Quotes of the day

Who would have thought that Hollywood environmentalists would find themselves aligned with Persian Gulf oil barons? --John Carney

The [Iranian] Fars News Agency, which is close to Iran’s powerful Republican Guard Corps, posted its version of the report on its English-language Web site under the same headline used by The Onion for the original four days earlier: “Gallup Poll: Rural Whites Prefer Ahmadinejad To Obama.”--Robert Mackey

[Warren Buffett] thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.--Alice Schroeder

The real reason why Warren Buffett wants to raise income tax rates

To fund his enormous special tax deals:

Yesterday, First Solar (FSLR) announced that it had sold its interests in a big solar project called Topaz. The buyer was MidAmerican Energy Holdings, a subsidiary of Berkshire Hathaway.
...
-PGE gets a long-term supply of alternative energy that allows them to grow for a few more decades.

-First Solar gets out of a huge headache. It gets get to sell solar panels to Topaz.

-The citizens of California that will use this power will get nothing. They will continue to pay the highest rates for electricity in the country.

-The US tax payers foot the bill for another $600 - $700mm. That's the "Vig" for Warren. Those taxpayers also get nothing in return.

How about a 2% wealth tax for those who have net worths above $25 million?

Quotes of the day

... Mr. Buffett didn’t build his $10 billion-plus stake in I.B.M. overnight. He started buying eight months ago, beginning in March. You wouldn’t have known that if you had been studiously reading Berkshire Hathaway’s filings — known as 13Fs — in which companies must disclose stock holdings. There was no mention of I.B.M. in Berkshire’s quarterly filing in April, nor in August. Instead, if you were looking carefully, you might have found an odd footnote that said: “Confidential information has been omitted from the form 13F and filed separately with the commission.”
...
Translation: Mr. Buffett received special permission from the S.E.C. to keep secret his investment in I.B.M. — and possibly keep secret stakes in other companies that he is building positions in that we have yet to learn about. Mr. Buffett’s special treatment from the S.E.C. is not new — he has long taken advantage of an obscure rule to avoid disclosing his bets to the public before he is good and ready. Mr. Buffett — and other billionaire investors like Carl Icahn, Bill Ackman and Nelson Peltz — essentially argue that the simple disclosure of an investment would cause the price to rise so much as to scuttle their strategy.
...
The rule says that the S.E.C. “may prevent or delay public disclosure of form 13F information for public interest reasons or the protection of investors.” In this case, the rule is clearly meant to protect the investor — Mr. Buffett — not the public.--ANDREW ROSS SORKIN

As a general rule, you can usually assume that someone is trying to screw someone else whenever you find these two elements working together:

Complexity
Money

Complexity is how evil schemes are hidden from the public. Complexity is what caused so many people to get mortgages they couldn't afford. Complexity is how hedge funds hide their treachery. Complexity is how the derivatives debacle was possible. Complexity is how your financial manager can get away with charging you for doing nothing. Complexity is why you don't know if you can get a better deal with another phone carrier.--Scott Adams

I’ve always been curious about successful men, leaders, and what they know that the rest of us don’t. This book was entertaining because Eisenhower was a character, nearly getting himself kicked out of West Point, causing a lot of trouble. But always there was in him a sense of confidence, a sense he would become somebody important. And more than this, he believed the world needed him — that if he didn’t exist, things would fall apart. He believed he was called to be a great man. I wondered, as I read, where he got this confidence.  I found the reason for Eisenhower’s confidence early on in [ At Ease: Stories I Tell to Friends.], in a chapter in which he discussed his childhood. Dwight Eisenhower said that from the beginning, his mother and father operated on an assumption that set the course for his life: that the world could be fixed of its problems if every child understood the necessity of their existence. Eisenhower’s parents assumed, and taught their children, that if their children weren’t alive, their family couldn’t function.--Don Miller

Plans are nothing. Planning is everything.--Dwight Eisenhower

... because Oscar campaigns are always based in part on the terrified certainty that the performance in itself cannot possibly be enough, all three men also come equipped with prepackaged narratives. DiCaprio’s, unveiled in a New York Times "Arts & Leisure" cover story simply headlined “Risk Taker,” is just that: I’m a hard worker who challenges myself with transformative roles for serious directors, and you’re never going to see me sell myself out for Pirates of the Caribbean 5: Shitload of Doubloons. Clooney’s narrative goes something like: I use my star power to get small and worthy movies greenlit, the clear implication being that the difference between The Descendants with Clooney and The Descendants with someone else is the difference between a movie you get to see and a movie you don’t. And Pitt’s, tailored to the tortuous history of Moneyball, is: I stick with projects I believe in for years until they get made. All three of these premises have enough truth in them to be legitimately deployed. But there’s a problem: They all fall into an awards-narrative category that Movieline’s Oscar guy, Stu Van Airsdale, astutely identified a couple of weeks ago “It’s a nice story. It’s just not … charming.”  Academy voters like to be seduced by a narrative, not simply persuaded by it, and a Clooney vs. Pitt vs. DiCaprio contest has a slight whiff of “Which of the three richest, handsomest, most popular boys in the school are we going to choose as class president?” They are, in short, the 1 percent — and this is not an ideal year to be in that category.--Mark Harris

The [Stereotype Threat] study investigated the applicability of previous experimental research on stereotype threat to operational Graduate Record Examinations® (GRE®) General Test testing centers. The goal was to document any relationships between features of the testing environment that might cue stereotype threat as well as any impact on GRE test scores among African American, Hispanic, Asian American, and female test-takers. Among such features were the gender and ethnicity of test proctors and more general factors, such as the size, activity level, and social atmosphere of test centers. Our analyses revealed several relationships among environmental factors and several variations in test performance for all groups. However, we found no direct support for stereotype threat and, in fact, found some effects for proctor ethnicity that ran counter to a stereotype-threat explanation.--Walters, Lee, and Trapani

These angry women have even less of a leg to stand on, now. Ding dong, the Sterotype Witch is dead, at least when it comes to race and gender in GRE performance (unless someone has another study with the same scientific credibility they can point me to).--Cav

Photo link here.

Words, words, words

President Obama is talking on TV right now.  I am more productive in my job with the mute on.

Makes me think of the time Beavis and Butthead were using industrial strength glue to create beards on their faces.  Butthead looks at the warning label, but says aloud "... words, words words."

The President says his jobs bill will create jobs because "experts who do this for a living" affirm it, so therefore it must be true.  I wonder if it would be too Butthead of me to ask what these experts predicted about his earlier stimulus bills.

Oh, and apparently, Butthead was sampling Hamlet.  Check out Kenneth Branagh's interpretation at the 1:19 mark:


UPDATE: I found the B&B episode, go to the 1:50 mark:


UPDATE: Simon Black eloquently suggests the reasons for my impatience today:

While people like Warren Buffet are pleading with the government to raise their taxes and give away their wealth to sycophantic bureaucrats, Jobs showed time and time again that the best way to improve people’s lives is to create value and be productive.

Steve Jobs was one of the most productive human beings to have ever lived; he started several successful companies which directly employed tens of thousands of people. Indirectly, his businesses improved the livelihoods of millions across the globe, from Chinese factory workers to iPhone app programmers to Apple shareholders.

