Tuesday, November 30, 2010

Quotes of the day

I'd rather get punched in the face 10 times than study for those [FINRA] tests again.--Wayne Chrebet

[A player lockout next season is a] near certainty. The magnitude of the loss would be at the very least about $160 million to $170 million per team-city.--DeMaurice Smith

The big elephant in the room is not Portugal but, of course, it’s Spain. There is not enough official money to bail out Spain if trouble occurs.--Nouriel Roubini

Many people seem truly astonished by my decision not to comply with the Federal Bureau of Investigation’s request to wear a wiretap to record conversations with a client. I have even been asked, “Why not just agree to wear the wire to show that no wrongdoing had occurred?” Unfortunately, that requires assuming that I was asked nicely to cooperate. That was not the nature of the proposal I was offered. (And had I agreed, I have no doubt I would have been asked to record conversations with others as well.) A surprise visit by the F.B.I. to your home — especially when your wife and two young children are due to arrive from school at any moment — is a shocking, terrifying experience. It makes me wonder whether they deliberately chose this time of maximum vulnerability. F.B.I. agents are backed by the full force of the federal government, and the ones who arrived at my home made it abundantly clear that they believe I am guilty, and therefore so are all of my clients, and they threatened to arrest me on the spot. ... The S.E.C.’s proper role is to provide guidance and rules to the investment community on what is considered appropriate behavior. If the agency is doing its job, it will take note of untoward activities and issue a cease-and-desist order. But here, the rule-making appears to be decided by the Justice Department. My personal belief is that much of this activity is politically motivated, and will ultimately only delay the return of the confidence of Main Street and Wall Street in our country. Our economy won’t fully heal and return to solid growth so long as the political class maintains its vendetta against business interests in our country. This, along with my firm belief that my clients and I have done nothing wrong, is why I have chosen to take a stand. It’s about fighting for what I believe should be fair dealings between individual citizens and their government.--John Kinnucan

How surfing is like investing

I've never surfed, but I really liked this:
* Know exactly how to exit before you enter.
* Being in the right spot is more important than the size of the wave.
* The waves you let go are more important than the wave you catch.
* If you miss a wave be sure that another will come behind it.
* Stay out of the water when wild amateurs are present.
* Avoid crowded take offs.
* Don't panic in a wipeout and don't fight the current.
* Success is achieved by taking risk, not avoiding risk.
* Push too hard and you get hurt - don't push hard enough and you can get hurt even worse.
* Get in the water yourself to evaluate the current by instinct - the height and direction of the swell, the wind, the tide, the temperature, the coral reef bottoms, the peak, the trough, the time between sets and the position - data without experience will deaden your senses.
* Know where the "impact zone" is and how to stay out of it.
* Humility trumps arrogance.
* You need to be in condition for the worst circumstance in the worst situation not the best circumstance of the best situation.
* A successful outing is being able to surf another day.

Photo link here.

Monday, November 29, 2010

Quotes of the day

... the principle of noncontradiction has been high orthodoxy in Western philosophy since Aristotle mounted a spirited defense of it in his “Metaphysics” — so orthodox that no one seems to have felt the need to mount a sustained defense of it ever since. So the paradox must be of the second kind: there must be something wrong with the argument. Or must there? Not according to a contentious new theory that’s currently doing the rounds. According to this theory, some contradictions are actually true, and the conclusion of the Liar Paradox is a paradigm example of one such contradiction. The theory calls a true contradiction a dialetheia (Greek: “di” = two (way); “aletheia” = truth), and the view itself is called dialetheism. ... Revolutions in logic (of various kinds) have certainly occurred in the past. Arguably, the greatest of these was around the turn of the 20th century, when traditional Aristotelian logic was overthrown, and the mathematical techniques of contemporary logic were ushered in. Perhaps we are on the brink of another.--Graham Priest

Predominantly Catholic countries in Europe and elsewhere, such as Ireland, Spain, or Mexico, had larger families than did predominantly Protestant countries, like Sweden or Norway, even after adjusting for the effects on fertility of differences among countries in their average incomes, education, importance of cities, and other variables. Again, the explanation given for this result was that Catholic families were more reluctant to use contraception to reduce the number of children they had. Demographers even used the situation in Ireland to define a class of behavior called “Irish family patterns”, which meant that men and women married late-in their late twenties and early thirties- and that after marriage women gave birth at frequent intervals because couples made little effort to control their births once married. These findings of a strong Catholic “effect” on fertility changed radically during the past 40 years or so. Studies for the United States now show that Catholic families have, if anything, fewer rather than a greater, number of children compared to Protestant families who have similar incomes and education. A similar reversal has occurred in international comparisons. Catholic countries like Spain, Italy, and Poland now have total fertility rates-the number of children born to the average woman over her lifetime- of only 1.4, 1.4, and 1.2, respectively, far below these rates in the predominantly Protestant countries of Northern Europe. Even “Irish” family patterns no longer hold in Ireland, where the typical woman has a little less than two children over her lifetime instead of four or five, even though she is not marrying any later than the typical Irish woman did in the past.--Gary Becker

For the most part, however, what we see here [with the latest Wikileaks dispatches] is diplomats doing their proper job: finding out what is happening in the places to which they are posted, working to advance their nation's interests and their government's policies. In fact, my personal opinion of the state department has gone up several notches. In recent years, I have found the American foreign service to be somewhat underwhelming, reach-me-down, dandruffy, especially when compared with other, more confident arms of US government, such as the Pentagon and the treasury. But what we find here is often first rate.--Timothy Garton Ash

Some experts, however, questioned WHO's calls for more health donations. "How do you make an impassioned plea for spending more money when we're wasting so much?" asked William Easterly, a foreign aid expert at New York University. He said much of the problem in developing countries is that while donors have spent billions on things like drugs, vaccines and malaria bednets, little has been spent on the health workers needed to distribute them. "Medicines and vaccines don't administer themselves," Easterly said. He also criticized U.N. agencies and major donors like the Bill & Melinda Gates Foundation, who have mostly avoided investing in health systems, preferring instead to build separate programs for illnesses like malaria, polio and AIDS. "That is like doing aerial bombing at 35,000 feet without knowing what you're hitting on the ground," Easterly said. "But investing in medicines for AIDS and malaria makes for much better publicity than investing in health systems."--Maria Cheng

So here goes for what Aid Watch is sincerely thankful for: For the largest reduction in world poverty in human history, which has already happened in our generation. For the largest improvement in health and life expectancy in human history, which has already happened in our generation.--Aid Watch

Most people operate in an environment of such low risk that both action and inaction have very few consequences. So although we may be attracted to the tiger on the terrace, we prefer to live with the kitty in the kitchen. The tiger on the terrace is operating in a high-risk environment so the consequences of his actions are significant. He is keeping everything stirred up and everyone around him on their toes. He is tireless, always in perpetual motion, relentless, obsessed and fills every room with energy the moment he enters. He has a twinkle in both eyes and all in his path are standing on their toes. While he is on the terrace no one is whining, complaining or sick. They are all running for their lives. That is entertaining for most people to watch, but not to live. The tiger is all things to excess and nothing to moderation. As a consequence, the masses choose to trade the tiger for a kitty in the kitchen and lower risk tolerance. The daily risk appetite of the tiger is just too exhausting even though the thrill quotient is significantly higher. Most people want mediocrity, security, safety and repetition. The kitchens are then filled with whining, sickness, complaints and boredom. That is why there are few tigers left in the world and millions of kitties. Leaders are tigers!--Tom Barrack

