Thursday, December 31, 2009

Last post for the year

Source here.

Quotes of the day

I don’t know the right answer. I don’t even know that it was wrong to do what Jim Caldwell and the Colts did. I can definitely see the other side. I only know that when I saw Peyton Manning stewing on the sideline while the Colts’ undefeated season flushed away, that it FELT wrong. Because, I guess, at the end of the day, if you’re not trying to be perfect … what are you trying to be?--Joe Posnanski
And some choice quotes from Tedy Bruschi, including:
I am going to say something that a lot of people are thinking but aren’t saying: At least the ’07 Patriots had the guts to go for it.

If [playoff bubble teams who need help] didn't want to have to count on us to win games, they shouldn't have lost games. I think we were in the same position last year, where we needed a team to lose, and that was no one's fault but our own. Whenever you are counting on other teams to win for you, you are in a bad situation.--Logan Mankins

The prevailing sentiment within the sport for now is that the owners and players are likely to go through a season without a salary cap in 2010, then will try to negotiate a deal before the 2011 season could be threatened by a work stoppage. --Mark Maske

Tuesday, December 29, 2009

Constitution of the day

H.L. Mencken's, from 1937. I wish it weren't so true.

Via Don Boudreaux.

Quotes of the day

If the U.S. were a stock, it would be trading at historic lows.--Joel Kotkin

I didn’t see this one coming: that the nicest responses I have ever gotten to criticisms made on this blog came from military officers (both this time and on one previous occasion). I didn’t know that a command-and-control ARMY would prove about 1 trillion times more responsive than the civilians at USAID. I didn’t know that a Lieutenant General would handle criticism better than a Starbucks PR executivewho flamed out in response to another blog post (what DO they teach in PR school?).--William Easterly

I see most progress as being asymptotic, e.g., there is a period of accelerated development and rapid growth, beyond which gains are much harder and more costly to achieve. The goal is to find businesses at the early part of the rapid growth phase, but where they are close enough to rapid growth that they don't require decades of funding to get there. For instance, if you had invested in machine learning in the 1960s (or natural language processing in the 1980s) back when it held so much promise, you'd have gone bust many times over waiting for commercial success. Does it mean that machine learning and NLP are unattractive fields? No. But if you were 20-40 years early then I'm sure it seemed that way. My goal as an investor is to avoid such delayed gratification.--Roger Ehrenberg

How much can one car crash cost? If you are Tiger Woods, as much as $12 billion. That is the amount Tiger’s corporate sponsors lost in stock value since he crashed his sport-utility vehicle the day before Thanksgiving, according to a study from two economics professors.--Stephen Grocer

This is silly stuff, of course: not only are the error bars larger than the estimated losses, but a huge proportion of those multi-billions comes from the decline of the share price of enormous companies like P&G, which had just one exposure to Tiger Woods through its Gillette subsidiary. Drawing a causal relationship between the Tiger Woods scandal and fluctuations in P&G’s share price is simply impossible.--Felix Salmon

The trade in oil that would surprise most people isn’t a rise to $100 from $75, its a drop to $50.--Barry Ritholtz

It’s just that if you’re making a bet and Goldman is your bookmaker, don’t be surprised if you end up losing.--Felix Salmon

New York Senator Chuck Schumer, with information fed to him by the head blogger at Zero Hedge, generated enough noise to move the SEC to propose a rule change. Even the mainstream media got in on the act. The New York Times and The Wall Street Journal both penned lengthy articles on the topic. ... Algo programs buy almost every new low because they bet that short-term shorts will get trapped and have to cover higher.--Mike Bellafiore

Both sports betting markets and financial markets are efficient ENOUGH that you have to do your own work - and LOTS of it - if you expect to generate alpha. Some people will deride me for making the analogy of markets to a casino or bookmaking operation - but I'm reasonably certain that most traders (myself, and everyone I know at least) do expected value calculation on their trades just like you'd do in the casino or in the sports book. It's not "Kid Dynamite is a naive immature gambler" - it's the realization that in both financial markets and in gambling markets, it's not a crime to have more information than the guy on the other side of the trade/bet."--Kid Dynamite

Joke of the day

Rene Descartes walks into a bar. Bartender says, “You gonna have a drink?” Descartes replies, “I don’t think I am,” then disappears.

Via Abraham Piper

But becoming a Marine?

That wasn't part of the equation for a kid enrolled in the Wharton School of Business at Penn. Those kids go to Wall Street, which is where Nick figured he'd be headed. That all changed, though, when lawyer Alan Dershowitz, whom Nick had met when Dershowitz spoke on campus, helped to arrange an internship for Nick at a Washington think tank dealing with Middle Eastern issues.

There Nick met a man who would have a profound effect on his future: Andrew Exum, a Penn graduate who as a captain in the U.S. Army Rangers saw duty in Afghanistan and Iraq, became a scholar in Middle Eastern studies, and would go on to serve as one of the experts advising Gen. Stanley McChrystal on his Afghanistan policy.

Monday, December 28, 2009

Quotes of the day

If we would know the power of truth we must emphasize it. Creedal truth is coal lying inert in the depths of the earth waiting release. Dig it out, shovel it into the combustion chamber of some huge engine, and the mighty energy that lay asleep for centuries will create light and heat and cause the machinery of a great factory to surge into productive action. The theory of coal never turned a wheel nor warmed a hearth. Power must be released to be made effective.--A.W. Tozer

But what’s made the task [of reforming healthcare] even more difficult is that American politicians—as well as American voters—have a confused, and often contradictory, set of beliefs about how health insurance should work. ... measuring risk, and setting prices accordingly, is the raison d’être of a health-insurance company. The way individual insurance works now, risk and price are linked. ... Congress is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them.--James Surowiecki

Thursday, December 24, 2009

Capricious prediction of the day

The Public Option in healthcare is going to look like the public option in mortgages. That's right, like Fannie Mae and Freddie Mac.

Wednesday, December 23, 2009

Quotes of the day

Sadly, much of the history written in the past 14 months had redounded to the salvation of parties who will be tempted to make the same mistake again.--Holman Jenkins

I have seen the motto, "In essentials unity; in nonessentials charity," and I have looked for its incarnation in men and churches without finding it, one reason being that Christians cannot agree on what is and what is not essential. Each one believes that his fragment of truth is essential and his neighbor’s unessential, and that brings us right back where we started. Unity among Christians will not, in my opinion, be achieved short of the Second Advent. There are too many factors working against it. But a greater degree of unity might be realized if we all approached the truth with deeper humility. No one knows everything, not saint nor scholar nor reformer nor theologian. Even Solomon in all his glory must have overlooked something.--A.W. Tozer

We must recognize Israel's achievements under difficult circumstances, even as we strive in a positive way to help Israel continue to improve its relations with its Arab populations, but we must not permit criticisms for improvement to stigmatize Israel. As I would have noted at Rosh Hashana and Yom Kippur, but which is appropriate at any time of the year, I offer an Al Het (a plea for forgiveness) for any words or deeds of mine that may have done so.--Jimmy Carter

Isn't that nice. Oh, in a not-at-all related story, Jimmy Carter's grandson is running for Congress in a Georgia district that has a significant (at least for Georgia) Jewish population. ... The only thing worse than no apology is a convenient apology. Funny, I didn't think I could like Jimmy Carter less, I guess I was wrong.--Patrick Archbold

Sometimes—like during the economic horror show we have just lived through this past year—I think the point is simply to endure.--Epicurean Dealmaker

Investors who seek triple-A debt are running out of options. Yet another top-rated class of debt is on the hit list now that Standard & Poor’s may downgrade covered bonds — a type of mortgage-backed security popular in Europe. Soon there will be little AAA debt left outside the world of government and quasi-government debt. That’s putting safety-oriented investors in a bind.--AGNES CRANE and UNA GALANI

... we don't like to buy stocks that have already rallied, and we don't like to sell stocks that have already fallen - our instinct is to do the opposite - buy low, sell high. So that's why I mentioned Newton's First Law of Motion to describe the big move in stocks this year. An object in motion tends to stay in motion - like the stock market since the march lows - until an outside force acts on it. I've been thinking that the outside force will be "reality" - the reality that things are not really getting better - that we (As a country) have pretty much spent all the money we have and all the money we borrowed already. The reality that unemployment overrides existing home sales in terms of importance in the economy, and that you can't tax and spend your way back to prosperity. Perhaps the outside force will be the eventual inevitable Federal Reserve interest rate hike needed to remove the massive fiscal stimulus that's been enacted.--Kid Dynamite

I've got the flu

Let's see if the swab comes back positive for H1N1.