In building an empire and unimaginable wealth for himself, Steve Jobs enriched the lives and livelihoods of others by creating value. Not by forced redistribution. Not by giving things away. By creating value.

Ironically, just as I write this I am watching President Obama on Bloomberg Television trying to explain how many jobs his new plan will create– 1.9 million in his estimate:

“We’re just going to keep on going at it and hammering away… until… something gets done. I would love to see nothing more than Congress act… so aggressively.”

Politicians would do themselves and their constituents a great service by comparing their own track record for enriching people’s lives against Steve Jobs’ performance, and then kindly stepping out of the way. The path to prosperity is not paved in votes, but rather in freedom: the freedom to create, produce, risk work hard… and be rewarded for your efforts.

If you have the time, I’d encourage you to take a few minutes and read some of Jobs’ own words; there are boundless sources online that will praise his creativity, drive, and intellect, but perhaps no one is better suited to explain Steve Jobs than the man himself.

Below I’ve pasted in some key quotes ...

Quotes of the day

When it comes to business, everyone on Wall Street wants a piece of Warren E. Buffett. His presidential politics, however, appear to be another matter altogether. On Friday evening, Mr. Buffett was the host of a fund-raiser for President Obama at the Four Seasons restaurant in Manhattan, typically a magnet for the who’s who of finance. Democrats had bet that the star power of one of the world’s richest men would draw an overflow crowd of Wall Street’s elite for an affair that ran $10,000 a plate, or $35,800 for one-on-one time with Mr. Buffett.Yet organizers had trouble drawing the biggest guns of finance. The president’s campaign reserved space for 130 guests but only 116 (including Democratic staff members) attended, according to people with knowledge of the matter but not authorized to speak on the record. And there were few marquee names on the guest list.  ... One person who attended described the atmosphere as subdued and said the event seemed to attract more Buffett followers than Obama supporters.--SUSANNE CRAIG and BEN PROTESS

In the last election, people were tripping over themselves to get on the Obama bandwagon. Things have changed; Wall Street is not happy being under attack by the administration.--Michael J. Driscoll

In the meantime, we deserve to lose. We deserve our pain. The pain is the only hope that we'll ever learn to win again.--Stephen Marche

Silicon Valley entrepreneurs think the tech journalists are all stupid. The sports people think that about the sports journalists. They don’t say that to the sports journalists, because they want the sports journalists to be nice to them. But the level of contempt is very high. You need to kind of cut through that. You’ve got to be willing to not be a member of the tribe. Like, you can think what you think about journalists, but don’t put me in that category, because I’m not that.--Michael Lewis

It’s long been the source of domestic strife. Are women really worse at parking than men? Sorry ladies, official figures have revealed the truth: we are not very good at parking a car. Almost a third of all women who failed their driving test last year came unstuck due to parallel parking.--Emily Andrews

It's weird to write something that you really don't like.--Francis Chan

Uh, I’m pretty sure Jesus told us to have faith like a child. And kids can’t read. Soooo…--Jon Acuff

I'll never be in Joe [Montana]'s category.--Tom Brady

Lots of players are on pace to do ridiculous offensive things, and then there's Wes Welker, who has 40 catches in four games. Reggie Wayne, Hines Ward and Santonio Holmes have 40 too. Combined.--Peter King

... it is a waste of electrons to send me your resumé. ... I have seen dozens of top-ranked Ivy League graduates flame out (or worse, fizzle) over the years, mostly due to lack of energy, drive, or commitment to do what has to be done. Not because they weren’t smart enough; no, they were just too lazy or too entitled to get down in the mud and wrestle with the alligators, which is why we hire young cannon fodder like you in the first place. Survive the alligators, and you have a chance to rise into the haughty position of power, influence, and respect you feel you deserve. Don’t survive, and we’ll toss your mangled corpse out the back door onto a trash heap like a used Kleenex. Did I mention investment bankers are heartless bastards?--TED

When Mr. Obama was elected, some Americans believed he was serious about his campaign promises of immigration reform, an important issue for many voters. Those reforms were expected to include allowing more legal immigrants into the country for work, tourism, and study, and regularizing the status of many of the 11 million undocumented workers already in America. Three years later, immigration reform is more remote than ever. Once elected, the Obama administration has had other priorities, chiefly environmental and health policy. Our immigration policies remain a national embarrassment, confused and confusing and getting worse. Franz Kafka could never have imagined a more opaque, arbitrary, and unjust system than American immigration. It is a testament to the overwhelming attraction of America that people still seek to become Americans despite our immigration policies.--Diane Furchtgott-Roth

Photo link here.

Quotes of the day

[Rogue traders] need to come to terms, personally, with what happened, with their own dishonesty. If you can't accept that you can't move on. If I had put my hand up at the end of the first year, I'd have received a slap on the wrist. By the end of the second, I'd have lost my job. By the end of the third, it had become criminal. I am a criminal, by the letter of the law, but there was no criminal intent there. You don't go into these things intending to become a criminal. You want to make money for the bank, be a good trader and get a big bonus. The criminality is always with the individual trader, but the bank, with its incompetence and negligence in controlling what is going on, is complicit. In all those cases there are strange similarities: the length of time that passes before they reveal themselves, the amount of money involved, the age of the trader.--Nick Leeson

... the “tournament” problem ... comes up in any market that’s potentially dominated by “superstars”. Athletic competitions, for example, are prone to drain more resources than they’re worth. (See previous blog posts here and here.) Major league baseball is a good thing — it entertains the fans. But if we could randomly eliminate half the players, we’d lower the quality of competition just a little, while freeing up a lot of ex-ballplayers to start businesses, drive cabs, or write sports blogs. The market fails to find that outcome. The fact that it’s so easy for markets to fail is part of why we should be so astonished, and so thankful, that they typically succeed.--Steve Landsburg

This is no market for young men.--Jeremy Grantham

Attention all you hedge fund readers: if [the Swiss] can arbitrage and convexify their guinea pig market, you’d better not bet against their currency peg.--Tyler Cowen

... unless you get rid of the tax-free status of muni bonds, Theresa Heinz-Kerry will continue to have the effective tax rate of a probationary janitor.--Megan McArdle

It appears Team Obama wants you to conclude that there is no difference between the President and Congressional Republicans on the amount of proposed deficit reduction, and that the President wants a prospective deficit reduction approach balanced between spending cuts and tax increases. Both conclusions are false. The policy changes the President is proposing are significantly less deficit reduction than that proposed by (House) Republicans, and almost all of the President’s new proposed deficit reduction comes from tax increases. To put the second point in schoolyard terms, President Obama is in effect saying to Republicans, “We did it all your way (spending cuts) the last two times, so this time we should do it almost all my way (tax increases). That’s balanced.” It’s a legitimate liberal policy position to propose new net deficit reduction of about $1.4 T over the next ten years, almost all of which comes from tax increases on the rich. That is the President’s policy. I think it’s terrible policy, but that’s a judgment for the Congress and ultimately for American voters to make. Team Obama knows they will lose the public debate if they actually say that, so they are helping you to draw mistaken conclusions about what they are actually proposing. They are instead pretending to propose $4T of deficit reduction over the next ten years, balanced between “real, serious spending cuts” and tax increases. That is a fundamentally dishonest presentation of the policies the President is actually proposing.--Keith Hennessey