Sunday, November 28, 2010

The shadow of greed, that is

Death is a natural part of life. Rejoice for those around you who transform into the Force. Mourn them do not. Miss them do not. Attachment leads to jealously. The shadow of greed, that is.--Yoda

Just when does an artist decide to step away from a piece of work and say, in no uncertain terms, “It’s done?” The “Star Wars” faithful erupted in anger, and with good reason. A healthy chunk of the documentary details the outrage over the “Star Wars” scene involving Han Solo and Greedo, which underwent an ill-advised tweak, to showcase Lucas’ bald overreach. What isn’t addressed, but implied throughout the film, is that Lucas the artist is clearly in decline. When he decided it was time to create the prequel films his filmmaking skills had started to ebb, but his ego had only just begun to grow. Rather than hire a director to help the prequels, as he did with Episodes Five and Six, he took on the task himself. Lucas’ journey toward the Dark Side began when the “Star Wars” toy brigade started hitting the market. The franchise’s merchandise potential caught his eye, turning an iconoclastic filmmaker into a parody of the corporations he once mocked. And where are those small, personal films outside a galaxy far, far away he promised us in interview after interview? Lucas comes off as arrogant here, and blindingly hypocritical for massaging the original trilogy. Years earlier he had testified before Congress about the harm adding color to great black and white films would do to the cultural fabric. Yet here he was performing a similar act to his own trilogy with little regard for the consequences.
Image link here.

Wednesday, November 24, 2010

I thought Paul Krugman only contradicted himself depending on which party was dominant in Washington, D.C.

or around 4 years.

Apparently, he can contradict himself in 4 weeks.

Quotes of the day

It turns out that Bloomberg ran a headline on its terminals at 1:48 EST. The headline read: “Janus Says It Received Inquiry Calling For General Information.” That information wasn’t publicly available to anyone who does not have a Bloomberg terminal. It wasn’t posted on Janus’s website. In fact, it took several minutes before it appeared in any place the general public has access to. So is Bloomberg aiding insider trading? Of course not. It’s a journalistic enterprise whose right to report information is protected by the First Amendment. That’s true even if the information is ‘non-public’ and has obviously been leaked by an insider. And, although it’s less clearly spelled out in the constitution, the right to gate the information so that it is only available to subscribers is probably protected as well. The question is: what’s the difference between what Bloomberg did on Janus today and what the expert networks and consultants are doing?--John Carney

Here is what [Stevie Cohen] is not: he is not Warren Buffett, arguably the best investor in history. Buffett is a fundamental investor, a man who takes deep, long-term views on the prospects of one company or another, and then tries to pick his entry point when he's got a large "margin of safety" as protection. It's not difficult to understand why Buffett's early investments in the likes of Coca-Cola (KO), Wells Fargo (WFC), and American Express (AXP) have paid off over the long haul. Cohen is also not Marc Lasry of Avenue Capital, an investor who specializes in so-called distressed investments. When you're a distressed investor, you not only have to have a well-thought opinion on the prospects of a company, you also need to know your way around the capital structure. Size and experience go a long way in the distressed realm, and the big can get bigger by virtue of that edge. When Lasry tries to take control of Donald Trump's bankrupt Atlantic City casinos, we can understand where he's coming from: the assumption that a serious human being could run Trump's casinos better than the Donald himself. Finally, Cohen is not James Simons of Renaissance Technologies, the king of the quantitative investors. While SAC Capital may use some trading algorithms in its day-to-day, Cohen's is not a black-box operation, with software designed and constantly tweaked by a squadron of PhDs like those that work for Simons. We may never learn what Simons' algorithms actually are, but we do accept that computers can outperform humans at quantitative tasks. Cohen, in short, is a trader. According to one knowledgeable investor, Cohen has called what SAC does "information arbitrage." He and his staff are simply whipping stocks around on a day-to-day basis, trying to get an information edge over the guy on the other side of the trade. If that sounds fundamentally useless, that's because it is.--Duff MacDonald

While every decent person applauds fairness and condemns unfairness, “fairness” is far too fuzzy a concept to guide public policy. To see why, imagine what the state of First Amendment law would be like were only a few words of that amendment changed to make its guiding principle fairness rather than freedom: “Congress shall make no unfair law respecting an establishment of religion, or prohibiting the fair exercise thereof; or abridging the fairness of speech, or of the press; or the right of the people fairly to assemble, and to petition the Government fairly for a redress of grievances.” Is there any doubt that replacing “free” with “fair” in this context would remove all teeth from the First Amendment? In the same way, a policy of fair trade rather than free trade would, in practice, be a policy of unfree – and, by the way, unfair – monopoly privileges for politically influential domestic producers.--Don Boudreaux

Politicians lie all the time. They are expected to lie. The British government lied in 1931, 1967, and 1992, when it said it wasn’t going to devalue, before it did devalue. That’s expected. Everyone knows that if you say you will devalue in the future, it forces an immediate devaluation. And under a gold standard if there is uncertainty about whether a devaluation will occur then gold hoarding increases, which is deflationary. This happened on four occasions during the Great Depression, and on each occasion asset prices and industrial production declined sharply.--Scott Sumner

Every damn day, if you tune in to any of the 24-hour news outlets, the same pundits retread through the same stuff--they all say the same thing. I spend a great deal of time trying to figure out how the whole DC opinion apparatus remains employed. If there were any justice, their ranks would swell the unemployment rate beyond 10 percent. And still, some moron known as a news executive who hasn't registered a thought beyond mediocre in my lifetime approves of this, and Americans, educated to believe 2+2=5, will put up with anything. Into this horror walks Sarah Palin, who is kind of a sexy librarian, kind of a MILF, kind of just crazy, and altogether does what she wants to do. This, actually, is normal behavior. But we are so used to watching other female politicians compromise in so many ways that there is not enough Vaseline in all of CVS to make the situation comfortable--so Sarah Palin seems completely strange. Unfortunately, Sarah Palin is not very bright, not very thoughtful and not very qualified to run a country. Or a state. But really, are any of the other idiots who want the job so much better?--Elizabeth Wuertzel

You can either be an unhelpful and indecisive wimp, or you can be a frickin' idiot. There are no other options. I recommend the frickin' idiot path because it's more masculine.--Scott Adams

The enormous amount of coal required to run our great ocean steamships, our leviathans of the deep, and the innumerable factories of our cities is making such inroads upon the available store that nature cannot forever supply the demand. When all the coal of the earth is used, what then?--Lord Kelvin, in 1902

One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.--Al Gore

... Gore explains why he voted for ethanol subsidies despite believing that they are poor public policy. Note that Mr. Gore refers to his knowingly selling his principles for votes as a “mistake.” Unless he means that his effort didn’t pay off with the top job in the White House, his soul-selling was no “mistake”; he knew exactly what he was doing and why he was doing it. His soul-selling was an instance, pure and simply, of the hypocrisy and lying that is the stuff of too many political campaigns.--Don Boudreaux

Palin Derangement Syndromers collectively breathe a sigh of relief

Strangely, I do, too:
It seems that the Tea Baggers (really, someone should tell those narrow-minded chumps the alternative meaning for that) have been voting in droves to perhaps soften the image of the gobbledegook nattering, gun wielding simpleton, Sarah Palin, who is probably going to be the next US president.