Tuesday, December 22, 2009

A case study in why economists in Washington, D.C. should not lecture traders

on Wall Street.

Too cheap to hedge, huh, Larry? How'd that work out for ya?

Via Felix Salmon.

Quotes of the day

If you make people think they're thinking, they'll love you; but if you really make them think, they'll hate you.--Don Marquis

I only seem smart because for some reason I have always had an easy time understanding the paradoxes of monetary economics. I got Cs in French, computer science, and freshman English. --Scott Sumner

Why were banks so much stronger back then [in the 1930s]? My answer is that they lacked deposit insurance, so they had to instill a sense of trust in the public. They had to behave responsibly.--Scott Sumner

The intellectual advantages of proximity keep industries like advertising, publishing and finance — which offer the highest returns to those with the most information — in dense urban cores.--Edward Glaeser

It is not clear how a government might encourage people to be nicer, but one famous economic study does suggest a way: Ray Fisman and Ted Miguel looked at the behaviour of diplomats in New York. The Scandinavians committed 12 unpaid parking violations between them; diplomats from Chad and Bangladesh notched up over 2,500. But when the city was given more power to punish offenders, all the diplomats cleaned up their act – niceness is best supported by legal incentives.--Tim Harford

Rasmussen polls voters. It asks where people approve or disapprove of the president’s performance. 56% disapprove of President Obama’s performance — including 46% who strongly disapprove. Only 44% approve — only 25% strongly approve. His popularity has melted faster than any elected president going back to at least FDR.--Don Surber

An intercepted e-mail from a professor at the Climate Research Unit in England to a professor at the University of Pennsylvania warned the latter: "Don't any of you three tell anybody that the UK has a Freedom of Information Act" and urged the American professor to delete any e-mails he may have sent a colleague regarding the Intergovernmental Panel on Climate Change. When a business accused of fraud begins shredding its memos and deleting its e-mails, the media are quick to proclaim these actions as signs of guilt. But, after the global warming advocates began a systematic destruction of evidence, the big television networks went for days without even reporting these facts, much less commenting on them.--Thomas Sowell

Monday, December 21, 2009

A nice 40 second illustration on the public option

from my good friend Soteria Trader:

Did you know: That Bert Blyleven has more shutouts than

– Randy Johnson and Pedro Martinez. Combined.
– Roger Clemens and Chris Carpenter. Combined.
– Greg Maddux, John Smoltz and Mark Buehrle. Combined.
– Tom Glavine, Mike Mussina and Brandon Webb. Combined.
– Orel Hershiser, Curt Schilling, Johan Santana and Bartolo Colon. Combined.
– Dave Stieb and Jack Morris. Combined.
– The New York Yankees pitchers have had since 1988. Combined.
– The entire American League in 2009, 2008, 2007, 2006 and … every year going back to 1992.

He also has more shutouts than every single pitcher of his era except Tom Seaver and Nolan Ryan, Hall of Famers who each have exactly ONE more shutout than Bert Blyleven.

No, Joe, I didn't know until now.

Some excerpts from the latest Bill Simmons-Malcolm Gladwell mashup

Years ago, I did a story on Tupac, and I tracked down some poems he wrote when he was in high school. They were all about flowers and sunsets and warm kisses. Before there was thug life, apparently, there was hug life. Who knew?--Gladwell

By, the way, that Derek Jeter and not [Tom] Watson was Sports Illustrated's athlete of the year was a crime. For Jeter to have had the year Watson did, he would have had to lead the Yankees to a World Series title in 2033.--Gladwell

Leonard Little left a party, got into his car and hit and killed a young woman. He blew .19 on the Breathalyzer. What happened to him? He did 60 days. Six years later, he was arrested for drunk driving again. He still plays for the Rams. Michael Vick did bad things to dogs and went to jail for two years and become the personification of evil. I mean, I love dogs and I was appalled by Vick's behavior. But in what universe is it a bigger crime to fight pit bulls than it is to get wasted and kill an innocent person?--Gladwell

What can't be explained is why some athletes get more leeway than others for those indiscretions. I thought the reactions after the Rodriguez/Ramirez/Ortiz PED controversies this season were fascinating. Only A-Rod got raked over the coals. Only A-Rod was serenaded with steroid chants in every opposing stadium. Only A-Rod was ridiculed on radio shows and blogs with particular zeal. And really, it came down to the fact that America genuinely liked Big Papi and believed Manny was a lovable, harmless goofball. They didn't have that same affection for A-Rod. It's the same reason so many forgave Bill Clinton a long time ago, but Eliot Spitzer and Rod Blagojevich can never work again unless they're co-directing a "Girls Gone Wild" video for Joe Francis.--Simmons

My son is a wrecking ball and has one of those ripped little-kid bodies that makes him look like a 1780s blacksmith. (Important note: These genes came from my wife's side. I am built like Play-doh with bones.) He also has a hard head. And he's tough as nails.In the old days, I would have said, "Yes, a future middle linebacker!" Today? I have to be honest … if he wants to play a sport where he can run around and wallop people, I'd much rather see him play lacrosse. Same principles, safer, more fun to play, easier on your body. --Simmons

For me, the sport stuck most in the past is baseball. It took them 15 solid years and a forearm growing out of Barry Bonds' head to start handling the PED epidemic. They still don't have a salary cap or revenue sharing; nobody is going to give a crap until Joe Mauer signs with the Yankees for $270 million next winter and the entire state of Minnesota tries to light itself on fire. The games routinely last three-plus hours -- death for the Short Attention Span Generation -- and they just don't care (although Bud Selig did just announce a committee that will investigate ideas to improve the game). The African-American talent pool is dwindling to 1960s-level numbers, and only Torii Hunter seems to be bothered by this. We have the technology to create computer-generated strike zones and remove human error from pitch to pitch, only they would never dream of changing the game like that. Same for outlawing pickoff throws (and making a rule that you can only lead 4-5 feet off every base) to speed up games, or preventing batters from stepping out of the box after every pitch, or giving pitchers a time limit to deliver every pitch.--Simmons

Whole thing starts here.

Incoming Bank of America CEO Brian Moynihan never took the so-called Series 7 exam

or a separate Series 24 exam required to supervise an investment banking or securities business.
I actually failed the 24 on my first try, as I was not accustomed to studying with a newborn at home.

But this FINRA waiver granted to Moynihan seems a bit shady. Reminded me a bit of JFK Jr. taking his third NY bar exam in a private room, after failing it twice when taking it with the rest of the law school graduates.