You can get a sweet deal if you are the customer who gets marginal cost pricing. Medicare does this--reimburses hospitals at above their marginal cost, but below their average cost, so that private insurers have to pick up most of the hospital overhead. European countries do this with prescription drugs: reimburse above the marginal cost of producing the pills, but below the total cost of developing the pills, so that the US has to pick up most of the tab for drug development. The problem is that as voters and as customers, we often get the notion that this can be extrapolated to everyone. So liberal policy wonks want to save money by putting everyone on Medicare, or some equivalent program that uses the government's monopsony pricing power to get lower prices for everyone; thrifty customers think that everyone should drop cable and just pay $14.95 for streaming plus DVDs.--Megan McArdle

... the President’s definition of “shared sacrifice” exempts the largest entitlement spending program (Social Security), his biggest legislative achievement (the new health entitlement created two years ago), and tax increases for more than 99% of the population. That is an odd definition of “shared.”--Keith Hennessey

I never put on a pair of gloves again [after the Leonard fight]. Never had one gym workout. If you get that taste in your mouth, it never goes away.--Marvin Hagler

Marvin [Hagler] was more a traditionalist and a purist. The money was great, but he didn't fight for the money. For Marvin, the belts came first, the history came first, the legacy came first. He was a boxer-businessman. [Sugar] Ray [Leonard] was a businessman-boxer.--Seth Abraham

On This Day. 1862: President Lincoln issued a preliminary Emancipation Proclamation, setting a date for the freedom of 3 million slaves.--WestWingReport

I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.--Warren Buffett

"I thought they did a great job with the movie.  Let's be honest: Did I think they could make a movie out of 'Moneyball?' No. Never. I even told the studio that. And when they did make it, I thought it would suck.--Michael Lewis

The movie did not suck, not at all, that's the wrong word and that's a story for tomorrow. The story for today is how we even got here. It is about a man who is not really in the movie. No actor plays him. He's mentioned in the movie here and there, but only for a a few seconds. Still, without him, there is no Moneyball. There is no Sabermetrics, at least not under that name. Certainly people would still be looking for objective knowledge in baseball -- people were looking long before Bill James and they will look long after.  But without the life's work of Bill James, they sure as heck would not have made a movie out of it.--Joe Posnanski

Before a decade’s worth of steroid revelations made their glowing press coverage seem like an exercise in self-deception, people liked to say that Mark McGwire and Sammy Sosa “saved baseball” in 1998 — that their extraordinary home run surge revived fan enthusiasm and restored America’s interest in the sport after the ugliness of the World Series-canceling 1994 strike. Maybe that was true for others. For me, the player who saved baseball was Tim Wakefield.--Ross Douthat

Photo links here and here.

Quotes of the day

Republicans could fairly use the Solyndra flap to highlight Obama's corporatism -- if only they weren't guilty of the same sort of thing.--Timothy Carney

The "Buffett Rule" Is Based On Flawed, Anecdotal Evidence; National Data Show That "Super-Rich" Pay Avg. Tax Rates 2-3X Higher Than a Secretary.--Mark Perry

It speaks volumes that a so-called populist bid to increase marginal tax rates for millionaires has to be named for a billionaire.--Chris Lehmann

Statistics are like a bikini. What they present is suggestive, but what they conceal is vital.--Aaron Levenstein

Obama’s debt-reduction plan: $3 trillion in savings, half from new tax revenue.--Zachary Goldfarb

Note to the editors: If you take money from one person, or a group of people, and give it to another person or group of people – first having passed it through the sticky hands of the bureaucracy – that is no sense any kind of “savings”. Deficit reduction it may be (and only will be if not used in the traditional way, i.e. to bankroll ever new unfunded entitlements) but it’s certainly not savings. Saving is virtuous, and occurs when an entity economizes by not spending. In ordinary usage, taking someone’s property from them and coloring that as “savings” would land you in jail for theft. (It’s not theft when governments do it because they have a monopoly on organized violence. This makes all the difference.)--Neptunus Lex

There are more than 100 million households in the United States; ranking them by income (using proper database tools) enables us to select any portion of them to define income groups. To cover a wide range of plausible definitions of “middle class,” I chose four possible definitions: the middle 20 percent, 40 percent, 60 percent, and 80 percent of households. In a similar manner, three possible definitions of “the rich” were selected: the top 5 percent, 10 percent, and 20 percent of households. (Interestingly, when survey respondents have been asked which income class they’d place themselves in, close to 80 percent have tended to place themselves somewhere in the middle class. In contrast, the various definitions used by social scientists indicate that the middle 40 to 60 percent is a more-defensible range. Hardly anyone thinks they are part of “the rich.”).  ... three of the four chosen definitions of “middle class” outperformed the overall economy. In other words, the middle class got at least its fair share of overall growth, and arguably more. Moreover, all four versions of “middle class” outperformed every definition of “rich”; in short, the gap between the rich and the middle class got smaller, not larger.  The middle class finally caught a break. Figuring it out took us longer than it should have, but at least we now know that the middle class has in fact been getting its fair share of whatever income growth has resulted from the work we put into the economy.  And that’s not just good news for the middle class, that’s good news for everybody. Why? Because we now know that, if past is prologue, the middle class should automatically get its fair share of future growth under current tax policy, as it did during the Bush years of the recent past—which means it shouldn’t be necessary to spend any of our limited time for national discourse on whether or how to redistribute the benefits of whatever growth our economy can muster. The time we’ll save by sidelining the redistribution argument and the class-warfare rhetoric can be much better spent on the overwhelmingly important problem of how to kick the economy into higher gear, back to robust growth rates approaching 4 percent or more. The debate about our economy can now focus freely on which policies are best in the long run for creating jobs, jobs, jobs.--Steve Conover

Kraft said maybe Bledsoe's most important game was the final one of his 1993 rookie season in which the Patriots topped the Dolphins, 33-27, in overtime -- a 36-yard pass from Bledsoe to Michael Timpson lifting New England to only its fifth win of the season. Kraft said it was that moment, in a raucous Foxboro Stadium, that convinced him to "overpay" by purchasing the team for a then-NFL record $175 million.  Without that moment, it's fair to wonder if Gillette Stadium and the Hall that Bledsoe and Morris were ushered into on Saturday would have ever existed.--Chris Forsberg

The impact [Drew] Bledsoe had on [the New England Patriots] can't be overstated. I believe his stamp on this franchise is still being felt today. When you walk into that facility, there is a sign on the door. One of the things it says is "put the team first." When it comes to the Patriots under Belichick, Bledsoe showed everyone what it meant to put the team first. His final year in New England, when Brady took over, the way that Bledsoe was unselfish and helped Brady start to become the quarterback he is now was the greatest example of a player putting the team first that I had ever seen. Drew moved on to Buffalo and Dallas, but I always remember the lesson he taught us on his way out of New England. Every time I walked in that door and saw that sign, I thought of Bledsoe and the example he set.--Tedy Bruschi