However, there is room for hope. That’s because, despite the efforts of the slackjawed xenophobes, Bristol Palin didn’t win Dancing With The Stars. Jennifer Grey and Derek Hough did.
While Mom is not my first (second, or third) choice for President in 2012 or 2016, I'm also not worried that she would do much worse than Obama, Bush, Kerry or Gore.  She'd probably do better, without the Harvard/Yale elitist brainwash.  Truman avoided this, and he was pretty good; then again, LBJ missed as well, and he was terrible.

Photo link here.  Chart here.

Tuesday, November 23, 2010

Economists with trade settlement uncertainty

Check out the comments.

Quotes of the day

Employer callbacks to attractive men are significantly higher than to men with no picture and to plain-looking men, nearly doubling the latter group. Strikingly, attractive women do not enjoy the same beauty premium.--Ben-Gurion University of the Negev, Department of Economics

If your child is habitually rude or even violent, then changing behavior has to be your priority; it's a precondition for any deeper progress. You can't discuss your child's feelings while he's screaming or kicking you. And no matter how mellow your child is, you've got to tailor your explanations to his age.--Bryan Caplan

The key to understanding why market economies have outperformed planned societies is not recognition of the ubiquity of greed, but understanding of the power of disciplined pluralism. The primary strength of the market economies – and certainly the strength of their economic performance – results from the way in which the market provides freedom to experiment and opportunity to imitate successful innovation, yet is ruthless in cutting off successful experiment. Planned societies, in contrast, have been typically slow to innovate and, when they have done, have been quietly slow to acknowledge when innovation has failed – as most innovations do.--John Kay

The Fed isn’t really trying to create inflation.--Scott Sumner

Here in the United States, one thing that strikes me about my most liberal friends is how conservative their thinking is at a personal level. For their own children, and in talking about specific other people, they passionately stress individual responsibility. It is only when discussing public policy that they favor collectivism. The tension between their personal views and their political opinions is fascinating to observe. I would not be surprised to find that my friends' attachment to liberal politics is tenuous, and that some major event could cause a rapid, widespread shift toward a more conservative position.--Arnold Kling

The main danger to liberty here is not the TSA but rather a set of American attitudes which, at the same time, take our current "war" both far too seriously and also not nearly seriously enough. Overall, I'd like to see less posturing in these debates and more Thucydides.--Tyler Cowen

"All of us?" Really, Mr. President?--David Henderson

The companies with multimillion-dollar contracts to supply American airports with body-scanning machines more than doubled their spending on lobbying in the past five years and hired several high-profile former government officials to advance their causes in Washington, government records show.--Fredreka Schouten

Unbeknownst to the 12 of us [jurors], we were playing out a script to the letter. Our inability to reach an accord, while not the stuff of Law & Order, was not a failure per se but actually set in motion a chain of events that allowed all parties to get the something if not good then at least reasonable for all involved from an otherwise terrible situation. All I could think as I walked to my car after being excused was this: from chaos comes order. This system that we look at and think that it’s in disrepair, that nobody can possibly fix it or in which you have “activist judges” on one side and uncaring, throw-the-book-at-them judges on the other side just isn’t a fair characterization. What you truly have is a proverbial sausage factory: it’s incredibly messy, nothing seems to make sense, nothing looks good or reasonable or even real, but at the end of the line there is something like justice. It doesn’t always look right. It doesn’t always feel right. It doesn’t even always taste right. But it’s at least palatable.--Tux Life

Beginning in the 1950s, however, a growing band of East Asian countries followed Japan in mimicking the West's industrial model, beginning with textiles and steel and moving up the value chain from there. The downloading of Western applications was now more selective. Competition and representative government did not figure much in Asian development, which instead focused on science, medicine, the consumer society and the work ethic (less Protestant than Max Weber had thought).--Niall Ferguson

The religion of peace further distinguishes itself.--Tony Woodlief

Monday, November 22, 2010

From making Subway sandwiches to receiving the Medal of Honor

Thank you Sergeant Giunta.

The Sal Giunta Story from SebastianJunger/TimHetherington on Vimeo.

Quotes of the day

... in the long run the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if it is often mistaken, is less likely to do harm than the centralized decisions of a government; and certainly the harm is likely to be counteracted faster.--Sir John Cowperthwaite

You’ve got to understand, guys just want to play the game. Guys don’t really want to practice. We play games like this, what, two in five days? Something like that. One day of practice, so you don’t have to worry about coach Belichick cursing us out all the time. That’ll be great.--Deion Branch

The problem with these Keynesian policies is that at best they give short term boosts to the economy, but then fizzle out as we are seeing now. Sustaining growth in employment requires sustaining investment, which requires government policy that encourages investment and innovation, not short-run stimulus packages that try to boost consumption and government purchases, which crowd out investment.--John Taylor

Food prices are marching up again mainly because the world economy is recovering from the crisis.--Gary Becker

Erskine B. Bowles and Alan K. Simpson, the chairmen of President Obama’s deficit reduction commission, have taken at hard look at these tax expenditures — and they don’t like what they see. In their draft proposal, released earlier this month, they proposed doing away with tax expenditures, which together cost the Treasury over $1 trillion a year. Such a drastic step would allow Mr. Bowles and Mr. Simpson to move the budget toward fiscal sustainability, while simultaneously reducing all income tax rates. Under their plan, the top tax rate would fall to 23 percent from the 35 percent in today’s law (and the 39.6 percent currently advocated by Democratic leadership). This approach has long been the basic recipe for tax reform. By broadening the tax base and lowering tax rates, we can increase government revenue and distort incentives less. That should command widespread applause across the ideological spectrum. Unfortunately, the reaction has been less enthusiastic. ... THERE are certain tax expenditures that I like. My personal favorite is the deduction for charitable giving. It encourages philanthropy and, thus, private rather than governmental solutions to society’s problems. But I know that solving the long-term fiscal problem won’t be easy. Everyone will have to give a little, and perhaps even more than a little. I am willing to give up my favorite tax expenditure if everyone else is willing to give up theirs. The Bowles-Simpson proposal is not perfect, but it is far better than the status quo. The question ahead is whether we can get Senator Porkbelly and Congressman Blowhard to agree.--Greg Mankiw

So I like the mortgage interest deduction because it effectively repeals a bad tax.--Steve Landsburg

John Kinnucan says he was sipping wine on his front porch in Portland, Ore., on Oct. 25 when a gray sedan pulled up and two men in business suits jumped out, identifying themselves as FBI agents. The two men accused Mr. Kinnucan, 53 years old, of passing inside information to his hedge-fund and mutual-fund clients, he says. He says they threatened to arrest him and asked him to cooperate with their investigation by tape-recording his calls with a client. Mr. Kinnucan declined the offer, and later that night he sent out a blast email to his clients detailing the visit.--Susan Pulliam

There is no question of 'resisting change'. The only question is what can and should be salvaged from 'devouring time.' Conservation is a labor, not indolence, and it takes discrimination to identify and save a few strands of tradition in the incessant flow of mutability.--Joe Sobran

This is not a thought, it’s safe to say, that has ever crossed Bud Selig’s mind.--Ross Douthat

Friday, November 19, 2010

Quantitative easing explanation, further explained

One of my church elders  asked me if the QE video here is true. My explanation to him after the embed.