Quotes of the day

Trees grow.--Allan Meltzer

In other words, growth is the natural state of economies, so optimism usually is rewarded.--Gregory Zuckerman

The 1990's had its best return decade ever, averaging 17.6% returns, and the equity return premium was often estimated around 6%. Now, it's generally thought to be around 2-3%. --Eric Falkenstein

Goldman Sachs has threatened the UK Treasury with plans to move up to 20 per cent of its London-based staff to Spain in a standoff over tax and bonuses.--Simon Evans

Indeed, in extremis, liquidity can sometimes be a bad thing, insofar as excess liquidity in one area of the markets (most likely Treasuries) can act as a super-magnet, unhelpfully pulling risk capital from everywhere else.--Felix Salmon

Sometime in the next several weeks, Tishman Speyer Properties, the global real-estate empire run by father-son duo Jerry and Rob Speyer, along with their investment partner BlackRock, will default on the mortgage at Stuyvesant Town and Peter Cooper Village. And just as the transaction was the biggest real-estate deal in American history, the collapse is liable to be similarly epic.--Gabriel Sherman

If hot means being able to burn other people's money, I guess [Donald Trump]'s correct.--Carl Icahn

Tae Kwon Do is a massive money-making venture posing as a martial art.--Tony Woodlief

... we had crises before there was moral hazard--really, really dreadful crises, crises far worse than the one we're having now. I just don't see how you can look at the 1930s and name the FDIC as the decade's biggest financial problem. Or this decade's biggest financial problem. The closest our era came to a really devastating financial crash along the lines of the 1929-1933 period was in the total unguaranteed institutional money market funds. Nor do I find the central story of how the FDIC induced this moral hazard very compelling. Supposedly, ordinary depositors don't bother to check the soundness of their banks because they don't actually have skin in the game. --Megan McArdle

Now, what do all of these cities have in common beyond their egregious poverty level rates? They all have had since 1989 and continue to have, Democrat Party mayors… with Cleveland having had the Democrat mayor incumbent for the shortest period, since 1989, while Newark and Milwaukee now go back for nearly one hundred years of Democrat “rule.” Detroit, with the highest poverty rate has had a Democrat running the city government since 1961. We’re not casting aspersions here; we are simply drawing correlations.--Dennis Gartman

I may be a dining room table, but Krugman doesn't have a leg to stand on.--Bryan Caplan

Maybe we should try some other path of change besides the Big International Summit?--William Easterly

If we're not careful, we could let our institutions, things like tenure and hierarchical structures and peer review, slowly morph over time so that old guys control more and more of what's going on and the young people have a harder and harder time doing something really different, and that would be would be a bad thing for these processes of growth and change. I'd like to see us keep thinking about how we could tweak our institutions to give power and control and opportunity to young people.--Paul Romer

What did Padme say?: "So this is how liberty dies, to thunderous applause." By the way, did I mention that the Jedi are genetically superior supermen with "enhanced blood"? That the rebels' victory party in Episode IV borrows liberally from Leni Riefenstahl's "Triumph of the Will"? And that the much-maligned ewoks make perfect sense as an antidote to Jedi fascism?--Tyler Cowen

There is no excuse for trying to hide the medieval warming period statistically, or diminish the credibility of critics. It isn't simple talk, and more than a white guy can say they use the N-word casually but that means nothing: everyone knows that someone who talks that way isn't credible on racial issues. Talking about coalitions, and hiding conspicuous trends, is pure slanting data to one's predisposition. If someone shaded beta-return data from the 1970s because they were not relevant to the CAPM ,that would be conscious fraud. Luckily in economics we are all looking at the same data, so no one would even try to do that, but if they did, it would be a big, black stain. There is no good excuse for what they said in those emails.--Eric Falkenstein

... it's undeniable that the film [Avatar] ... is emphatically a fantasy about race. Specifically, it's a fantasy about race told from the point of view of white people. Avatar and scifi films like it give us the opportunity to answer the question: What do white people fantasize about when they fantasize about racial identity?--Annalee Newitz

The question is whether Nature actually deserves a religious response. Traditional theism has to wrestle with the problem of evil: if God is good, why does he allow suffering and death? But Nature is suffering and death. Its harmonies require violence. Its “circle of life” is really a cycle of mortality. And the human societies that hew closest to the natural order aren’t the shining Edens of James Cameron’s fond imaginings. They’re places where existence tends to be nasty, brutish and short. Religion exists, in part, precisely because humans aren’t at home amid these cruel rhythms. We stand half inside the natural world and half outside it. We’re beasts with self-consciousness, predators with ethics, mortal creatures who yearn for immortality. This is an agonized position, and if there’s no escape upward — or no God to take on flesh and come among us, as the Christmas story has it — a deeply tragic one.--Ross Douthat

What are you doing talking about sodomy? You shouldn’t even know what that is! Why do people have to know your views about that?--Robert George's mom

People have lost their grip on the true reasons for marrying, so they are unwilling to make all the sacrifices real marriage requires. --Robert George

Friday, December 18, 2009

Which guy is morally worse?

So, one guy has tens of extramarital affairs and is considered a disgrace, someone who must come clean and ask forgiveness. Another guy has hundreds if not thousands of affairs, in the process acquiring HIV, thus exposing his poor wife.

... Clearly, the guy who caught HIV by having 100x more affairs. Yet, when Magic Johnson announced he had become HIV positive due to innumerable extramarital affairs, all he got was sincere pity, poor Magic. In contrast, the venom inspired by Tiger's actions is rather severe.

Thursday, December 17, 2009

Quotes of the day

Following Yeltsin’s death less than three years before and that of the “godfather of glasnost,” Alexander Yakovlev, in 2005, it is almost like nature itself has conspired to make the Gorbachev-Yeltsin-Gaidar revolution an aberration and Putinism Russia’s norm. As if Dostoevsky’s Great Inquisitor was right when he told the imaginary Christ: you have come to make people free, but they don’t want to be free.--Leon Aron

What [David] Halberstam shows is that investment bankers certified who was reliable or not--to serve in foreign policy positions.--Arnold Kling

The proportion of aid channeled through the UN system shrank from ten percent to five percent over the last eight years. And yet the UN’s massive bureaucratic machinery is not being downsized accordingly.--Sandra Sequeira

Some microfinance borrowers say they need village moneylenders to help them pay their debts on time. Some academic researchers believe the moneylenders are keeping afloat many microfinance groups.--Ketaki Gokhale

Of course, history offers more than just the lesson that financial accidents will happen. One of the most important historical truths is that the first draft of history -- the version that gets written on the spot by journalists and other contemporaries -- is nearly always wrong. So though superficially this crisis seems like a defeat for Smith, Hayek, and Friedman, and a victory for Marx, Keynes, and Polanyi, that might well turn out to be wrong. Far from having been caused by unregulated free markets, this crisis may have been caused by distortions of the market from ill-advised government actions: explicit and implicit guarantees to supersize banks, inappropriate empowerment of rating agencies, disastrously loose monetary policy, bad regulation of big insurers, systematic encouragement of reckless mortgage lending -- not to mention distortions of currency markets by central bank intervention. ... Consider this: The argument for avoiding mass bank failures was made by Friedman, not Keynes. It was Friedman who argued that the principal reason for the depth of the Depression was the Fed's failure to avoid an epidemic of bank failures. It has been Friedman, more than Keynes, who has been Bernanke's inspiration over the past two years, as the Fed chairman has honored a pledge he made shortly before Friedman's death not to preside over another "great contraction."--Niall Ferguson

Why is business investment so weak? Part of the reason is that the downturn is severe and investment responds to the overall economy. Part of the reason is that the credit crunch makes financing more difficult. Part of the reason is that the policy environment seems adverse to business. I am referring here to a group of policies that include higher minimum wages, the seeming retreat from free trade, proposed mandates to provide employees health insurance, higher prospective energy costs from climate change regulation, and the likelihood of higher future tax rates resulting from the huge fiscal imbalance we are now experiencing. All of these factors have worked in concert to depress business investment.--Greg Mankiw

Another unique characteristic about Brian [Moynihan] is that he actually wanted the job.--Ken Lewis, outgoing Bank of America CEO, on his successor

Climate change is not the fault of man. It's Mother Nature's way. And sucking greenhouse gases from the atmosphere is too limited a solution. We have to be prepared for fire or ice, for fry or freeze. We have to be prepared for change. We've been deceived by a stroke of luck. In the two million years during which we climbed from stone-tool wielding Homo erectus with sloping brows to high-foreheaded Homo urbanis, man the inventor of the city, we underwent 60 glaciations, 60 ice ages. And in the 120,000 years since we emerged in our current physiological shape as Homo sapiens, we've lived through 20 sudden global warmings. In most of those, temperatures have shot up by as much as 18 degrees within a mere 20 years.--Howard Bloom

Why Tim Raines is the best candidate on the Hall of Fame ballott

Joe makes a solid case, with numbers and analysis.