Quotes of the day

I've never been 100% sure whether patents help or hinder technological progress. When I was a kid I thought they helped. I thought they protected inventors from having their ideas stolen by big companies. Maybe that was truer in the past, when more things were physical. But regardless of whether patents are in general a good thing, there do seem to be bad ways of using them. And since bad uses of patents seem to be increasing, there is an increasing call for patent reform. The problem with patent reform is that it has to go through the government. That tends to be slow. But recently I realized we can also attack the problem downstream. As well as pinching off the stream of patents at the point where they're issued, we may in some cases be able to pinch it off at the point where they're used. One way of using patents that clearly does not encourage innovation is when established companies with bad products use patents to suppress small competitors with good products. This is the type of abuse we may be able to decrease without having to go through the government. The way to do it is to get the companies that are above pulling this sort of trick to pledge publicly not to. Then the ones that won't make such a pledge will be very conspicuous. Potential employees won't want to work for them. And investors, too, will be able to see that they're the sort of company that competes by litigation rather than by making good products.--Paul Graham

The Buffett investment just might turn out to erode, not increase, confidence. And not only for Bank of America, but for the banking sector as a whole.--Jesse Eisinger

To show her support for American workers, President Obama's labor secretary, Hilda Solis, has junked the standard black limo and purchased a new Chevrolet Equinox to ride around Washington in. The problem: the crossover SUV is built and assembled in Canada from parts also made in Canada.--Paul Bedard

Let's hope that labor economist Alan Krueger, as he assumes his new position as Chief Economist to the President, remembers that demand curves really do slope downward, despite his original flawed findings based on faulty survey data.--Mark Perry

If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That's the fiscal gap," he says. "That's our true indebtedness.--Laurence Kolitkoff

Bias matters not because liberals deliberately slant their stories, but because they are much more likely to interrogate the facts that contradict their ideological beliefs, than the ones that support them.  When they come across an uncomfortable fact, they'll go out of their way to figure out why it isn't really true.  When they come across a fact that confirms what they believe, they'll be more likely to accept it at face value.  I'm not claiming that liberals do this more than conservatives (I think that being human, they're equally prone to this phenomenon)--only that in the media, liberal bias is mostly what matters, because the media is overwhelmingly somewhere to the left of the American center.  Even if you have a conservative reporter prone to insufficient interrogation of convenient facts, those same facts are going to set off alarm bells with his editors, who are quite likely to question the whole story.  This is why I think liberal media bias is worrisome--not because it's a vast conspiracy, but because it creates a giant store of pseudofacts that "everyone knows", like all those ludicrous statistics about abortion and domestic violence that used to appear everywhere.  And new pseudofacts are being created, or resurrected, all the time.  Longtime readers of the blog have endured my jeremiads against Republicans who say that cutting tax rates raises revenue.  A few weeks ago I was flabbergasted to find out that a very smart left-of-center blogger I admire seemed to think it was common knowledge that there's really no evidence that tax cuts provide stimulus . . . a belief that I then find out seems to be common among some of the left commentariat.  This is not at all what any mainstream economist I'm aware of believes (the debate is over the relative size of secondary and tertiary effects of various kinds of stimulus, not whether tax cuts are stimulative at all.)  But somehow this belief had become common . . . presumably because in the milieu where it was transmitted, no one was disposed to question something that fit so neatly with what they already believed.  Add in a few hundred repeitions from people you like, and voila, "Everyone knows . . . "--Megan McArdle

Everything here [in Afghanistan] was difficult, and the longer we remained the more army officials from air conditioned lairs on high pronounced an increasingly complex series of edicts, lest someone had to explain the actions of a unit actually in contact with the enemy. Winning in the traditional sense, any one could see was not the goal. The months here, had resolved the entire project into the madness of so-called “nation building.” Trouble was there was no nation to build. There never really had been. ... With absolute clarity I see the awful meaning of war. The sand is bright red. Discarded crimson stained bandages fly away in the wind and we hold no illusions about what has happened here. Governments and chains of command are pale compared with these events. Philosophical discourse is of no consequence. It is a confusing moment of sadness and urgency.--Michael Woodard

Quotes of the day

Over the years, I have paid a significant portion of my income to the various federal, state and local jurisdictions in which I have lived, and I deeply resent that President Obama has decided that I don't need all the money I've not paid in taxes over the years, or that I should leave less for my children and grandchildren and give more to him to spend as he thinks fit. I also resent that Warren Buffett and others who have created massive wealth for themselves think I'm "coddled" because they believe they should pay more in taxes. I certainly don't feel "coddled" because these various governments have not imposed a higher income tax. After all, I did earn it. Now that I'm 72 years old, I can look forward to paying a significant portion of my accumulated wealth in estate taxes to the federal government and, depending on the state I live in at the time, to that state government as well. Of my current income this year, I expect to pay 80%-90% in federal income taxes, state income taxes, Social Security and Medicare taxes, and federal and state estate taxes. Isn't that enough? Others could pay higher taxes if they choose. They could voluntarily write a check or they could advocate that their gifts to foundations should be made with after-tax dollars and not be deductible. They could also pay higher taxes if they were not allowed to set up foundations to avoid capital gains and estate taxes. What gets me most upset is two other things about this argument: the unfair way taxes are collected, and the violation of the implicit social contract between me and my government that my taxes will be spent—effectively and efficiently—on purposes that support the general needs of the country. Before you call me greedy, make sure you operate fairly on both fronts. Today, top earners—the 250,000 people who earn $1 million or more—pay 20% of all income taxes, and the 3% who earn more than $200,000 pay almost half. Almost half of all filers pay no income taxes at all. Clearly they earn less and should pay less. But they should pay something and have a stake in our government spending their money too. ... Why do we require that public projects pay above-market labor costs? Why do we spend billions on trains that no one will ride? Why do we keep post offices open in places no one lives? Why do we subsidize small airports in communities close to larger ones? Why do we pay government workers above-market rates and outlandish benefits? Do we really need an energy department or an education department at all? Here's my message: Before you "ask" for more tax money from me and others, raise the $2.2 trillion you already collect each year more fairly and spend it more wisely. Then you'll need less of my money.--Harvey Golub

The great majority of people in different cultures do not object to someone who has made lots of money when they have superior abilities and talents, and they work hard at producing what are considered useful goods or services. Actors like Tom Hanks or Jennifer Aniston earn millions of dollars per film, yet they are admired as stars rather than condemned for being millionaires because films are a popular form of entertainment. Bill Gates, Steve Jobs, and others who became billionaires by creating innovative companies that provide highly valuable goods and services to millions of individuals are widely admired as the business equivalents of rock stars rather than attacked for their great wealth. Leading transplant and other doctors who become successful and very wealthy through extensive education and superior skills are recognized for their valuable contributions to extending the lives of very sick individuals, and few object to their high earnings. On the other hand, when hedge fund managers become rich by using arbitrage activities to narrow the spreads in interest rates and other prices between different regions (most hedge funds do not only engage in arbitrage) they produce useful services, but the value of what they do is not so apparent as the businessmen who make successful products. It is still harder for many to understand the usefulness of “speculators” who do well financially by successfully shorting shares of companies or commodities, such as oil, because they believe correctly that their prices will fall in the future. Their activities add value by smoothing out the prices of these shares and commodities over time, but few people like individuals who bring bad news, or who profit from anticipating bad news. Other forms of behavior are objectionable because they both add to inequality and lower economic efficiency. These are the most dangerous sources of inequality, and they create negative attitudes toward the wealthy, and even at times social unrest. One illustration is the arbitrary use of government power to give or take away wealth. Some individuals become very wealthy because of the political favors they receive, while others lose much of their wealth because of unjust governmental treatment. Examples include Carlos Slim and the Russian oligarchs who gained big economic advantages by receiving monopoly positions in industries like telecommunications when they were privatized, and the officials of Fannie Mae and Freddie Mac who became wealthy by using their political connections to acquire a dominant position in the US residential mortgage market. A highly publicized recent example is the Indian businessmen who obtained special privileges in telecommunications and other industries because of corrupt government officials. ... I agree with the argument by Warren Buffet in a recent New York Times op-ed piece that it is neither fair nor efficient for highly wealthy individuals like himself to be paying a smaller fraction of their incomes in taxes than middle income and many lower income persons. However, the way that inequity is corrected can make an enormous difference to economic efficiency as well as to the degree of inequality. The best way to reduce these inequities is to substitute for the present tax mess an inclusive equal percentage tax on all incomes, where the income base would be greatly widened by eliminating deductions on mortgage interest payments, restraining the tax-deductibility of charitable contributions, and eliminating special subsidies, such as the generous ones to ethanol producers. With a flat broad equal percent tax on all incomes, capital gains and other sources of income that currently have special tax treatment should then be taxed at the same flat rate as earnings and other incomes.--Gary Becker

