealt a humiliating defeat, and a democracy in the heart of the Arab world is emerging. The success of Mr. Bush's surge made it possible for President Obama to warn terrorists on Tuesday "you cannot outlast us."Perhaps after Bush Derangement Syndrome has faded in the wake of President Obama, Rove's words will be accepted more generally. I've got several beefs with Bush (off the top of my head: ethanol policy, steel industry protectionism, prescription drug benefit, deadweight of Homeland Security policies, Tom Ridge, Paul O'Neil, Harvey Pitt ...) but I'm still glad he was president ahead of Kerry and Gore.Mr. Bush was right to establish a doctrine that holds those who harbor, train and support terrorists as responsible as the terrorists themselves. He was right to take the war on terror abroad instead of waiting until dangers fully materialize here at home. He was right to strengthen the military and intelligence and to create the new tools to monitor the communications of terrorists, freeze their assets, foil their plots, and kill and capture their operators.
These tough decisions -- which became unpopular in certain quarters only when memories of 9/11 began to fade -- kept America safe for seven years and made it possible for Mr. Obama to tell the terrorists on Tuesday "we will defeat you."
Mr. Bush was right to be a unilateralist when it came to combating AIDS in Africa. While world leaders dithered, his President's Emergency Plan for AIDS Relief initiative brought lifesaving antiretroviral drugs to millions of Africans.
At home, Mr. Bush cut income taxes for every American who pays taxes. He also cut taxes on capital, investment and savings. The result was 52 months of growth and the strongest economy of any developed country.Mr. Bush was right to match tax cuts with spending restraint. This is a source of dispute, especially among conservatives, but the record is there to see. Bill Clinton's last budget increased domestic nonsecurity discretionary spending by 16%. Mr. Bush cut that to 6.2% growth in his first budget, 5.5% in his second, 4.3% in his third, 2.2% in his fourth, and then below inflation, on average, since. That isn't the sum total of the fiscal record, of course -- but it's a key part of it.
He was right to have modernized Medicare with prescription drug benefits provided through competition, not delivered by government. The program is costing 40% less than projected because market forces dominate and people -- not government -- are making the decisions.
Mr. Bush was right to pass No Child Left Behind (NCLB), requiring states to set up tough accountability systems that measure every child's progress at school. As a result, reading and math scores have risen more in the last five years since NCLB than in the prior 28 years.
He was right to stand for a culture of life. And he was right to appoint conservative judges who strictly interpret the Constitution.
And Mr. Bush, a man of core decency and integrity, was right not to reply in kind when Democratic leaders called him a liar and a loser. The price of trying to change the tone in Washington was to be often pummeled by lesser men.
Few presidents had as many challenges arise during their eight years, had as many tough calls to make in such a partisan-charged environment, or had to act in the face of such hostile media and elite opinion.
A good step for Caroline
And good leap for democracy:
I informed Gov. Paterson today that for personal reasons I am withdrawing my name from consideration for the United States Senate.--Caroline KennedyWhen under extenuating circumstances, it makes sense to me for a person not elected as governor to appoint a person never elected as senator. And indeed, that is what might be happening in the state in which I am domiciled.
But in the spirit of self-government, it would be more seemly for Governor Paterson to appoint someone who has been elected to public office, as opposed to someone with cultural cache.
UPDATE: NY Times reporting Caroline had some housekeeper and tax skeletons in her closet.
Wednesday, January 21, 2009
Real Transparency
Mr. Obama should press for a complete, itemized—and publicly available—list of how much money taxpayers are already on the hook for to bailout failing entities. There are so many different bailout-related programs—TARP (Troubled Asset Relief Program), Federal Reserve programs, auto bailouts, and investment guarantees—that we don't have a firm dollar figure. No one knows exactly what to count. Different sources have given different estimates that vary by as much as $1 trillion or so. The New York Times, in December, calculated bailout spending to be $7.8 trillion. CNBC thinks it is about $7.3 trillion. If you count all the taxpayer money spent in 2008 on bailouts, including the $150 billion stimulus in the spring of 2008 and the early bank rescues, such as IndyMac, the figure rises to over $8.4 trillion.UPDATE: Here is $192 billion worth of TARP injections. Of course, that's less than 10% of what the government has financed.
During the campaign, Mr. Obama talked about "putting the government online" and he has already announced a website for stimulus spending—www.Recovery.gov.