Wednesday, December 16, 2009

Quotes of the day

In seeking to evaluate our conduct over the past year, we must be careful to avoid two opposite errors: the first is being too easy on ourselves and the second is being too hard.--A.W. Tozer

We're only a few years away from a point where no mating will ever occur because no one will pass the background check. If you knew everything about another person's history, there would always be at least one show stopper. In a simpler time, you could fall in love before you found out any damning information about your partner. I'm not sure that was better.--Scott Adams

I believe the villain is Keynes and there was a Keynes line that in the long run we are all dead. Whether or not that is true, I believe that in the long run Keynesianism will be dead and that the problem with never thinking about the long run is that in the long run, the short run becomes the long run.--Peter Thiel

Was the “animal spirits” model wrong? That’s not the right question. The question is; “Was it useful?” I suppose it might have had some value. It pointed to the problem of unstable nominal spending in a market economy, and the need for the government to insure that NGDP was stable. So in that sense Keynesian economics was a step forward. But it is no longer a useful model, i.e. a useful social construct. And some day my gold market model of the 1930s will also be obsolete. When physicists developed models that didn’t need concepts like dark energy and dark matter, they threw those concepts into the trash bin. It is time to throw Keynesian economics away. The pre-Keynesians knew wages and prices were sticky, and that’s the only useful part of Keynesian economics.--Scott Sumner

... when I asked one of my professors at Chicago which economic school Galbraith belonged to, he thought for a moment, then said "it's less of a school than a sort of conspiracy theory."--Megan McArdle

Cutting wages increases the quantity of labor demanded. If labor demand is elastic, total labor income rises as a result of wage cuts. Even if labor demand is inelastic, moreover, wage cuts reduce labor income by raising employers' income. So unless employers are unusually likely to put cash under their matresses, wage cuts still boost aggregate demand.--Bryan Caplan

Historically, the median CPI has been 50% more accurate at gauging future inflation than the traditional CPI (based on the Cleveland Fed's research), and the median CPI is now suggesting that rising inflation is not an imminent problem. In fact, the decrease in November's median CPI to 1.3% from 1.45% in October was for 14th consecutive monthly drop in median CPI inflation.--Mark Perry

I find the reaction to my post last week about undeserving deadbeats rather . . . odd. Odd, because it came mostly from the left, who seemed to think that refusing to pay your mortgage so that you could spend more time and money on cruises and Disney furniture was not merely rational, but admirable.--Megan McArdle

A recent report by the left-leaning Center for American Progress blasts conservative billionaires David and Charles Koch for funding a campaign of “hate” against the White House. It said the Koch’s — funded by their oil, gas and timber conglomerate — have spent millions of dollars trying to block President Obama’s stimulus package, climate-change policies and health-care reform. The report said the funding has been channeled through the Cato Institute, Heritage Foundation and Competitive Enterprise Institute. It’s central message: Billionaire ideologues are bad for democracy. Yet missing from the report was one central fact: The Center for American Progress, itself, receives support from politically active billionaires, including George Soros and Herbert and Marion Sandler.--Robert Frank

On the campaign trail, Barack Obama vowed to take on the drug industry by allowing Americans to import cheaper prescription medicine. "We'll tell the pharmaceutical companies 'thanks, but no, thanks' for the overpriced drugs -- drugs that cost twice as much here as they do in Europe and Canada," he said back then. On Tuesday, the matter came to the Senate floor -- and President Obama forgot the "no, thanks" part. Siding with the pharmaceutical lobby, the administration successfully fought against the very idea Obama had championed. ... No surprise here: Lawmakers, and the White House, are addicted to drug money. The industry has pumped upwards of $130 million into federal elections over the past decade and is now among the top 10 donors, according to the Center for Responsive Politics. At the same time, the White House needed the industry to spend its millions of dollars in advertising money on support of the health-care legislation, not against it. --Dana Milbank

Either the Abu Dhabi Investment Authority will have to show that they were indeed unsophisticated - entertaining in itself - or that Citi were actually fully aware in December 2007 of the carnage that was to come in 2008/9. Remember Chuck Prince was "still dancing" only a couple of months before the ADIA transaction. Catching falling knives is simply a question of timing. The Kuwait Investment Authority just about succeeded squeezing something out of a Citi transaction. ADIAs timing on Barclays was also better, but they simply failed in the case of Citi. Take your lumps, people, and move on.--Andrew Clavell

So Time magazine has named Ben Bernanke Person of the Year

Be afraid, be very afraid.

Gold Buying by Central Banks May Send Signal to Sell

Some of the biggest buyers of gold may be sending the strongest signal to sell it, if past performance is indicative of future results.

Central banks, holding about 18 percent of all gold ever mined, are expanding their reserves for the first time in a generation as a nine-year bull market drives prices to a record.

The banks will buy 13.8 million ounces (429 metric tons) this year, worth $15.5 billion, for the first net expansion in reserves since 1988, New York-based researcher CPM Group estimates. Gold fell 15 percent that year and took another 15 years to trade again at the same price as central banks from Switzerland to the U.K. cut their holdings.

Ed Driscoll opens up a can of whoopass on Thomas Friedman


Tuesday, December 15, 2009

The biggest wealth losers of the decade

as compiled by Gus Lubin. On the bright side, at least half of these guys won't be appearing on next decade's list.

Steve McIntyre, hero of truth

A profile by Colby Cosh.

Quotes of the day

'Tis better to be silent and be thought a fool, than to speak and remove all doubt.--Abraham Lincoln

Inexact sciences like economics advance funeral by funeral.--Paul Samuelson

The simplest definition of art is a true lie. ... Addiction is the result of unresolved grief. ... I had the blessing of a heart attack just last year. For me, it was like two elephants standing on my chest. I saw it as a blessing almost immediately. It was almost like the shedding of a skin. It helped me to discard things I didn't need to carry anymore.--Kelsey Grammer

... male mate choice for high-fecundity females leads to a diminished rate of adaptive evolution by reducing the advantage to females of expressing beneficial genetic variation.--Tristan A. F. Long et al.