The revelation that the Securities and Exchange Commission had a history of destroying documents has once again raised questions about how well the agency has exercised its enforcement authority. Although Matt Taibbi in Rolling Stone described the policy as “Orwellian,” the practice looks more like corner cutting to avoid cumbersome federal regulations on document disposal — the very type of conduct that the S.E.C. often criticizes companies for when it pursues an enforcement action. ... The S.E.C. is responsible for enforcing the internal controls rules for corporations, which require that their “books, records and accounts are kept in reasonable detail to accurately and fairly reflect transactions and dispositions of assets.” How does it look when a federal agency may have violated the law by destroying records related to one of its most important public functions? No one can be sure whether the S.E.C. policy on disposing of records from closed MUIs had any concrete impact on other investigations because any missed leads will never be known. What is clear, however, is a policy that may have violated federal law raises the specter that the S.E.C. was more concerned with making its life easier by getting rid of documents rather than complying with burdensome regulations. That is an often-repeated complaint about the S.E.C.’s own rules, a claim that might now gain greater resonance.--Peter Henning

... when it comes to education, good outcomes are not the same as great teaching. The most reliable way to amass impressive alumni is to screen for impressive freshman. But at the policy level it’s more important to identify institutions that are unusually good at helping people learn, not institutions that are unusually good at screening.--Matt Yglesias

In short, software is eating the world.--Marc Andreesen

Perhaps the single most dramatic example of this phenomenon of software eating a traditional business is the suicide of Borders and corresponding rise of Amazon. In 2001, Borders agreed to hand over its online business to Amazon under the theory that online book sales were non-strategic and unimportant. Oops.  ... Cisco talk about 50 billion devices but you can't see it in their revenue line.  Instead in the middle of the biggest imaginable boom they had that dreadful conference call where they talked about government spending being weak. Hey isn't this a private sector routing boom? Well it is but the private sector is appifying really fast. The government sector are all paranoid about Chinese government hacking and terrorist vulnerabilities and so are wanting the tried-and-proven hardware-software integrated device (which they think is harder to hack). Government paranoia is stopping the software eating the hardware and them guys at the Department of Homeland Security are sitting there safely in their (antiquated Cisco) box...  But whilst the government holds back the tide of history the lesson holds true: if you make hardware-software integrated devices your risk is you are going to get appified and unless you do the appification someone will do it for you.--John Hempton

Quotes of the day

All great spirituality is subversive ...  We have the audacity to stand in the middle of the world and weep over the false idols of culture, the power, the money, the sex, the fashion.--Don Miller

I’m a firm believer that I can only lead others to the extent that I can lead myself. To that end, I’m constantly challenged to wrangle my thoughts and emotions and drive them to produce purposeful results.--Geoff Webb

Derek Jeter is wildly overrated. And Derek Jeter is wildly underrated. Perhaps no player has ever been so effusively praised for great defense with so little evidence of great defense to show. Twice, perhaps three times, he should have won the MVP Award and did not. ... There's a reason for this, I think. Jeter -- like Rose -- has been inescapable. If you are a baseball fan, you must have an opinion about him. His game is out there. His baseball soul is exposed. You can like him or dislike him, admire him or object to him, but you cannot ignore him.--Joe Posnanski

I can solve the deficit in 5 minutes. .. If debt exceeds a % of GDP, all sitting members of Congress are ineligible for re-election.--Warren Buffett, on CNBC this morning

Both [Colin] Farrell and Bullseye were Irishmen with terrified eyes brought to America by rich men thanks to lethal skills and an equally lethal inability to control them.  ... his is the rare Hollywood fairy tale told in reverse. We began with the boring prince. Here before us, at last, is the far more interesting frog.--Andy Greenwald

Explanations of how Greece got in this mess typically focus on profligate public spending. But its fiscal woes are also due to a simple fact: tax evasion is the national pastime.--James Suroweicki

... soccer fans can now rest assured that women are less likely than men to fake on-field injuries, according to a new study by researchers at Wake Forest Baptist Medical Center published in the July issue of the journal Research in Sports Medicine.--Science Daily

Doing good stats means exercising a pathological interest in the story that might have been missed. Doing politics can seem to mean a near pathological interest in telling us why your story was right all along.--Michael Blastland

Quotes of the day

When I watched the party and celebration in the streets of London [for the royal wedding], my very first thought was “David would be in his underwear.” That’s admittedly a weird thought, but that’s where I went. I immediately imagined David stripping down to his under armor and doing the robot in the streets after his victory. Just standing there saying, “Hands go up, and they stay there! All I do is win!”--Jon Acuff

In 1997, Julie Preuitt sounded the alarms that the Texas financier R. Allen Stanford was operating a huge Ponzi scheme. The Securities and Exchange Commission official hammered away at the case for years, until the agency finally brought action against Mr. Stanford in 2009. ... Ms. Preuitt brought the concerns to her bosses and later complained to officials in the agency’s Washington headquarters. In turn, Ms. Preuitt received a letter of reprimand. The agency later transferred her to a nonsupervisory position, which in essence was a demotion.--BEN PROTESS

When President Barack Obama took office, in 2009, he championed the cause of government transparency, and spoke admiringly of whistle-blowers, whom he described as “often the best source of information about waste, fraud, and abuse in government.” But the Obama Administration has pursued leak prosecutions with a surprising relentlessness.--Jane Mayer

... power is incredibly destructive. It’s a weird, pathological thing. I also think the intelligence community coöpted Obama, because he’s rather naïve about national security. He’s accepted the fear and secrecy. We’re in a scary space in this country.--Thomas Drake

We are witnessing the bipartisan normalization and legitimization of a national-surveillance state.--Jack Balkin, a liberal law professor at Yale

The program he talked to the Baltimore Sun about was a failure and wasted billions of dollars. It’s embarrassing to the N.S.A., but it’s not giving aid and comfort to the enemy.--Thomas Tamm, a Justice Department lawyer, revealed that he was one of the people who leaked to the Times

I think it’s outrageous. The Bush people have been let off. The telecom companies got immunity. The only people Obama has prosecuted are the whistle-blowers.--Mark Klein, the former A.T. & T. employee who exposed the telecom-company wiretaps