He writes good for an actor
... bringing Starbuck to life was over the dead imaginations of a lot of Network Executives. Every character trait I struggled to give him was met with vigorous resistance. A charming womanizer? The “Suits” (Network Executives) hated it. A cigar (fumerello) smoker? The Suits hated it. A reluctant hero who found humor in the bleakest of situations? The Suits hated it. All this negative feedback convinced me I was on the right track.
...
There was a time, I know I was there, when men were men, women were women and sometimes a cigar was just a good smoke. But 40 years of feminism have taken their toll. The war against masculinity has been won. Everything has turned into its opposite, so that what was once flirting and smoking is now sexual harassment and criminal. And everyone is more lonely and miserable as a result.
Avoid touching any objects while shopping whenever possible
Federal healthcare legislation set at 300% of poverty line
The [State Children's Health Insurance] bill became a liberal Pequot after President Bush repeatedly vetoed it in 2007 (while supporting a modest expansion). The GOP has no hope of stopping it now, so Schip will more than double in size with $73.3 billion in new spending over the next decade -- not counting a budget gimmick that hides the true cost. The program is supposed to help children from working-poor families who earn too much to qualify for Medicaid, but since it was created in 1997 Democrats have used it as a ratchet to grow the federal taxpayer share of health-care coverage.
With the new bill, Schip will be open to everyone up to 300% of the federal poverty level, or $63,081 for a family of four. In other words, a program supposedly targeted at low-income families has an eligibility ceiling higher than the U.S. median household income, which according to the Census Bureau is $50,233. Even the 300% figure isn't really a ceiling, given that states can get a government waiver to go even higher. Tom Daschle's folks at Health and Human Services will barely read the state paperwork before rubberstamping these expansions.
This subsidy (like most others) will create even more inflation and will also reduce choice. So much for helping the poor and the middle class. We'd be better off if Singapore and Walmart did more to provide healthcare, and the federal government less.
Quotes of the day
In diagnosing the cause of our economic distress, [President Obama] scored not only the easy mark of "greed" but also stressed "our collective failure to make hard choices and prepare the nation for a new age." He might have been referring to home buyers who took out "liar loans," Senators who got sweetheart mortgages, and executives who walked away with bonuses for profits that proved illusory.--WSJ Editorial Board
In this present crisis, government is not the solution to our problem; government is the problem.--Ronald Reagan, in 1981
To require such fealty to power in the name of patriotism was once repugnant to the left. Now, with the right guy in charge, apparently it can once again be embraced. ... Change, indeed.--David Hirsanyi
Everyone's hailing Obama's decision to suspend all Guantanamo trials for 120 days. But I thought the problem with Guantanamo was the people being held without trial.--Megan McArdle
Why have [the taxpayers been] been billed more than $45 billion to rescue Citigroup from failure when, as president of the Federal Reserve Bank of New York, you [Timothy Geithner] were its primary supervisor?--Anna Jacobson Schwartz
The income tax code favors those with employer-provided health insurance over those who buy their own health insurance or pay medical bills out of pocket. It also favors homeowners over renters, through the mortgage interest deduction. Is this tax treatment efficient or fair? Might you favor a more level playing field?--Greg Mankiw
Some people might manipulate their genes to become smarter. I think that's a mistake, especially after you become a winged monkey. The smarter you are, the more easily bored you will be. I want to be happy all the time so I'd trim 40% off my IQ and get some new hobbies such as collecting rocks that are roundish, or running for Congress.--Scott Adams
Tuesday, January 20, 2009
The Intrade 2009 Depression Contract
[Intrade defines] "depression" thus:Intrade has listed a new contract to address the error: 2009.US.GDP.-10.0%For expiry purposes a depression is defined as a cumulative decline in GDP of more than 10.0% over four consecutive quarters. This is calculated by adding together the published (annualized) GDP figures (as detailed below). If these annualised figures add up to more than -10.0% over four consecutive quarters then the contract will expire at 100.The problem is that if you add four quarterly change-figures that are already each annualized, you will get a far larger cumulative result than the actual change over a four-quarter period. Suppose there are four successive quarters each showing an annualized 2.5% decline in GPD. Intrade will add those together and get 10%. But over the year, the annual decline in GDP will acually be 2.5%.Expiry will be based on official quarterly GDP figures reported by the U.S. Department of Commerce (Bureau of Economic Analysis, Table 1.1.1, "Percent Change From Preceding Period in Real Gross Domestic Product") as reported by the BEA.
UPDATE: Here is Intrade's announcement.