Yes it is 99% correct.

The Ben Bernank is probably the pre-eminent expert on the Great Depression. QE is not a good thing, but monetary shocks are worse, and the more money that leaks out for now the better. I am glad he is there, but his policy for the US today sort of contradicts his policy criticism of Japan a decade ago.

I am not sure I know anyone better than The Ben Bernank to chair the Fed, with the possible exceptions of Glenn Hubbard, Greg Mankiw, Lars Svensson, or John Taylor. Do you know somebody else more qualified--smart, not a priest of the Church of Unlimited Government, and even keeled in this area?

The Fed's dual mandate is price stability (2-3% inflation) and maximum employment (94-96%). The problem is that unemployment is still high, and the only real dial the Fed can turn is money supply and short term interest rates. If it contracts the money supply, standard theory says that unemployment will rise, but inflation will ease. The interesting thing is that there is record low inflation. I speculate it is because people are incentivized to not spend, so it doesn't matter how much money the govt prints, its not being spent. So inflation stays low, and unemployment stays high.

There are plenty of competitors to The Goldman Sachs, so even though there is some transaction cost and economic friction in transacting with the US Treasury, it's better than it has ever been in history.

If central banks, including the Fed, act irrationally, then smart investment banks and/or hedge funds will make a ton of money (like Soros did against the British pound).

If the Fed said that the world should spend $1,000 on every Bible, then The Goldman Sachs would borrow as many Bibles as people would lend them (say, for $50), sell them to government agencies and anyone else who would take them for $1,000, and then wait until Bibles fell back to proper valuations, say $30, buy them back and return them to their owners and make a bazillion dollars.  Future taxpayers get hosed.

Goldman is seeking and speaking the truth in this case, by forcing prices toward reality and away from foolish policy. They are rarely the false teachers speaking the words our itchy ears wish to hear (with some interesting exceptions).

So it turns out Lloyd Blankfein is doing God's work, at least more than irrational central banks.

Gold is interesting to people because of primitive conditions

In an interview with Sanat Kumar, we learn that platinum and gold were the only stable and rare metals available to civilizations before 1800, and the melting point of platinum is 600 Celsius (1300 Farenheit) degrees hotter.

So why is everyone long again?

Via AR.

Disclosure: I am short GLD.

Chart of the day: Historic SPX earnings

Source here.

Forget Nostradamus

John Templeton is quite the predictor. Here is a letter he drafted in 2005, 3 years before his death.

An excerpt:
Increasingly often, people ask my opinion on what is likely to happen financially. I am now thinking that the dangers are more numerous and larger than ever before in my lifetime. Quite likely, in the early months of 2005, the peak of prosperity is behind us.

In the past century, protection could be obtained by keeping your net worth in cash or government bonds. Now, the surplus capacities are so great that most currencies and bonds are likely to continue losing their purchasing power.

Mortgages and other forms of debts are over tenfold greater now than ever before 1970, which can cause manifold increases in bankruptcy auctions.

Surplus capacity, which leads to intense competition, has already shown devastating effects on companies who operate airlines and is now beginning to show in companies in ocean shipping and other activities. Also, the present surpluses of cash and liquid assets have pushed yields on bonds and mortgages almost to zero when adjusted for higher cost of living. Clearly, major corrections are likely in the next few years.

Most of the methods of universities and other schools which require residence have become hopelessly obsolete. Probably over half of the universities in the world will disappear quickly over the next thirty years.

Obsolescence is likely to have a devastating effect in a wide variety of human activities, especially in those where advancement is hindered by labor unions or other bureaucracies or by government regulations.

Increasing freedom of competition is likely to cause most established institutions to disappear with the next fifty years, especially in nations where there are limits on free competition.

Accelerating competition is likely to cause profit margins to continue to decrease and even become negative in various industries. Over tenfold more persons hopelessly indebted leads to multiplying bankruptcies not only for them but for many businesses that extend credit without collateral. Voters are likely to enact rescue subsidies, which transfer the debts to governments, such as Fannie May and Freddie Mac.

Wednesday, November 17, 2010

Quotes of the day

DEAR Uncle Sam, My mother told me to send thank-you notes promptly. I’ve been remiss.  ... People will second-guess your specific decisions; you can always count on that. But just as there is a fog of war, there is a fog of panic — and, overall, your actions were remarkably effective. I don’t know precisely how you orchestrated these. But I did have a pretty good seat as events unfolded, and I would like to commend a few of your troops. In the darkest of days, Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch. And though I never voted for George W. Bush, I give him great credit for leading, even as Congress postured and squabbled. --Warren Buffett 

... when a large chunk of the latest crop of freshly minted [Harvard] MBAs decamps Cambridge for Manhattan — look out below!--Daniel Gross

I wonder if US government agencies have something to hide

the conspiracy theorist that I am:
U.S. Ends Inquiry of UBS Over Tax Evasion
Must be all that Ludlum I read as a youth.

Tuesday, November 16, 2010

I'm definitely left-brained

Test here.  Attributes include:
uses logic
_detail oriented
facts rule
words and language
present and past
math and science
can comprehend
order/pattern perception
knows object name
reality based
forms strategies
except I'm not detailed oriented.  I think this generally matches the INTJ Myers Briggs profile assigned to me.

From my favorite broker.

Monday, November 15, 2010

Chart of the day: Shiller's cyclical adjusted price earnings ratio

Source here.

Forget about poker, bridge, and backgammon for correlating with success on Wall Street

The operative game is now fantasy football:
[Stanley Druckenmiller] and [Raj] Rajaratnam, founder of hedge-fund firm Galleon Group, spoke frequently because they were in a fantasy football league together, which also included high-profile hedge-fund names like Paul Tudor Jones and Jim Pallotta [of Raptor Capital].
In somewhat related news, my fantasy teams are doing well.  I could be taking first place in the 14-team league after tonight's game (3rd in points), and first in points in the 12-team league (3rd in rankings).  A lot of this had to do with picking up Peyton Hillis after Week 1 (and taking a lot of good natured ribbing on allocating a ball carrier who is white).