Democracy is the recurrent suspicion that more than half of the people are right more than half the time.--E.B. White

Suffrage coincided with immediate increases in state government
expenditures and revenue and more liberal voting patterns
for federal representatives, and these effects continued growing
over time as more women took advantage of the franchise. Contrary
to many recent suggestions, the gender gap is not something
that has arisen since the 1970s, and it helps explain why American
government started growing when it did.--John Lott and Lawrence Kenny

Kesselschlact means ‘caldron battle’ in German. That’s what the Nazis called battles of total annihilation, and that’s how I felt. Like a survivor of Kesselschlact.--Jim Cramer

Taken from the top, these sentiments [of "Why isn't Wall Street in jail?"] imply that the financial crisis was caused by fraud; that people who take big risks should be subject to a criminal investigation; that executives of large financial firms should be criminal suspects after a crash; that public revulsion indicates likely culpability; that it is inconceivable (to Madoff, anyway) that people could lose so much money absent a conspiracy; and that Wall Street bears collective guilt for which a large part of it should be incarcerated. These assumptions do violence to our system of justice and hinder our understanding of the crisis. The claim that it was "caused by financial fraud" is debatable, but the weight of the evidence is strongly against it. The financial crisis was accompanied by fraud, on the part of mortgage applicants as well as banks. It was caused, more nearly, by a speculative bubble in mortgages, in which bankers, applicants, investors, and regulators were all blind to risk. More broadly, the crash was the result of a tendency in our financial culture, especially after a period of buoyancy, to push leverage and risk-taking to the extreme. ... The mortgage crisis was a societal breakdown—a massive failure of the private market, Wall Street in particular. It wasn't, fundamentally, rooted in fraud. Enron was fraud. The bankers convicted in the savings and loan scandal who dealt sweetheart loans to friends were fraudulent. These people had their hands, willfully, in the till—and knew it. ... I wasn't a fan of Goldman's slickness in letting a short-seller design a collateralized debt obligation that Goldman marketed to clients, for which it was sanctioned by the Securities and Exchange Commission. However, its unsavory dealmaking should not obscure that in betting, correctly, against the housing market, it helped mitigate the crash. Had more firms done as Goldman and shorted mortgages, fewer unsound loans would have been issued. ... imprisonment is a punishment for criminality—not a sociological remedy for unfairness, incompetence, or outsize losses.--Roger Lowenstein

But we didn’t know what [our dad, Warren Buffett] did. In fact, when my sister filled out a form, I think in fourth or fifth grade, about what our parents did, she put “security analysis,” and it was assumed that what he did was check alarm systems. So to a kid it was like “what do all the numbers on the page mean? And what exactly is the New York Stock Exchange and buying and selling and all that?” So we really didn’t know.--Peter Buffett

The U.S. achieved 9% annual growth between 1800 and 1900, with 15 recessions, 4 depressions, and a civil war at halftime.--Bill Smead, contrasting the growth of China on CNBC.  More here.

... maybe there remains one last shiny, fat apple hanging right in front of our faces, one last endeavor that would bring us fast, costless, and easy growth. It is immigration reform. The United States can grow faster by stealing the rest of the world's smart people.--Annie Lowrey

Photo link here.

I think you can trust a Wall Street dunkie like me more than Uncle Warren, now

The controversy surrounding a Berkshire Hathaway Inc. executive's stock trading before an acquisition by the firm shines a light on what some say could be a gap in securities disclosure: There is no rule requiring that executives' holdings in an acquisition target be revealed.--LESLIE SCISM, JEAN EAGLESHAM and ERIK HOLM

I didn't say I was smarter than the guy. Certainly, I'm less folksy.

Well, maybe my marriage history is a bit more folksy.

Photo link here.

Quotes of the day

The government didn’t charge nearly as much as Warren Buffett did.--Lloyd Blankfein

Bank of America said the Fed had vetoed its plans for a modest dividend increase in the second half of 2011.--BEN PROTESS and ERIC DASH

CalPERS, the pension fund in charge of California's $230B portfolio, recently noted they rejected adjusting their expected return over the next 10 years from 7.75% down to 7.5%. That 'saved' them $400MM this year! ... Either someone invents cold fusion, the Mayan alien astronauts bring us all sorts of manna when they return in 2012, or we will monetize our debt to pay for all these off-balance sheet liabilities. I'm betting on the latter.--Eric Falkenstein

The astonishing part was the way that the four-year-olds’ ability to defer gratification was reflected over time in their lives. Those who waited longest [to eat the marshmallow] scored higher in academic tests at school, were much less likely to drop out of university and earned substantially higher incomes than those who gobbled up the sweet straight away. Those who could not wait at all were far more likely, in later life, to have problems with drugs or alcohol.--The Economist

What bothers me is when I see attempts to redistribute wealth from the two marshmallow eaters to the one marshmallow eaters. For instance, by the time I retire in 6 years I will have probably averaged about $80,000/year over my working life, which makes me comfortably upper middle class. Because I am a two marshmallow personality, I’ve probably saved about half of that income. So I’m doing fine. Most Americans with similar incomes are one marshmallow types, and save something closer to 10% of their incomes.--Scott Sumner

[Herman] Husband really was a prophet. He proposed such things anathema to the creditor class as going off the gold standard and managing a slow, deliberate rate of paper depreciation; imposing taxes on wealth and income; making those taxes progressive; and instituting programs for supporting the elderly after they could no longer work. Prefiguring Bretton Woods, the New Deal, and Great Society by nearly two centuries, Husband became known as “the madman of the Alleghenies.”  ... So in judging the relative effectiveness of popular versus elite finance, it’s worth considering some outcomes. The sophisticates [Robert] Morris and [James] Wilson, like many of our best-certified wizards today, persisted in speculating well past the point where rationality would suggest stopping, often in manifestly dubious ventures.  ...  And inevitably, just as today, it all came crashing down. Wilson was serving on the U.S. Supreme Court when his increasingly desperate throwing of good money after bad finally landed the great legal scholar in debtors prison. Our mighty founding financier Robert Morris? He ended up in debtors prison too. In 1800, the first Bankruptcy Act was passed — in large part to get Robert Morris out of jail.--William Hogeland

Because [Paul Krugman] never engages in real arguments but rather ad hominem and straw men, his adversaries are unpersuaded, which makes him even angrier. ... It's a strange lack of self awareness to find one's certainty interesting to others, because of course everyone believes he is right, otherwise he wouldn't believe what he believes, but it seems [Brad] DeLong and Krugman simply think everyone else is merely a duplicitous shill or moron. ... As Krugman's dyspeptic disposition highlights, being certain you know better can not only be bad epistemologically, but make you feel bad too.--Eric Falkenstein

As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties. There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention. ... We know the measures to deal with the long-run deficit are politically difficult. The only way to accomplish them is for members of both parties to accept the political risks together. That is what the Republicans and Democrats on the commission who voted for the bipartisan proposal did. We urge Congress and the president to do the same.--Martin N. Baily, Martin S. Feldstein, R. Glenn Hubbard, Edward P. Lazear ,N. Gregory Mankiw, Christina D. Romer, Harvey S. Rosen, Charles L. Schultze, Laura D. Tyson, Murray L. Weidenbaum