Luigi Zingales offers Geithner/Obama some great advice
To begin, you need an overall strategy. Even a mediocre strategy is better than an ad hoc approach that confuses markets and fuels the perception of playing favorites. Legendary portfolio manager David Swensen (who in 23 years transformed the $1 billion of Yale endowment into $23 billion) in reference to the government intervention in this crisis commented “the government has done it with an extreme degree of inconsistency. You almost have to be trying to do things in an incoherent and inconsistent way to end up with the huge range of ways they have come up with to address these problems.”1
...One solution [to restart lending] is the one I advanced last Fall5. It requires passing a new piece of legislation introducing a new form of bankruptcy for banks, where derivative contracts are kept in place and the long term debt is swapped into equity. As Pietro Veronesi and I have shown in a recent article, such conversion will fully recapitalize the banking sector and bring down the level of risk of debt (as measured by the credit default swaps level) to pre-crisis level.6
When I proposed it in September they told me that there was not enough time.7 When I re-proposed it in October they told me that there was no chance to reconvene Congress after the election. But time has passed and the Congress has been reconvened after the election, but there has been no discussion of this alternative that can save hundreds of billions of dollars to taxpayers.
...
Mr Geithner, incumbent bankers and their lobbyists will always make you believe there is no alternative to the plan that benefits them the most. You cannot fall for this old trick.
The alternatives I outlined above are not only possible, but also fair. They penalize who invested poorly and help provide loans to businesses in need. On top of this, they achieve these goals at zero cost to taxpayers (no small feat in a time of ballooning deficits). Yes, we can Mr Geithner, … if you lead us there.
2009 Inauguration Day transcripts
Forty-four Americans have now taken the presidential oath. The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because We the People have remained faithful to the ideals of our forbearers, and true to our founding documents.Rick Warren's prayer:
...
We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness.
Help us, O God, to remember that we are Americans--united not by race or religion or blood, but to our commitment to freedom and justice for all.
A stimulus by any other name
It may seem odd that framing the same policy in different ways will change the way people respond to that policy. But it’s well established that the way choices are framed often has a huge impact on the decisions people make. In a recent experiment, Valrie Chambers and Marilyn Spencer found that, just as Obama’s proposal suggests, people were more likely to spend a tax refund when it was handed out in monthly installments than in one lump payment.
There’s even some history to draw on in this regard. In 1992, the first President Bush temporarily reduced people’s withholding payments. He didn’t cut taxes—people still owed the same amount at the end of the year—but the move made people’s take-home pay look better than it was. In textbook economics, this should have had no impact on spending. Yet one survey suggests that almost half of the people planned to spend most of their rebate. If the effect was that large with a tax cut that didn’t even exist, it should be significantly bigger when the government is handing out real money. On its own, Obama’s rebate plan isn’t going to resurrect the economy. But it’s a policy that works with people as they are, rather than as we imagine they should be. And that’s a stimulus in itself.
The Obama administration is reducing access to new healthcare solutions
BCWUW4: Be careful what you wish for.In Britain, a government agency evaluates new medical products for their "cost effectiveness" before citizens can get access to them. The agency has concluded that $45,000 is the most worth paying for products that extend a person's life by one "quality-adjusted" year. (By their calculus, a year combating cancer is worth less than a year in perfect health.)
Here in the U.S., President-elect Barack Obama and House Democrats embrace the creation of a similar "comparative effectiveness" entity that will do research on drugs and medical devices. They claim that they don't want this to morph into a British-style agency that restricts access to medical products based on narrow cost criteria, but provisions tucked into the fiscal stimulus bill betray their real intentions.
The centerpiece of their plan is $1.1 billion of the $825 billion stimulus package for studies to compare different drugs and devices to "save money and lives." Report language accompanying the House stimulus bill says that "more expensive" medical products "will no longer be prescribed." The House bill also suggests that the new research should be used to create "guidelines" to direct doctors' treatment of difficult, high-cost medical problems.