Most progressives, and not a few conservatives, think that Lieberman has been jerking Senate progressives around as payback for their support for Lamont. Which reminds me who was one of Lamont's big supporters in the general--one Barack Obama.--Megan McArdle

One liberal sage noted in a 2007 paper that "four decades of empirical research" have shown that insulating people through third-party insurance coverage "from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures." Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today's invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes. Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection.--WSJ Editorial Board

In short, the American people are hugely exposed to any losses at the Fed.--John Carney

The government has threatened and intimidated three witnesses. To submit this case to the jury would be a mockery of justice.--Cormac Carney, the judge who threw out the Broadcom options backdating case
“The road to high performance isn’t always paved.” To which the obvious rejoinder these days is “Sometimes it runs straight into a fire hydrant.”--James Surowiecki

No longer a descriptive noun, "bubble" has become the default term for lazy writers seeking to explain what they cannot. --John Tamny

[Paul Samuelson will] take these incomprehensible verbal debates that go on and on and just end them; formulate the issue in such a way that the question is answerable, and then get the answer.--Robert Lucas

What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?--Paul Samuelson

Samuelson had an amazingly tin ear about communism. As early as the 1960s, economist G. Warren Nutter at the University of Virginia had done empirical work showing that the much-vaunted economic growth in the Soviet Union was a myth. Samuelson did not pay attention. In the 1989 edition of his textbook, Samuelson and William Nordhaus wrote, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."--David Henderson

I call myself a post-Keynesian. The 1936 Model A Keynesianism is passé. Of course, it doesn’t meant that it wasn’t right for its time. ... Everybody was there [at the 150th anniversary of Keynes' birth]. And they all stood up and said, ‘I am still a faithful Keynesian. I am still a true believer.’ I was a bit rude. I said, ‘You remind me of a bunch of Nazis saying, I’m still a good Nazi.’ It’s not a theology: it’s a mode of analysis. I think I am a different Keynesian than I was ten years ago.” Samuelson then quoted Keynes himself. “When my information changes, I change my views. Don’t you, Sir?--Paul Samuelson

A Keynesian will keep insisting that you can’t be a realistic, sensible, modern monetary economist unless you think in terms of interest rate rules. Monetary rules are too old-fashioned, and futures targeting is too, I don’t know, futuristic? So it’s got to be interest rate rules. Then they develop models that show interest rate rules don’t work very well when interest rates are at zero and further monetary ease is called for. No kidding. ... I realize that Krugman and Eggertsson actually have very similar views, and the apparent differences reflect differing assumptions about what sort of policies are politically feasible and/or credible. But I do have a very serious point to make. Krugman is using a double standard, basically accepting an argument made by Eggertsson that is far weaker than those he criticizes people like Mankiw and Barro for making--Scott Sumner

I think Samuelson and Solow doth joke too much. There is a jeering, disdainful, immature element in both of those “jokes.” I wonder if Friedman was deeply discomfiting to them. He was a relentless critic of what underpinned their worldviews. He remade the profession in his own image and helped make “use markets” the default, at least for a while. He created what Dan Klein calls the “presumption of liberty.” Their lack of respect for someone who had been in the intellectual wilderness and who triumphed by virtue of his scholarship and his passion speaks volumes.--Russ Roberts

Which I suspect is how my mother must feel when she hears me talk about what it’s like to steer the pirate’s ship that is our grocery cart through the aisles at Wal-Mart, alternately slapping hands as they reach for candy, barking at the little ones for crawling beneath the cart so that I think they’ve gone missing, and wondering why, if Jesus is planning to come back in this lifetime, he doesn’t just do it right now, before we hit the cereal aisle and I lose the last shreds of my Christian patience.--Tony Woodlief

It's my job to sing a song I wrote thirty years ago as if I'd written it in the afternoon. ... Gratitude is the fundamental emotion that one should feel in a state of grace. ... You don't have to be the greatest singer in the world. What you need to be is unique. Whenever you open your mouth, people should know: "Oh, that's Van Morrison." Or "That's Bob Dylan." Or "That's Bono." You want to get to that point where you have a unique vocal fingerprint. ... Your parents name you, but they haven't a clue who you are. Your friends nickname you because they know exactly who you are. ... I had a pretty miserable childhood, but would I want to change it? No. Childhood made me who I am, and I'm quite happy with who I am. Without my childhood, something else would've happened. ... Trudie and I have been together thirty years and married eighteen. You can multiply that by seven because show business is like dog years. ... Sometimes mediocre poetry becomes incredible song material. ... I thought when my kids got to twenty-one, that would be it, you know? They'd be out the door. We'd never have to worry about them again. But I have a thirty-two-year-old, and I still worry about him like he's a little boy. ... I've got the same rank as James Bond. Commander of the British Empire. It used to span the whole world, from Britain to India and including America. But now it's the size of a postage stamp. Frankly, there is not much to command. ... I was twenty-seven before I had any success. That probably saved my life. I'd had a job with a pension. I'd paid a mortgage. I'd had a kid. All those things gave me an appreciation for reality, and I think that allowed me to still have a career now at fifty-eight.--Sting

Monday, December 14, 2009

Translator of the day

Source here.

The Halo Effect: We thought because Tiger was so good at being a golfer

he also must be very good at to have and to hold, forsaking all others, keeping thee only unto her as long as you both shall live…

Tim Fernholz swats Matt Taibbi


Quotes of the day

While faith contains an element of reason, it is essentially moral rather than intellectual. ... "Everywhere, everywhere, Christmas tonight." But Christmas either means more than is popularly supposed or it means nothing. We had better decide.--A.W. Tozer

Why was alchemy a terrible idea? It was only chemistry without a sound theory. Chemistry would not have been developed unless alchemy had come before. In the same way, social science today lacks a sound theoretical basis. Economics and sociology are the alchemies of today; not quite scientific, but essential precursors to the sound social science of the future.--pj

Don't forget that even today's 2% to 4% bond yields aren't as paltry as they look, because inflation remains close to zero. The 6% interest income you remember earning a decade ago came at a time when inflation ran about 3%. You might protest that inflation, as officially measured, is understated today—but it is probably no more inaccurate now than it used to be. In real terms, you are only slightly worse off now than you were then.--Jason Zweig

The essence of capital provision is bearing economic risk. The flow of funds is like the flow of urine: important, even essential, as one learns when the prostate malfunctions. But “liquidity”, as they say, takes care of itself when the body is healthy.--Steve Randy Waldman

It is indeed true that the stock market can forecast the business cycle. The stock market has called nine of the last five recessions.--Paul Samuelson

The very young Paul Samuelson bore an odd resemblance to, of all people, Buddy Holly.--Tyler Cowen

When economists “sit down with a piece of paper to calculate or analyze something, you would have to say that no one was more important in providing the tools they use and the ideas that they employ than Paul Samuelson.--Robert Solow

I’ve just campaigned on a platform of fiscal responsibility and balanced budgets and here you are telling me that the first thing I should do in office is to cut taxes?--John F. Kennedy, to his professor Paul Samuelson

Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending. All these findings suggest that conventional models leave something out. A clue as to what that might be can be found in a 2002 study by Olivier Blanchard and Roberto Perotti. (Mr. Perotti is a professor at Boccini University in Milano, Italy; Mr. Blanchard is now chief economist at the International Monetary Fund.) They report that “both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is difficult to reconcile with Keynesian theory.” These studies point toward tax policy as the best fiscal tool to combat recession, particularly tax changes that influence incentives to invest, like an investment tax credit. Sending out lump-sum rebates, as was done in spring 2008, makes less sense, as it provides little impetus for spending or production. LIKE our doctor facing a mysterious illness, economists should remain humble and open-minded when considering how best to fix an ailing economy. A growing body of evidence suggests that traditional Keynesian nostrums might not be the best medicine.--Greg Mankiw

Governments, if they endure, always tend increasingly toward aristocratic forms. No government in history has been known to evade this pattern. And as the aristocracy develops, government tends more and more to act exclusively in the interests of the ruling class — whether that class be hereditary royalty, oligarchs of financial empires, or entrenched bureaucracy. ... Good government never depends upon laws, but upon the personal qualities of those who govern. The machinery of government is always subordinate to the will of those who administer that machinery. The most important element of government, therefore, is the method of choosing leaders.--Frank Herbert

I still have to keep going to Washington and sucking up. Because the problem is when you have a baby with an Uzi, right, they might accidentally mow you down. But here's the thing . . . they're brilliant people. It's just that the idea of a market in health care never occurred to them. ... You can't buy what [healthcare] you want. America will have one car. Everyone will have access to transportation, which means that everyone will have a black Escalade, with spinners. That's it. There's no Hyundais, no bicycles, no nothing. These poor people who clip the things off the backs of cans to make the tomatoes cheaper are subsidizing the hypochondriac who gets his shoulder done with an arthroscope because it clicks when he serves at tennis. ... It is kind of too bad that all these software companies that we're really close to putting out of business, these terrible legacy companies, with code that was written in the '70s, are going to get life support. That's why I call it the Sunny von Bülow bill. What it is, basically, is a federally sponsored sale on old-fashioned software. ... This is a market: its a set of agreements, it's a language. What's needed is a way of exchanging value and making choices, that's ethical—and, you know, nobody, nobody, not nobody, has said a word about that.--Jonathan Bush

Friday, December 11, 2009

When you politicize an industry

be it cars, mortgage lending or health insurance, you invite interventions on behalf of the rich and powerful. The less rich and the less powerful foot the bill. Before you tell me that members of Congress are already covered by a public health plan, reflect on the difference between giving them the power to reshape a public health plan that covers 535 people on the one hand, and a health plan that covers tens of millions on the other.