In what may be the nerdiest ripple effect from last year's scandal, Tiger Woods has been excised from the latest edition of Greg Mankiw's popular econ textbook, Principles of Economics. ... The new edition replaces woods with Tom Brady. "I thought all the recent events surrounding Woods' social life might be distracting," Mankiw told the Harvard Crimson.--Jacob Goldstein

... our ideal candidate has also cursed out an editor, had spokespeople hang up on them in anger and threatened to resign at least once because some fool wanted to screw around with their perfect lede.--Matt Doig

I believe there are two categories of media: national and local. The national media is the one most troops dislike. They are the ones who seem to focus on stories that make us look bad or don’t provide complete context. They like to take credit for breaking stories like Abu Ghraib when the reality is that it was a concerned soldier who turned in those sorry excuses for troops. Most people don’t know that, because the national media takes credit for “breaking” the story. They focus on the deaths of our troops instead of the lives of our troops. They focus on the failed missions or the ones that didn’t go as planned instead of the successful ones. On the contrary, the local media seems to have a greater proclivity for telling positive stories about our troops, while not ignoring the negative ones. They seem more balanced because the troops come from their hometowns. They are the sons and daughters of these hometowns while the national media is largely detached.--C.J. Grisham

In 1930, 21.5 percent of the workforce was employed in agriculture and agricultural production representing about 7.7 percent of national GDP. By 1970, 4 percent of the workforce was employed in agriculture and agriculture’s share of GDP had dropped to 2.3 percent. By 2000, the percent of workforce and GDP share had fallen even further to 1.9 percent and 0.7 percent respectively.--Ronald Bailey

The North Korean government turns a country into a prison, starves millions to death, and yet escapees still think "free health care" is worth mentioning? What's wrong with people? To me, this reveals a lot about the world-wide appeal of government-run health care. Socialized medicine is like a love potion. The government can treat you like dirt, but as long as it slips a little of this potion into your drink, you'll probably think "How wonderful - the government loves me so much that it takes care of me whenever I'm sick without asking for a thing in return." And who would be vile enough not to love such a government back? My point: Whatever you think about socialized medicine, it's not that great. It's not remotely enough to, say, redeem North Korea. The fact that anyone would imagine otherwise reveals a strong human tendency to judge socialized medicine like a bad boyfriend - with our hearts instead of our heads. When someone says, "Dump him - he's just not good for you!" we really ought to calm down and listen.--Bryan Caplan

If Kate Middleton were American, she would be from somewhere like Darien, or possibly Westport, or the horsier parts of New Jersey: Bernardsville or Far Hills. She would probably have gone to boarding school—nothing top-tier but probably something with a retro snob appeal that would have made her strive-y parents happy—Miss Porter’s, maybe, or Westover. College would have been something like Trinity—respectable but not so taxing that classes would have kept her from a spring trip to one of the better Caribbean islands. Her job would be in fashion, probably in PR, and it would be understood that her hours would allow ample time for drinks at Brinkley’s. Weekends would be for working out at Equinox and the occasional blowout brunch at Lavo. She would probably date a banker with a similar background. She would live on the Upper East Side, or possibly in Murray Hill, even though she’d have lots of friends who live in the West Village. She would get her hair done at Fekkai, and her clothes would be some combination of Jimmy Choos, Ralph Lauren, and ­Theory—sometimes frugal, forever tasteful. But here is where the stories begin to diverge. William is not your run-of-the-mill hedge-fund bachelor. He’s the future King of England. ... Kate’s real competition, famously not dull at all, is her dead mother-in-law, the Real Housewife of Kensington Palace, England’s first reality-television star.--Will Frears

Photo link here.

Quotes of the day

Idleness is not inertness, for example. Inertness is immobile, inattentive, somehow lacking potential. Neither is idleness quite laziness, for it does not convey disinclination. It is not torpor, or acedia—the so-called Demon of Noontide—nor is it any form of passive resistance, for these require an engagement of the will, and idleness is manifestly not about that. Gandhi was not promulgating idleness, nor was Bartleby the scrivener exhibiting it when he owned that he would “prefer not to.” Nor are we talking about the purged consciousness that Zen would aspire to, or any spiritually influenced condition: idleness is not prayer, meditation, or contemplation, though it may carry tonal shadings of some of these states. It is the soul’s first habitat, the original self ambushed—cross-sectioned—in its state of nature, before it has been stirred to make a plan, to direct itself toward something.--Sven Birkerts

Pause for Sabbath for 24 hr. each week (Stop, rest, delight, contemplate).--Pete Scazzero

... an emerging body of research is suggesting that spending time alone, if done right, can be good for us — that certain tasks and thought processes are best carried out without anyone else around, and that even the most socially motivated among us should regularly be taking time to ourselves if we want to have fully developed personalities, and be capable of focus and creative thinking. There is even research to suggest that blocking off enough alone time is an important component of a well-functioning social life — that if we want to get the most out of the time we spend with people, we should make sure we’re spending enough of it away from them. Just as regular exercise and healthy eating make our minds and bodies work better, solitude experts say, so can being alone.--Leon Neyfakh

... is Mark Zuckerberg really the center of The Social Network? This audacious super-student who wanted to get into elite clubs makes quite a subject. But the film is also about Zuckerberg’s business partner, Eduardo Saverin. Saverin gets caught up in the rush of Facebook’s juggernaut success, only to realize that success is sucking the life out of his friendship with Zuckerberg. It’s also leading him into a world of business in which words like “loyalty” and “ethics” are fantasies. If the audience sympathizes with anybody in this movie, it’s probably Saverin. And Andrew Garfield’s performance anchors Saverin as the film’s true, broken heart. He’s the one who wants to believe that good business can be done without sacrificing conscience.--Jeffrey Overstreet

For when [Alexander the Great] had asked the [pirate] what he meant by keeping hostile possession of the sea, he answered with bold pride, "What thou meanest by seizing the whole earth; but because I do it with a petty ship, I am called a robber, whilst thou who dost it with a great fleet art styled emperor."--St. Augustine

This exalted view of [government's] scope, character, powers and autonomy is fundamentally false.  A government at bottom is nothing more than a group of men, and as a practical matter most of them are inferior men….  Yet these nonentities, by the intellectual laziness of men in general, have come to a degree of puissance in the world that is unchallenged by that of any other group.  Their fiats, however preposterous, are generally obeyed as a matter of duty, they are assumed to have a  kind of wisdom that is superior to ordinary wisdom, and the lives of multitudes are willingly sacrificed in their interest.--H.L. Mencken

Even if some government program is proved effective, that is not a good enough reason to protect it. Is it more effective than other uses of the money, including leaving it in taxpayers' pockets? We are still a rich country and can afford to finance a high school essay contest on peace, or any other luxury — if we're willing to pay for it.--Michael Kinsley

The funding for outsized government health benefits and pensions just magically appears, rather than being stripped from private investment.   So why not then put everyone on a government job and solve all our economic woes?--Heather MacDonald