Hey, I've only had 4 down months in the last 24. (And no, my benchmark ain't zero).

Quotes of the day

People on all levels of income are better off than they were in 1979. The hon. Gentleman [Simon Hughes (Southwark and Bermondsey)] is saying that he would rather that the poor were poorer, provided that the rich were less rich. That way one will never create the wealth for better social services, as we have. What a policy. Yes, he would rather have the poor poorer, provided that the rich were less rich. That is the Liberal policy.--Margaret Thatcher

There’s a colossal irony here: the very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment. In part, this is because seniors think of Medicare as an “entitlement”—something that they have a right to because they paid for it, via Medicare taxes—and decry the new bill as a giveaway. This is a myth: seniors today get far more out of Medicare than they ever put in, which means that their medical care is paid for by current taxpayers.--James Suroweicki

Someone who begins a sentence with “Confidentially” is nearly always betraying a confidence; someone who starts out “Frankly,” or “Honestly,” “To be (completely) honest with you,” or “Let me give it to you straight” brings to mind Ralph Waldo Emerson’s quip: “The louder he talked of his honor, the faster we counted our spoons.”--Erin McKean

The right question to ask of the Bowles-Simpson plan is not whether the chairmen’s advice will be followed in full. It would be good if it were, but it will not be. The right question is what Mr Obama does next. Will he see the plan as a way for him to take charge and make the US think hard about ends and means – which he, the rest of the political class and the country as a whole have avoided up to now? Or will he see the plan, for which he himself asked, as political poison and hide? If it is the latter, as seems likely, we can conclude that the US has become ungovernable. The Bowles-Simpson plan matters not just for its merits but even more for what it says about the government’s capacity to act. The stakes are that high.  ... That vast empty space in the middle [between the extreme partisan divide of Congress] is the one [Obama] promised to bridge in 2008. I recall, in addition, a good deal of talk about confronting hard questions and leading the country from partisan paralysis to workable solutions. The talk has continued and there has been action as well: nobody could call this an idle administration. But the hardest questions have been shirked and Mr Obama has failed, abjectly, to lead. Mr President, here is your chance. You appointed two excellent chairman to lead your commission. Here is their advice. Accept it. Take ownership of it. Infuriate the zealots on Capitol Hill and, for heaven’s sake, do something with it.--Clive Crook

House Speaker Nancy Pelosi called it, “simply unacceptable.” Richard Trumka of the AFL-CIO thinks it is a death sentence for “working Americans.” The conservative Americans for Tax Reform said it was “merely an excuse to raise net taxes on the American people.” And yesterday on TV, Senator Kent Conrad described the recommendations of the Bowles-Simpson deficit cutting commission as “shock therapy.” Please. There’s nothing radical or earth shattering about the Bowles-Simpson proposals. You want something shocking? Try this. One generation of a once-great nation borrows $14 trillion from future generations so that it can fund a lifestyle it can’t afford – and then refuses to entertain reasonable proposals to curtail its lifestyle. Now, that’s shocking. So selfish. But predictably so. After decades of handouts, of LBJ’s Great Society, George Dubya’s Medicare D and now Obama’s “healthcare for all”, we have a fully entitled nation. And it’s much worse than “me, me, me.” American society is “me, me, me – and make sure you use other people’s money.”--Evan Newmark

Fed Chairman Bernanke wrote in an article in the Washington Post on November 4th that "The Federal Reserve cannot solve all the economy's problems on its own." The slowdown in the recovery of the American economy is not the result of Fed policy, and cannot be cured by yet another bout of open market operations. This is why the Fed should curtail, and better yet, eliminate its plans for QE2.--Gary Becker

[Dubya] Bush, please don’t use the Ivy League, a group to which you clearly belong, as cannon fodder to shape your presidential legacy.--Constance Boozer

Today you give away your privacy for nothing, in dribs and drabs. Your credit card company knows some things about you, your phone company knows others, and FaceBook knows a lot. One thing that all of those companies have in common is that the private information they possess involves mostly your past, and not so much your future. When you post pictures on FaceBook, it is a record of where you were, not a prediction of where you will be. Likewise, your credit card company and the phone company have records of what you did, as opposed to what you plan to do next. Privacy about your past is so cheap that you literally give it away. Privacy about your future plans is another matter. That has real value.--Scott Adams

Columbia gets its head out of its, er, gets its head into the real world

Breaking from a 42-year ban on military activities on campus, students raised the American flag over Low Plaza Thursday morning in a traditional ceremony in honor of Veterans Day.

Via IvyGate.

Friday, November 12, 2010

Quotes of the day

In short [the federal government's Troubled Asset Relief Program, i.e. TARP] may have been the most successful United States program ever. Moreover, it was bipartisan in the sense that both the Republican Administration that created it and the Democratic Administration that fostered it were unified in their beliefs as to what should have been done—and they did it. ... [The media and politicians] continue to excoriate the program as having been harmful to ‘main street’ America. ... The program was never understood by … either group and they acted on their misperceptions by selling the American people an enormous set of falsehoods concerning what was being done and the effect of these programs.--Dick Bove

I don’t want to be too hard on [Jim] Webb: Health care isn’t his bailiwick, he’s a freshman Senator, and his work on prison reform is a model of the kind of task that lawmakers should be willing to take up. But in this case, he’s yet another exhibit in the case against the Senate’s bloc of centrists, center-right and center-left alike. There was a period of months where Webb basically wielded a kind of veto power over a bill that he apparently viewed as a political disaster in the making. And by his own account, he let that power go to waste.--Ross Douthat

You can get as angry as you want, but you cannot assume away the half of the political spectrum that does not want a massive increase in government spending and income redistribution. If you do, the voters will . . . well, do what they just did, and elect more of those people. ... A top tax rate of 28% on a much broader base is not a giveaway to the rich; it's more than double what Theresa and John Kerry paid in 2003.--Megan McArdle

If you accept Chait’s vision of a close-minded, Ayn Randian right and a pragmatic, non-ideological left, you would expect conservatives to be furious over the means-testing and loophole-closing, and liberals to be delighted to have a more redistributionist welfare state. Yet conservative reaction has been muted and respectful (with a notable exception, admittedly) while liberals have been flatly dismissive. Which suggests that maybe, just maybe, American liberalism has more of an ideological commitment to ever-rising government spending than Chait wants to admit.--Ross Douthat

I don't find it surprising that people who are not self-supporting would disproportionately break in favor of higher taxes to support a paternalistic program. But the proportion in the general population which supports tax increases is well under 50%, and unsurprisingly, is lowest among the age groups that are going to pay most of the taxes. ... Like a struggling company, we have a big budget gap, and a limited reservoir of tax increases and spending cuts that we can "spend" on fixing it. Every time we raise taxes or cut spending to fund one program, we leave less that can be used for other programs. Taxes cannot go to 100%. Spending will not go to zero. The question, then, is not simply, "Should we raise taxes or the retirement age to fix Social Security?" The question is, "What are the best spending cuts and tax increases to bring our budget into balance?" ... People in polls are lunatics on the budget; they consistently oppose tax increases, oppose spending cuts, and strongly support balancing the budget.--Megan McArdle

Shouldn’t we struggle against Facebook? Everything in it is reduced to the size of its founder. Blue, because it turns out Zuckerberg is red-green color-blind. “Blue is the richest color for me—I can see all of blue.” Poking, because that’s what shy boys do to girls they are scared to talk to. Preoccupied with personal trivia, because Mark Zuckerberg thinks the exchange of personal trivia is what “friendship” is. A Mark Zuckerberg Production indeed! We were going to live online. It was going to be extraordinary. Yet what kind of living is this? Step back from your Facebook Wall for a moment: Doesn’t it, suddenly, look a little ridiculous? Your life in this format?--Zadie Smith

Unsurprising: Hyperinflation in federal government salaries

Source here.