I have never been more convinced of Global Cooling and its coverup

since I saw this:

Via Chris Masse.

Under current law

it is not legally possible to “use” returned TARP funds for a new stimulus proposal.

Tiger, I begged you

or, perhaps, I told you so. Rachel Beck agrees: Tiger Flubs Crisis Management 101.

NGDP will fall over 1% this year. Last time it fell that sharply?

Nineteen thirty-eight.

Quotes of the day

A new study by Hedge Fund Research found that, from January 2000 through May 31, 2009, hedge funds run by women delivered nearly double the investment performance of those managed by men. Female managers produced average annual returns of 9%, versus 5.82% for men.--Cathy Arnst

But how do the laws of economics fare against a tougher opponent: the laws of sexual attraction?--Adam Martin

There are huge gains to be made, for instance, in decreasing hospital-acquired infections and paying attention to the inefficacy of many types of chemotherapy. Also, it may be that less interaction with the healthcare system in general would be a very good thing.--Stephen Dubner

The ability of [James] Cameron's oeuvre to seemingly print money for his backers is rivaled perhaps only by the Federal Reserve. His last three feature films (Titanic, True Lies and Terminator 2) have grossed $2.7 billion worldwide. As Levin notes, those movies each made more than 60 percent of their gross overseas. Attention Avatar haters: Don't bet a against a guy who can make grown men hoot, tween girls weep and Tom Arnold seem funny.--Derek Thompson

Why sell 50 when we can sell Kanye? ... Money is not going to make you happy. A new idea is what makes you happy. ... In my house, Carmelo Anthony is bigger than 50 Cent. ... My son is more important to me than I am to him. ... Am I being honest right now? Yeah. Most people would answer that question with a yes. Even the liars. ... You know how a person is made for something? Eminem is made for hip-hop. The best rapper is a white man. ... I like generals. I like Napoleon. I like strategy. The majority of them are praised for mass destruction, but it's exciting to see how it comes to the mind mentally. Is Charles Manson a serial killer? No, he isn't, because he ain't do no killing. He's a coward. He was just crazy enough to influence people to kill for him. There were a lot of Charles Mansons in my neighborhood. There were no Napoleons. Hip-hop is arrogant because people are arrogant.--50 Cent

The question of courage is something I've thought about for a long time. Tell me if I'm wrong, but courage is when a man in a difficult situation acts as if he truly believes he's right. And in the end, he is right. When I was young, we were taught not to dunk. We were taught not to stand out from the rest of the team. It's different now. The young guys in China are new age. They want to show their stuff. But I am old-school. It was a big adjustment when I first came here to play at a camp. The coaches told me to dunk, but I would lay the ball in. Finally, the coaches made everyone else on my team run laps when I didn't dunk. I didn't want my teammates to be punished because of me. That's how I learned to dunk. ... The alcohol in China is made of rice. It's strong. You know it's strong when you drink it. So you have an idea what it can do to you. But here, you have alcohol that doesn't taste very strong. So you think you can have many shots. You don't find out the truth until the next morning. I haven't done much trash-talking. But last year, I did complain about a call. Nobody could believe it. So I said, "I've spent a lot on English lessons. I want to get my money's worth." The official was laughing. My American strength coach says he liked me better before I could talk English. We don't have a tip culture in China. If you give a tip to an old waiter, he might feel like you don't respect him. But I think the younger waiters would take it. ... When I got my first paycheck playing in China, I thought, I'm making money now! I'm independent! That first month I went broke. My next paycheck was two weeks away and I didn't have anything in my pocket. That was a good experience to have before coming to the NBA. Our first emperor, Qin Shi Huangdi. Napoleon. Roosevelt. That would make a good table for dinner. Power means different things in different times. But the more I read, the more I think power is about intelligence. Kobe's heart is as strong as his muscles. ... Our honeymoon was in Europe. One stop was Venice. Cost fifty dollars for a ride in the gondola. There was also the romantic package. Three hundred dollars. That gets a bottle of red wine and a man playing music. But I don't really drink red wine. And you can hear the music coming from the other boats. So the fifty-dollar package seemed like the way to go. ... Sports teach you how to be quick. Injuries teach you how to slow down.--Yao Ming

I'm sorry, I tried to be all breezy and cynical about this, but it's time for Democrats to tell Max Baucus that it's time for him to resign. Not because he had an affair with an employee, which doesn't bother me as long as it doesn't bother the employee. But nominating your girlfriend for US Attorney, and then withdrawing the nomination when a paper says they're about to break the story, clearly indicates that you know it's unsavory. Say what you want about Republicans, but they have a much better sense than their opponents of when it's time to grab one of their own and throw him off the sled to the wolves running behind.--Megan McArdle

While mere exposure to green products may “prime” us to think about social consciousness and perhaps improve our behavior, if we actually buy a green product, we appear to take it as license to act like jerks.--Ryan Sager

Green jobs are NOT a zero sum game where nations are competing for a fixed number of them. If China or Germany or anyone develops "innovative energy technology", that is NOT bad for us. It is in fact *awesome* for us, as we can then adopt it and use it. People, ideas are public goods. That is the whole basis of new growth theory. If China is now doing cutting edge R&D, that is an unmitigated blessing for everyone on the planet.--Angus

Fiscal policy is discussed in terms of whether it can create jobs. Monetary policy is discussed in terms of its impact on inflation. Which sounds better, jobs or inflation? Obviously jobs. ... If your intuition still tells you that monetary policy is more of an inflation threat than fiscal policy, you are probably right. But that is because, and only because, you intuition is correctly telling you that monetary policy is a far more powerful tool for boosting NGDP. Which begs the question of why so many economists support fiscal stimulus, and so few criticize the Fed. --Scott Sumner

If you keep your cell phone with you most of the time, especially if the earpiece is in place, I think we can call that arrangement an exobrain. Don't protest that your cellphone isn't part of your body just because you can leave it in your other pants. If a cyborg can remove its digital eye and leave it on a shelf as a surveillance device, and I think we all agree that it can, then your cellphone qualifies as part of your body. In fact, one of the benefits of being a cyborg is that you can remove and upgrade parts easily. So don't give me that "It's not attached to me" argument. You're already a cyborg. Deal with it.--Scott Adams

I remember asking my older cousin, "How do they do that?" My cousin must've been about eight, and he said, "Oh, that's just special effects." I can still remember hearing those words for the first time. In some respects, I can chart everything I've ever done since back to that moment.--Peter Jackson