Quotes of the day
We may be able to get a Negro President in less than 40 years.--Martin Luther King, Jr., in 1964
Mr. Obama will be the country's first African-American president, but he is actually far more than that. He will be the first president whose ethnic identity is not linked to the extreme northwest corner of Europe. All 42 men who have been president of the United States up to now were either British, Irish or Dutch in ancestry -- except Dwight Eisenhower ...--John Steele Gordon
"Let it be told to the future world...that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet [it]."--George Washington at Valley Forge
I'm seeing this inauguration through my mother's 85-year-old eyes. She is here with me in D.C. and will be at the inauguration. Her husband, my beloved departed father, was a Tuskegee Airman. He was part of a segregated military. My mom will be filled with emotion when she witnesses the swearing in of an African-American commander-in-chief. Yes we can.--Robin Roberts
... the amount of stimulus from the spending package would be far less than estimated in a study by the incoming Chairperson of the Council of Economic Advisers ("The Job Impact of the American Recovery and Reinvestment Plan", by Christina Romer and Jared Bernstein, January 9, 2009). The activities stimulated by the package to a large extent would draw labor and capital away from other productive activities. In addition, the government programs were unlikely to be as well planned as the displaced private uses of these resources.--Gary Becker
... there are those who will never forgive Mr. Bush for not losing a war they had all declared unwinnable.--William McGurn
[Eric] Holder now concedes that Presidents have inherent powers that even a statute can't abridge, notwithstanding his campaign speeches. That makes us feel better about a General Holder on national security. But his concession is further evidence that the liberal accusations about "breaking the law" and "illegal wiretaps" of the last several years were mostly about naked partisanship. Mr. Holder's objection turns out to be merely the tactical political one that the Bush Administration would have been better off negotiating with Congress for wiretap approval, not that it was breaking the law. Now he tells us.--WSJ Editorial Board
... from passages in Genesis, it is clear that the colour of domestic animals was at that early period attended to.--Charles Darwin
Friday, January 16, 2009
That's what happens when you only use half of your brain
No wonder my wife remembers where everything in the house is.
More evidence that incomes and lifestyles are wealthier than ever
The current stimulus proposal
It looks like 40% of it is good: tax cuts put give households a little of their hard-earned money back to spend in the best way for each family, upgrading the power grid will increase productivity and reduce potentially fatal blackouts, and increasing broadband internet will increase information access (assuming no offsetting erosions in First Amendment rights).
That means the remaining half a trillion is a double horror: not only are we wasting money we don't have today, we are reducing the ability to fund superior projects in the future.
The best way to increase equality
The only exceptions are where government subsidies distort things, like in education and healthcare services, which are currently hyperinflationary.
Quotes of the day
Character played by Salma Hayek: I have another patient on my off days. He's a sweet old man with advanced dementia, totally disconnected from reality.
Jack: That reminds me. I owe Lou Dobbs a call.--30 Rock
What we have done is kicked this [entitlements reform] can down the road. We are now at the end of the road and are not in a position to kick it any further," he said. "We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's.--Barack Obama
Mostly, Democrats took their wish lists, called them "stimulus", and look set to inflict them on the American people in badly done drag. ... ow, what does that remind me off? Rhymes with Whoosh Max Butts, I think . . . --Megan McArdle
I will not yield; I will not rest; I will not relent in waging this struggle for freedom and security for the American people.--George W. Bush
Thursday, January 15, 2009
US Airways Airbus 320 is down in the Hudson River
UPDATE: CNBC reports that the pilot reported hitting a flock of geese.
If no one is killed or seriously hurt from this incident, it will be an amazing testament to the capabilities of the pilot, crew, air traffic control, Airbus technology, and US Air maintenance and operations.
UPDATE: FAA reporting that everyone is safely off the plane.
UPDATE: Photo from NY Post:
UPDATE: My colleague emailed this close-in photo of the rescue process (taken by Janis Krums):
Arnold's quick reference to players in the financial sector
| Actor | The Promise | The Reality |
|---|---|---|
| Financial Executives | Brilliant Risk Management | Catastrophic Losses |
| Eliot Spitzer | Mr. Clean, Financial Reformer | Celebrity Prosecutions, Real Abuses Untouched, and Not So Clean |
| CONGRESS: Sarbanes-Oxley | Financial Responsibility | Large Costs, No Apparent Benefits |
| Basel Capital Standards | International Coordination, Sound Banks | Worldwide Banking Collapse |
| Fannie, Freddie | Stable Mortgage Credit | Fed the Boom, Stuck Taxpayers with the Bust |
| TARP | Unclog the Financial System | Zombie Banks |
| Big Fiscal Stimulus | Put the Economy on a Better Path | Wait and See |
Quote of the day
JP Morgan would have been better off financially just simply axing its M&A department altogether.--Felix Salmon
How refreshingly frank. [Bob] Herbert doesn't hide the fact that his ethics are those of a bank robber.--Don Boudreaux
The 2008 Global Warming Contract has expired; 2009 contract is listed
The 0.41-0.50 contract, trading on the Global Warming Exchange, expires in the money. Recent average temperatures peaked at 0.62 Celsius above in 2005, and was 0.57 above in 2007. Nice long-term temperature graph here.
I'll announce the 2009 contract shortly.
UPDATE: The 2009 contract is up. Click here, or in the Inkling Markets box on the upper right of the page.