Why aren't there more gold shorts out there?

I'm the only one that I've talked to that is short. Everyone else that I've talked to is either long, or neutral and trying to talk me out of the short.

Although my short is a hesistant one: I'm longer PALL than I am short GLD.

Don't want to be short metal right now. If I'm going to be long a metal, than I guess it should have some industrial use and intrinsic value (which gold does not).

Megan says
In the event that the US economy melts down so far that buying gold was a good alternative to holding US dollars, then buying canned goods, ammunition, and medical supplies was an even better alternative to gold. The only scenario I can think of in which it makes sense to stockpile a lot of gold is one where you and your household goods are unexpectedly teleported into the sixteenth century. If you worry a lot about this, then by all means, stockpile gold. But you should also probably take the precaution of stockpiling antibiotics and how-to books on dentistry.

Wednesday, November 10, 2010

Superbowl Futures, part 3

Matchbook latest odds (based on midprices):

NY Giants 14.7%
Pittsburgh 13.4%
Baltimore 11.7%
NY Jets 10.4%
Green Bay 9.8%
New Orleans 8.9%
New England 8.5%
Atlanta 7.8%
Indianapolis 7.4%
Philadelphia 4.4%
San Diego 4.3%
Tennessee 4.1%
Kansas City 2.4%

I am buying IND, GB, NO, and TEN; selling BAL and flipping my long NE back to short.  New England is killing me, along with my shorting the NY Giants.

P/L Team Position Paid Market Risk
 $       2.44 ATL 1 5.6% 8%  $   8.00
 $      (5.80) BAL -3 10.1% 12%  $(36.00)
 $          -   GB 1 10.0% 10%  $ 10.00
 $      (0.69) IND 1 7.7% 7%  $   7.00
 $      (0.72) KC 2 2.4% 2%  $   4.00
 $      (7.63) NE -1 1.4% 9%  $  (9.00)
 $      (0.70) NO -1 8.3% 9%  $  (9.00)
 $      (9.12) NYG -1 5.9% 15%  $(15.00)
 $       0.91 NYJ 1 9.1% 10%  $ 10.00
 $       3.48 PIT 1 9.5% 13%  $ 13.00
 $       1.56 TEN 3 3.5% 4%  $ 12.00
 $    (16.28) Total

 $  (5.00)

Part 2 here.

Quotes of the day

The real lesson from the story told in “The Social Network” is that businesses are not sold too soon or too late, but that they are instead sold when the founders can no longer take them forward.--Steven Davidoff

Smart people can be very clueless when they apply too much precision to imprecise problems.--Eric Falkenstein

Older Americans are less healthy than their English counterparts, but they live as long or even longer than their English peers, according to a new study by researchers from the RAND Corporation and the Institute for Fiscal Studies in London. Researchers found that while Americans aged 55 to 64 have higher rates of chronic diseases than their peers in England, they died at about the same rate. And Americans age 65 and older -- while still sicker than their English peers -- had a lower death rate than similar people in England, according to findings published in the journal Demography.--RAND Corp

Capital controls and a fixed exchange rate distort local capital markets in ways that can lead to malinvestment or underinvestment; done badly they harm global trade flows; and they are often a source of rent-seeking for local elites. For this last reason, they are also pretty popular.--Megan McArdle

The US discovered nearly half the drugs approved during [1998-2007], and accounts for roughly that amount of the market, for example. But there are two big exceptions: the UK and Switzerland, which both outperform for their size. In case you're wondering, the league tables look like this: the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel. But while the US may be producing the number of drugs you'd expect, a closer look shows that it's still a real outlier in several respects. The biggest one, to my mind, comes when you use that criterion for innovative structures or mechanisms versus extensions of what's already been worked on, as mentioned in the last post. Looking at it that way, almost all the major drug-discovering countries in the world were tilted towards less innovative medicines.--Derek Lowe

We believe a significant drag on economic activity has been the result of overly-burdensome regulatory initiatives, our challenged fiscal situation, legal uncertainty created by the erosion of the rule of law, and unpredictable tax policy. ... QE2 is much more likely to be successful in creating inflation and speculation in financial instruments. It is perverse that on the heels of suffering the after-effects of the collapse of the internet bubble and then the real estate bubble (both of which the Fed disclaims responsibility for creating or supporting), the Fed would like to encourage the formation of yet another asset bubble. ... An FOMC member added that he didn't know "what the world 'bubble' means." How about a rule where if you don't know what a bubble is, you can't serve on the Fed?--Greenlight Capital

Profitable, high flying startups like Facebook and Zynga don't bother going public anymore. Why put up with the expense, scrutiny, and distraction? Why risk exposure to class action shareholder suits every time a stock blips? Why kowtow to the whims of grandstanding Congressmen each time one of these potentates feels like holding a hearing to beat up on CEOs? These days the IPOs the public has a chance to participate in are mostly companies bleeding money so profusely that they can no longer be supported by their venture capitalists. Going public is their best alternative to going broke. But wait a minute - how do top tier startups achieve liquidity if they don't go public? Isn't getting rich the main objective of entrepreneurship after founders and early employees succeed in changing the world? Can't Uncle Sam force successful entrepreneurs to bend to the rules before they buy those yachts? Nope. The modern way to cash out is by selling stock on a shadowy collection of unregulated private markets. Emerging exchanges like Second Market and SharesPost as well as innumerable bilateral secondary transactions arranged on the old-boy network offer a free-market escape from the tender protections of Congress. Yes, these private markets are opaque, thin, and bereft of both pricing and company performance information. Which is why by law only the rich and well connected can participate. What do the Income Inequality mongerers have to say about that? By trying to eliminate risk from our public markets, Congress is on its way to eliminating reward.--Bill Frezza

Tuesday, November 09, 2010

Quotes of the day

The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America's problems, but they don't include German export surpluses.--German Finance Minister Wolfgang Schäuble