What struck me as I watched these movies was that a good deal of the Hollywood magic these Halloweentown witches perform is surprisingly part of ordinary Americans’ everyday world. Not truly magically, of course – it’s due to science and markets – but it’s nevertheless marvelous and amazing and wonderful. We gently press a button and the sound of a Bach concerto recorded a decade or a half-century ago fills our room as if it were being performed live, then and there. We turn a knob and out comes a jet of clean water for us to shower in, at whatever temperature we choose. We crawl into giant hunks of metal and plastic, filled with highly explosive liquids, press a few pedals and we’re traveling down highways at superhuman — even super-equine — speeds. We hold tiny devices in our palms, press some more buttons, and we’re talking to other human beings who are miles, maybe thousands of miles, away from us. We flick switches and lights turn on or off at our whim. I could go on and on and on ... There’s an irony in this fact: the more deeply and widely that people believe in magic, the less magical are their lives, while the more fully people untangle themselves from belief in myths and magic, the more magical their lives become. That is, the many marvels of our world – proximately the consequence of technology, ultimately the consequence of free markets and rational thought – are possible only insofar as we no longer really believe in magic. ... But one serious species of belief in magic continues to haunt us: politics. Many of us – indeed, most of us – believe that high priests who utter or write certain words according to treasured ceremonial prescriptions and done in certain temples (usually made of marble and topped with domes) can perform magic. They can’t. But they try and try – and too many of us simply have faith that their rituals are effective.--Don Boudreaux

The L.H.C. is not merely the world’s largest particle accelerator but the largest machine ever built. At the center of just one of the four main experimental stations installed around its circumference, and not even the biggest of the four, is a magnet that generates a magnetic field 100,000 times as strong as Earth’s. And because the super-conducting, super-colliding guts of the collider must be cooled by 120 tons of liquid helium, inside the machine it’s one degree colder than outer space, thus making the L.H.C. the coldest place in the universe.--Kurt Andersen

For anyone with a sense of history, the idea that a post-cold-war bubble embodied a new world order was obviously absurd. The built-in instability of capitalism had not gone away - it had been accentuated, as the US and other western economies became ever more dependent on unsustainable debt. Far from being in­destructible, the neoliberal market order was highly fragile. But millennial fantasies regarding a short-lived variety of capitalism were far from being the only delusional beliefs that helped shape events during the decade. ... The intellectual default of politicians cannot be remedied by returning to the ideologies of the past. It is shared by much of the public, and comes from a chronic inability to engage with reality. Perhaps only a more serious crisis will overturn the delusive fancies on which so many policies are based. A run on sterling in the event of a hung parliament after the next general election; the cataclysmic defeat that will follow Barack Obama's decision to reinforce inevitable failure in Afghanistan; a spiral in oil prices after a flare-up over Iran; the collapse of the dollar as the world finally loses patience with American solipsism - any one of these eventualities, together with others that cannot be foreseen, could be a catalyst for rethinking. But the omens are not encouraging. The make-believe that surrounds climate change - epitomised in the empty statements of intent regarding unachievable goals that will be the only outcome of the Copenhagen meeting - shows that the biggest challenge for the future is being evaded. It looks as if we may be wandering in the ruins of the Noughties for some time.--John Gray

Yitzhak Ganon was taken to the Auschwitz-Birkenau hospital, where Josef Mengele, the so-called "Angel of Death," conducted grisly experiments on Jewish prisoners. Ganon had to lie down on a table and was tied down. Without any anesthetics, Mengele cut him open and removed his kidney. "I saw the kidney pulsing in his hand and cried like a crazy man," Ganon says. "I screamed the 'Shema Yisrael.' I begged for death, to stop the suffering." --Christoph Schult

Egalitarians only outnumber libertarians by about 2:1. If you adjust for the initial leftism of the humanities, it seems like libertarian arguments must be making a lot of converts among the philosophers.--Bryan Caplan

To be sure, the government can design the regulation to make arbitrage and jurisdictional competition more costly. But the tighter the straitjacket we put bank governance into, the less ability the industry has to evolve to meet the challenges of modern finance.--Larry Ribstein

I won’t rehash all the evidence that his misrepresented his own views. And before [Paul] Krugman's fans write in saying; “There is no contradiction, he’s always said inflation targeting can work, he doesn’t think that merely increasing the money supply can help once rates hit zero” you might want to check out the next paragraph in the new Krugman piece ... Yes, [having the Fed expand credit] could do a lot indeed. Last March it would have been even more helpful. On March 1st I asked Krugman to endorse this sort of plan. I am glad that he has finally done so.--Scott Sumner

As I said the last time I blogged about this bozo, it’s not his conclusions I’m objecting to. It’s his apparent belief that “No you may not” is a substitute for logical analysis based on clearly stated principles that are at least stable enough to be maintained for the length of a newspaper column.--Steve Landsburg

Now, it’s no surprise that Immelt’s speech is an ode to the glory of governments and businesses working together. Governments around the world are GE’s biggest customers. The U.S. government saved GE Capital. The U.S. government will need to approve GE’s sale of NBC Universal. And Immelt is a high-profile member of President Obama’s economic recovery board. But shareholders should ask themselves whether hitching GE to the Obama administration is the right strategy. Sure, GE and the White House may transform the U.S. economy into some new private/public manufacturing utopia. But given GE’s recent past and its current leadership, there are plenty of reasons to be skeptical about such a renewal.--Evan Newmark

It’s especially important for those persons who support minimum-wage legislation to realize that employers can almost always, at the margin, substitute away from human labor and toward mechanized or electronic “labor” — that is, capital. Mythical indeed is the notion that employers must hire a given, or minimum, number of low-skilled workers. As the cost of hiring such workers rises, employers have greater incentives to substitute away from employing such workers. This machine whose operation I witnessed today at Target testifies to the futility of minimum-wage legislation to improve the lot of most low-skilled workers.--Don Boudreaux

But tax policy is a blunt instrument, and it acts on the economy a lot like a water balloon: every time we squeeze one end, the other end swells up bigger than before. Moreover, I am sad to say that all available evidence seems to indicate our water balloon is a whoopee cushion, too.--Epicurean Dealmaker

Thursday, December 10, 2009

Let's play Three Truths and A Lie

or One of These Stories Is from The Onion.

UPDATE: And this one is even too crazy for The Onion.

Chart of the century

Source here (via Megan McArdle). The author, Willis Eschenbach says:

YIKES! Before getting homogenized, temperatures in Darwin were falling at 0.7 Celcius per century … but after the homogenization, they were warming at 1.2 Celcius per century. And the adjustment that they made was over two degrees per century … when those guys “adjust”, they don’t mess around. And the adjustment is an odd shape, with the adjustment first going stepwise, then climbing roughly to stop at 2.4C.

Quotes of the day

Are the naughties the best decade ever?--Tyler Cowen

... mindless trend extrapolation is bad, bad, economics. The fact that we only saw cost-shifting of 21 cents on the dollar ten years ago does not mean that we can continue getting those sorts of results ad infinitum. That's why it's pretty easy to get a 5% discount in a jewelry store, and pretty hard to get an 80% discount. The larger a percentage of Medicare recipients in the patient mix, the higher the percentage of costs that hospitals will have to shift, because it will become harder and harder to make matching cuts.--Megan McArdle

For reform advocates, this is not good news. At 40% approval, it probably passes. At 30% approval--what Social Security reform enjoyed by the time it imploded--it's not going to no matter how the Senate massages their plan. Democrats cannot pass a bill this large on a straight party line vote if the only people in the country who want it are Democrats.--Megan McArdle

Great Britain's minister of economics and finance announced today that the government intends to levy a heavy tax on banker bonuses. ... So who's the real winner from this move? New York City. Even though the British government claims that this tax is a one-time event, bankers there will not soon forget when the government cut their bonuses by 50%. After all, if the government did this once, it could do it again. Any Americans who thought it sounded like a good idea to work in London instead of New York must be questioning their logic. I'll be interested to see what kind of brain drain this causes in London.--Daniel Indiviglio

Earlier this week DARPA, the Defense Advanced Research Projects Agency, moored ten, 8 ft red, weather balloons in undisclosed locations across the United States. The DARPA Network Challenge offered a prize of $40,000 to the person or group who first identified all the locations.--Alex Tabarrok

Copenhagen: 1,200 Limos, 5 Hybrids, 140 Private Jets, and CO2 Equal to Alexandria VA (41,000 tons)--Mark Perry

... due to complex female sexuality, the man is supposed to accept the sex part of the deal fluctuating from day to day and year to year for unknown and unexplained reasons.--Robin Hanson

Otherwise known as apocalypse now?