The ephemeral increase in homeownership was to people who never had the wherewithal or commitment to own homes, rather, the boom merely gave all sorts of people money they basically wasted. This highlights the folly of trying to fine-tune aggregate economic statistics, as homeownership is something you can have ‘too much’ of, as inconceivable as that might sound to some back in 2005. [Today we can’t have enough education.] The key to a bubble is the broad asset class trend that facilitates it. This highlights why interviews on CNBC are so clichéd and vapid. I mean, really successful people seem nice enough, usually have virtues like discipline, good humor, and above average intelligence, but once they stop talking about their childhood (who didn't have interesting challenges growing up?), their big idea is often just to go all-in on a big trend that works. A really big bet like that that pays off can't be luck, many people think, because that would be an absurd amount of risk. This just highlights the maxim about confusing a genius with a bull market. It happens all the time.--Eric Falkenstein

We know that taxes do not stay where Congress puts them. In technical terms, the economic incidence of a tax does not match the statutory incidence. Who bears the burden of a tax depends on the underlying economic fundamentals, not on who writes the check to the government. When the government taxes car companies, for instance, the burden falls not only on the company shareholders. It also falls on car buyers and car workers, and most likely on consumers and workers in other industries as well. ... The estate tax is a tax on capital. As such, one would naturally expect it to discourage capital accumulation. Now, put this together with the fact that a smaller capital stock reduces productivity and labor income throughout the economy and the implication is clear: the repeal of the estate tax would stimulate growth and raise incomes for everyone, even those who never receive a bequest. ... Whether a person reaches old age wealthy or penniless mostly depends on the percentage of his earnings he saved - not on the total amount he made in his lifetime. This means that most of the burden of the estate tax falls not on those who have been lucky throughout life but rather on those who have been frugal. In other words, when the government taxes your estate, it is, literally, taxing your patience.--Greg Mankiw

Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies. Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign. Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times. But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories. And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting. Urged on by government warnings about saturated fat, Americans have been moving toward low-fat milk for decades, leaving a surplus of whole milk and milk fat. Yet the government, through Dairy Management, is engaged in an effort to find ways to get dairy back into Americans’ diets, primarily through cheese.--Michael Moss

The Great Persuader was going to carry the country into a new age of progressive politics, creating a new consensus behind the power of a reinvigorated state. The earth would start to cool, the waters to recede, the rainbows would appear in the sky. All pundits, including yours truly, get it wrong sometimes, and normally there would be little point in dwelling on past blunders. But it this case, it is worth exhuming these vaporous and embarrassing stupidities for a few moments. Many of our nation’s intellectual leaders wonder why the rest of the country isn’t more respectful of their claims to be guided by and speak for the cool voice of celestial reason. That so many of them gushed over Barack Obama with all of the profundity of reflection and intellectual distance of tweeners at a Justin Bieber concert should help them understand why their claims of superior wisdom are sometimes met with caustic cynicism. A significant chunk of the American liberal intelligentsia completely lost its head over Barack Obama. They mistook hopes and fantasies for reality. Worse, the disease spread to at least some members of the White House team. An administration elected with a mandate to stabilize the country misread the political situation and came to the belief that the country wanted the kinds of serious and deep changes that liberals have wanted for decades. It was 1933, and President Obama was the new FDR. They did not perceive just how wrong they were; nor did they understand how the error undermined the logical case they wanted to make in favor of a bigger role for government guided by smart, well-credentialed liberal wonks. ... Another factor in the President’s political trouble comes from a failure of rhetoric and communication. Musing over the electoral setback, President Obama has spoken of a ‘failure of communication.’ It’s a strange failure for a President so enthusiastically hailed by the mainstream media as the greatest orator of the era.--Walter Russell Mead

The pursuit of sport is not something we put as much emphasis on here at Sidwell Friends - it's such a vulgar enterprise. My own father wasn't so enlightened - he loved baseball, hunting and other antiquated male pastimes, whereas I celebrate opera, gardening and appeasing my angry, Prius-driving wife. While my passivity and latent homosexuality may negatively impact my son's performance on the football field, I am confident it will prepare him well for a life of NPR, canvas totes, and garden parties featuring locavore cuisine.--Lexus Liberal

Monday, November 08, 2010

Proof of public choice theory?

Tough standards for slot machines; not so much voting machines.

Via Abraham Piper.

I'm getting grayer, too

Quotes of the day

My biggest regret is that I saw things going on that I should've known were wrong or I knew were wrong but then I rationalized them away. I didn't say anything. I should've spoken up a number of times and said, "Wait a moment, this isn't right," and I didn't. That's my greatest regret.--Chuck Colson

When Ken stands up to Lotso at the end of [Toy Story 3], Lotso yells that there’s a hundred million Barbies just like the one he’s fallen for. Ken affirms that he loves Barbie — that she’s special and unique to him; that she’s not replaceable to him. To be pretentious for a second, that’s a gesture Shakespeare uses a lot — putting wisdom in the mouth of a fool.--Michael Arndt

[Thomas] Schelling pointed out that toddlers and terrorists have a tremendous advantage in any negotiation because both are immune to reason. They can demand everything, and often get it. (I can’t advise on the subject of dealing with terrorists, but I can attest that most negotiations with two-year-olds go better if conducted at home, rather than in a restaurant, train or bookshop.) All this is very frustrating for those of us who advocate a bit of give and take in life, but there is a consolation: there’s good reason to believe that co-operative people tend to find each other and do very well sharing and sharing alike. As for greedy bullies, they can do well toe-to-toe with reasonable people, but not so well when they meet other greedy bullies. Two people who won’t back down is a recipe for a well-deserved disaster.--Tim Harford

[Istvan] Hargittai is a Hungarian historian who has written extensively on the Nobel Prize itself, Nobel laureates, and some of the greats who did not get the biggest prize in science. His 2003 book The Road to Stockholm includes eleven chapters on the prize and its winners, then a final (and best) chapter: "Who Did Not Win." I have heard Hargittai speak about the subject of this chapter. He is direct and devastating in his judgments on why some of the greats in science were passed over for the big prize. Hargittai puts a human face on science (very much warts and all), which is missing from so much scientific biography. Of course there has been a trend recently in scientific biographies to talk about lust in the lives of their subjects. We all know now that Einstein would not be named husband of the century. Erwin Schrödinger, known for the thought experiment "Schrödinger's Cat," created the Schrödinger equation, central to quantum mechanics, on a winter semester break. At the time he was having an affair with twin young women in one of his classes. He took one twin to the Alps and came back with the equation. But while sins of the flesh haunt the lives of the rich and powerful, Coffey leaves these sins in the background to concentrate on the sins of the spirit central to their success or failure. It is Pride, Envy, and Greed that often make the difference between who gets the big prize and who doesn't.--Neil Gussman

San Francisco officials strike a blow for “food justice” by barring the Happy Meal. I think the word “justice” has now jumped the shark. We already have economic justice, social justice, global justice, environmental justice, climate justice, housing justice, transportation justice, even — no kidding — judicial justice. The game seems to be that when you want to force other people to adjust their lives to better suit your preferences, you slap the word “justice” on the end of your slogan and it’s transformed into a golden ticket on the rail car running straight to the tippy top of Moral Mountain. Well, I’m agitating here for definitional justice, and my manifesto is simply that every person who associates the word “justice” with some economically ill-informed utopian fantasy ought to be required to wear a t-shirt that says: I’M GETTING IN TOUCH WITH MY INNER IRON-FISTED AUTOCRAT.--Tony Woodlief

The most important step in raising the growth rate is not to increase but rather to lower taxes on capital and entrepreneurship. This implies maintaining essentially all the Bush tax cuts, including those on capital gains and dividends, and those on incomes at all levels, including quite high incomes. The estate tax on very high levels of wealth could be reinstated if politically necessary, but it will only bring in a very small amount of tax revenue, and will be more costly than it is worth. Tax reform also implies a reduction in the corporate income tax, and especially reductions in taxes on incomes of small businesses. Successful small businesses that grow to become large companies, such as Wal-Mart, Starbucks, Microsoft, and Apple, form the foundation of the American economy. They should be strongly encouraged. One goal of such tax reform is to eliminate as much as possible taxes on capital since economic theory basically implies that economic efficiency requires that capital not be taxed in the long run. For the supply of capital in the long run is highly responsive to after-tax rates of return on capital.--Gary Becker

Clearly the US needs to move aggressively to shift global demand in its favor because most countries are doing just that – that is what beggar-they-neighbor means, and in a beggar-thy-neighbor world whoever does not respond will bear most of the brunt of the pain. There is no point pretending that we are not in a world in which nearly every country is cheating on trade, and will continue cheating as long as it is able. But the wrong aggressive moves can easily make things worse. I guess this means that the whole trade problem really will best be resolved by an intelligent multilateral agreement, with no cheating and no free-riding, that involves a set of determined and coordinated policies that bring the imbalances down gradually over the next several years. But that is asking for a lot. My guess? Trade disputes will be resolved through more tariffs and currency interventions. No one out there, it seems, is willing to do more than wish the imbalances away. Actually to take the painful rebalancing steps is still not on anyone’s agenda.--Michael Pettis

Third-party apps and services can’t pull data from Google without allowing Google to do the same with their data. Think of it as a declaration of data reciprocity. ... To me, the contact info of my friends is *my* social graph — not Facebook’s social graph. I should be able to take it wherever I wish. My only criticism of Google’s move is that it has taken way too long.--Mathew Ingram

At the end of the day, the peculiar story of the downfall of Mark Hurd at the hands of Jodie Fisher remains a drama about what happens when only two people know all the facts, yet many others act on them—with momentous consequences.--Adam Lashinsky

But there were other matters weighing on H-P's board. An investigation by The Wall Street Journal into Mr. Hurd's sudden ouster reveals that the letter contained an explosive allegation: that in early 2008, Mr. Hurd told Ms. Fisher of a still-secret H-P plan to buy Electronic Data Systems Corp. Though directors had little reason to doubt Mr. Hurd's assurance this allegation was false, some fretted about it. That is because of what the Journal found was the ultimate reason directors ousted Mr. Hurd: They had lost confidence he was being honest with them about his relationship with Ms. Fisher.--ROBERT A. GUTH, BEN WORTHEN And JUSTIN SCHECK

Women assault each other twice as much as men do, and they fight one and half times as much as men do ...--Diego Gambetta

Chart of the day: US GDP growth

Source here, via Abnormal Returns.

Friday, November 05, 2010

Quotes of the day

When people tell me how mad they are at Wal-Mart for driving the mom-and-pop stores out of business, I ask them how Wal-Mart managed to do that. Did they go around torching their stores in the middle of the night, threatening the moms and the pops with baseball bats if they didn’t close their stores? The consumers drove the mom and pops out of business. The consumers preferred Wal-Mart (and Target and K-Mart) to the mom-and-pops. To the extent Wal-Mart did the driving, it was by offering better products at better prices. I was thinking of that yesterday when I saw the headline in the Washington Post:

GOP Seizes Control of House

I know, it’s just an expression. But they didn’t seize control. The voters essentially gave the Republicans control. (I say “essentially” because voters don’t vote for who gets control–they vote for an individual politician.) And if the Republicans don’t do a good job, the voters will let the Dems run the House again.--Russ Roberts

This election was a nationwide recoil against Barack Obama's idea of unlimited government. The more he denounced Republicans as the party of "no," the better Republicans did. His denunciations enabled people to support Republicans without embracing them as anything other than impediments to him. He had defined himself as a world-class whiner even before Rahm Emanuel, a world-class flatterer, declared that Obama had dealt masterfully with "the toughest times any president has ever faced" - quite a claim, considering that before the first president from Illinois was even inaugurated, seven of the then-34 states had seceded. Today's president from Illinois, a chronic campaigner and incontinent complainer who is uninhibited by considerations of presidential dignity, has blamed his difficulties on: George W. Bush, Rush Limbaugh, Fox News, the Supreme Court, a Cincinnati congressman (John Boehner), Karl Rove, Americans for Prosperity and other "groups with harmless-sounding names" (Hillary Clinton's "vast right-wing conspiracy" redux), "shadowy third-party groups" (they are as shadowy as steam calliopes), the U.S. Chamber of Commerce and, finally, the American people. ... The progressive agenda is actually legitimated by the incomprehension and anger it elicits: If the people do not resent and resist what is being done on their behalf, what is being done is not properly ambitious. If it is comprehensible to its intended beneficiaries, it is the work of insufficiently advanced thinkers.--George Will

I don’t believe for a second that the majority of people who argue for health reform really give a damn about the poor or infirm – it just makes them feel good to say it, or be more acceptable in the company of others. Why do I say this so strongly? Because providing even a very generous level of support to the poor and the infirm is so easily within our reach that it is laughable to suggest otherwise. Instead, “we” use the poor and infirm as pawns in a corporatist game, in a middle-class entitlement game, special-interest game, political-nanny-statism game, and no one is willing to admit it. Look at it this way. You want to argue that the world’s richest economy could easily sacrifice a little income to make sure people do not die (early, unnaturally, due to the poverty that used to kill people) because of income or for the seriously infirm to go without care. I agree. If you add up all of the annual expenditures by local governments, state governments, and the federal government in the United States, you would get a figure around $6 trillion. That would make the US government the world’s single largest economy, and by a factor of 20%.--Michael Rizzo

It is hard to exaggerate the emotions invested in the “hopey-changey thing” around the world. Just think of the cheering crowds at Mr Obama’s open-air speech in Berlin in the summer of 2008; the rave reviews given to the newly-elected president’s Cairo speech on Islam and the west; the Nobel Peace Prize awarded to Mr Obama, when he had barely had time to arrange his pens on the Oval Office desk. Now a nasty thought is occurring to the foreigners who invested so much hope in the new president. Perhaps Mr Obama represented not a new beginning in American relations with the rest of the world, but a temporary aberration? Maybe, after a brief stab at internationalism and engagement with the rest of the world, the US will revert to a more unilateralist and nationalist foreign policy?--Gideon Rachman

Video of the day: We've figured out a surefire way around the First Amendment

Incumbents, that is.

Via Don Boudreaux.