Google, that is:
[Eric] Schmidt's philosophy is clear with [Maria] Bartiromo in the clip below: "If you have something that you don't want anyone to know, maybe you shouldn't be doing it in the first place." The philosophy that secrets are useful mainly to indecent people is awfully convenient for Schmidt as the CEO of a company whose value proposition revolves around info-hoarding. Convenient, that is, as long as people are smart enough not to apply the "secrets suck" philosophy to their Google passwords , credit card numbers and various other secrets they need to put money in Google's pockets.

Wednesday, December 09, 2009

Climate change conferees arriving in Copenhagen avoid the carbon reducing buses

and go for the higher carbon emitting cars. (Via Don Boudreaux)

UPDATE: Graham Winfrey, channeling Dennis Gartman, has much more:
We haven't got enough limos in the country to fulfill the demand [so]... we're having to drive them in hundreds of miles from Germany and Sweden.

When asked how many of the delgates had asked for a "hybrid" fuel driven limousine, the same company owner said

Five. The government has some alternative fuel cars but the rest will be petrol or diesel. We don't have any hybrids in Denmark
, unfortunately, due to the extreme taxes on those cars. It makes no sense at all, but it's very Danish.

Quotes of the day

The short sushi, long kimchi trade is not without its dangers.--Christopher Swann

Knowledge is becoming more specialized and more dispersed, while government power is becoming more concentrated.--Arnold Kling

Proponents of a transactions tax misunderstand the way markets work. The bubble in home prices in the United States was not caused by the rapid buying and selling of individual family homes. The financial crisis was primarily a liquidity crisis and a credit crunch, and the major problem with collateralized mortgage-backed bonds was that they declined significantly in value and became illiquid. A transactions tax that would have reduced trading and made repurchase agreements more costly, could have made the problem even worse.--Burton Malkiel and George Sauter

Trying to shut down criticism in the name of science is the real attack on science.--Clive Crook

Remember the Club of Rome’s resource scare? In 1972, 57 predictions of exhaustion were made regarding 19 different minerals. All either have been falsified or will be. Remember the global-cooling scare promoted by, among others, the Obama administration’s science czar, John Holdren? (Yes, global cooling was a big deal, although it was not a “consensus.”) And all of the above doom merchants were uber-confident and still are loath to admit they were ever wrong. Holdren, for example, is sticking to his prediction that as many as one billion people could die by 2020 from (man-made) climate change. That’s about ten years, folks.--Robert Bradley Jr.

... when free marketers warn that Democratic health care initiatives will make us more “like France,” a big part of me says, “I wish.”--Matt Welch

The shock is to [Tiger Woods'] flow of income from his endorsements. This is equivalent to losing the lottery and having money taken from you. The bottom line is that Jacob Mincer was a more important dude than Tiger Woods. At the end of the day tapping a ball into a hole in a minimum number of strokes just isn't that important.--Matthew Kahn

History is the monster. And there is no escape. You can't talk your way out of it--at every step we're confronted by our own laziness. It warps our stories, reduces beautiful and complicated narratives about race, sports, agency into cartoonish fairy tales. It's sad. I always thought that what we needed in this country wasn't so much cash payments, but some respect for history. Not history as an excuse for hamburgers, hot dogs and chips, but history as a way of understanding who we--despite ourselves-- really are. And for African-Americans, history really is the balm in Gilead. I think a lot of us can come to some peace, can come to understand that whatever happened to us, there are limits on what anyone can do to make it right, and while those limits have to be pushed, some of this we're going to have to carry ourselves. And then with a even broader sense we can understand that our suffering is not singular, that it isn't the only suffering. And finally--and most important to me--we can understand ourselves as Zora Hurston did, as more then a litany of abuses, as more than a walking protest, as something apart and distinct from what someone else did to us.--Ta-Nehisi Coates

Peacemaking quests came in two kinds: scabs and abscesses. A scab is a sore with a protective crust, which may heal with time and simple care. In fact, if you bother it too much, you can reopen the wound and cause infection. An abscess, on the other hand, inevitably gets worse without painful but cleansing intervention. ‘The Middle East is an abscess,’ he concluded. ‘Northern Ireland is a scab.’--Bill Clinton

Yet because Clinton doesn’t do introspection, he doesn’t go on to draw the obvious inference: he was a scab president.--David Runciman

I used the word quaint in referring to provisions in the Geneva Conventions that require the signatories to provide the prisoners of war privileges like commissary privileges, scientific instruments, athletic uniforms. I think those provisions are quaint. I did not say nor did I intend to say that the basic principles of the Geneva Conventions in providing for humane treatment were quaint. So if I had to do it again, what I would not do is use the word quaint and the Geneva Conventions in the same sentence.--Alberto Gonzales

... it comes as a shock reading The Clinton Tapes to discover just how little George [Stephanopoulos] mattered to Bill [Clinton] during the time when Bill meant so much to George. ... The things [Clinton] loves are politics, hard data and his family, in roughly that order. The thing he hates is the media, above all newspapers, on which he blames almost all his troubles. His love of politics is not a love of the sort of low-level politicking in which Stephanopoulos and his fellow staffers indulge. Rather, he has an unquenchable fondness for politicians themselves, with all their foibles and all their weaknesses – it is, in other words, a kind of self-love. ... Clinton liked politicians who played dirty because they made him feel better about his own peccadilloes. He also liked anyone who was susceptible to his charms, which was true of many more politicians than it was of newspaper journalists. Most of all, though, what Clinton liked about his Republican opponents was that he was better at politics than they were. ... He gets it badly wrong in 1995, when he spends most of the year worrying obsessively about Colin Powell, whom he suspects of planning to run for the presidency and fears is the one person who could beat him. When Powell decides not to run, these anxieties suddenly look silly, but Clinton can’t let it drop. ‘The mistaken prediction about Powell seemed to gnaw at Clinton,’ Branch writes. ‘His mental churn pulled up a fresh clue. Every upward step for Powell had been paved by patronage and appointment, observed Clinton, including his post in the Reagan White House. Powell was a career staff officer at heart.’ In the end, Clinton nailed his man, as Powell’s horribly ineffectual spell as George W. Bush’s secretary of state was to show. ... Here is the ultimate insult in the Clinton lexicon: Gore had been posturing like a journalist when he should have been thinking like a politician. For Gore, Clinton is the posturer because he can never come clean about the demons that drive him. This gives Gore the moral high ground. But Clinton has the killer political argument. ‘By God,’ Branch has him exclaim, ‘Hillary [who was winning her New York Senate seat at the same time Gore was losing the presidency] had a helluva lot more reason to resent [me] than Gore did, and yet she ran unabashedly on the Clinton-Gore record. With that clarity, she came from 30 points down to win by double digits.’ ... Who can say if one person really loves another, but Bill appears here to be genuinely fond of his wife, and genuinely frightened of her. He is thrilled when she becomes a senator and he shows plenty of respect for her political judgment – she spots that Colin Powell is all medals and no trousers well before he does. Yet behind all this solicitousness it’s not hard to see the guilt bubbling away, as it does in Clinton’s relationship with Chelsea, whom he adores, pampers and, of course, betrays.--David Runciman