Maybe you could make a case that spending on interest is mandatory. But spending on Social Security and Medicare is not. Congress could vote to end them. If Congress can vote to end them, they are not mandatory; they are discretionary. The spending does occur automatically unless Congress votes not to spend. So most of what is called mandatory spending should be called automatic discretionary spending. What about entitlement spending? The term is a non-starter because you shouldn't start by using value-laden terms. If someone is entitled, then he's entitled. And don't underestimate the hold such terms have on the public, most of whom think about these things way less than the usual blog reader. I would bet that many people think Congress should not cut entitlement spending because people are entitled.--David Henderson

To think that Barry Bonds took steroids, but not knowingly, seems ridiculous, absurd on its face, and it seems an insult to the question and the people asking it. For seven years now the U.S. government has been trying to nail him for this unconvincing bit of nonsense. So, on the one hand you have someone who is probably lying — and obviously we should not stand for people lying to grand juries. On the other, you have what seems an extreme use of government power and money and shaky methods to nail him for this lie.--Joe Posnanski

... as I read about the Obama administration’s evolution in support of military action against Libya’s Muammar Qaddafi, I couldn’t help but notice an important distinction in the line up of senior officials. Defense Secretary Robert Gates, Chairman of the Joint Chiefs of Staff Adm. Mike Mullen, and White House chief of staff William Daley all argued against a no-fly zone in Libya. ... it was senior women in the administration who pushed the process toward military intervention. That included Secretary of State Hillary Clinton, UN Ambassador Susan Rice, and National Security Council senior aide Samantha Power ...--Brad Knickerbocker

Tokyo Electric Power Co. was reluctant to use seawater because it worried about hurting its long-term investment in the complex, say people involved with the efforts. ... "This disaster is 60% man-made," said one government official. "They failed in their initial response. It's like Tepco dropped and lost a 100 yen coin while trying to pick up a 10 yen coin."--NORIHIKO SHIROUZU, PHRED DVORAK, YUKA HAYASHI and ANDREW MORSE

... while the fear is understandable, this may turn out to have been an overreaction: history suggests that, despite the terrifying destruction and the horrific human toll, the long-term impact of the quake on the Japanese economy could be surprisingly small. That may seem hard to reconcile with the scale and the scope of the devastation. But, as the economists Eduardo Cavallo and Ilan Noy have recently suggested, in developed countries even major disasters “are unlikely to affect economic growth in the long run.” Modern economies, it turns out, are adept at rebuilding and are often startlingly resilient. The quintessential example comes from Japan itself: in 1995, an earthquake levelled the port city of Kobe, which at the time was a manufacturing hub and the world’s sixth-largest trading port.--James Suroweicki

When Anne Hathaway makes headlines, the stock for Warren Buffett's Berkshire-Hathaway goes up.--Dan Mirvish

Photo link here.

Top 10 billionaire investors

1. Carlos Slim Helu $74b
2. Bill Gates $56b
3. Warren Buffett $50b
26. Prince Alwaleed $19.6b
39. John Paulson $16b
46. George Soros $14.5b
57. Paul Allen $13b
61. Carl Icahn $12.5b
74. Jim Simons $10.6b
114. Steven Cohen $8b

Via market folly. The number ranking is from Forbes' list of billionaires.  Photo link here.

Quotes of the day

Goldman knows, even though it's a mighty company, it survives at the sufferance of the U.S. government.--Steve Forbes

Thanks for the sh…ty service, negative tip – you owe me 25 cents.--Bill Gross, to a waitress

Police Chief Jack Harris said he will not be stepping down amid controversy over his department’s reported kidnapping statistics for 2008. ... The controversy stems from allegations that the Phoenix Police Department misrepresented the number of kidnappings in the city. The department received $1.7 million in federal grant money to deal with the problem.--Catherine Holland

There’s no way you can run the kind of deficits we’re running—and this is true around the world—without it being enormously inflationary. No politician is going to come out and say we’re really going to solve this by making our money worth less. It would be suicide to do this (but) that’s the practical effect of the policies that are being followed now.--Warren Buffett

Massachusetts, "Romney Care" is nothing but ObamaCare in that state. If the federal government was not bailing out Massachusetts then it would have failed in that state I believe. It was just disastrous. We need to stop it.--Representative Paul Broun

Earlier this week, I wrote a short post at my personal blog drawing a parallel between the American left's new-found, pro-union, placard-waving enthusiasm and the tea-party movement. Reading the comments, the comparison seems to have pleased no one. But I'm especially interested in the reaction from the left. The tea-party movement, you see, is an "astroturf" movement, financed by billionaire puppetmasters, fueled by hatred, agitating for rank injustice. The labour movement, on the other hand, is the real deal: a bottom-up coalition of working Americans courageously standing up against the thuggery of bought-and-paid-for Republicans and their shamelessly insatiable plutocrat bosses. This zanily Manichean way of characterising the situation I think rather confirms my suspicion that the equivalence I drew is sound.--Will Wilkinson

I love the performance of a craft, whether it is modest or mean-spirited, yet I walk away when discussions of it begin - as if one should ask a gravedigger what brand of shovel he uses or whether he prefers to work at noon or in moonlight. I am interested only in the care taken, and those secret rehearsals behind it. Even if I do not understand fully what is taking place.—-Michael Ondaatje, Divisadero

The rewards for the dumb staying in school or working long hours are considerably smaller, so they rationally choose more leisure time. What’s more, with the economy geared in ways that limit their opportunities, attaching themselves to a smart mate is one of the few tactics for economic advancement. So dumb chicks have both greater opportunities and greater incentives to try harder to date smart men than smart women do.--John Carney

Quotes of the day

The high unemployment we are experiencing now is due to low private investment rather than low government spending. By reducing some uncertainty and the threats of exploding debt, the House spending proposal will encourage private investment.--John Taylor

It's rather amazing that so much money can disappear like that, but given the Department of Education spends $60B and the CIA spends $28B on nothing I am aware of, I guess one should never underestimate the ability of a bureaucracy to spend.--Eric Falkenstein

The whole government is a Ponzi scheme.--Bernie Madoff

Today's taxpayers contribute money that is funneled to today's Social Security recipients, and hope that tomorrow's taxpayers will put in enough money to fund their retirements. Something similar is true of government finance in general: Those who buy Treasury securities and municipal bonds do so on the assumption that future taxpayers (and bond investors) will keep pouring in enough money to allow governments to make good on their commitments.--Justin Fox, in 2008

Money will always flow toward opportunity, and there is an abundance of that in America. Commentators today often talk of “great uncertainty.” But think back, for example, to December 6, 1941, October 18, 1987 and September 10, 2001. No matter how serene today may be, tomorrow is always uncertain. Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential–a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War–remains alive and effective. We are not natively smarter than we were when our country was founded nor do we work harder. But look around you and see a world beyond the dreams of any colonial citizen. Now, as in 1776, 1861, 1932 and 1941, America’s best days lie ahead.--Warren Buffett

Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford. ... The fundamental principle of auto racing is that to finish first, you must first finish. That dictum is equally applicable to business and guides our every action at Berkshire. Unquestionably, some people have become very rich through the use of borrowed money. However, that’s also been a way to get very poor. When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people--Warren Buffett

... attending a college with higher SAT scores clearly lowered the wages of women 17-26 years after starting college (in 1976) — a school with a 100-point higher average SAT score reduced earnings by about 6-7%! The two estimates there are significant at ~0.01% level! (The other three, for other periods after starting college, are significant at the 5% level.) One obvious explanation is that women at more elite colleges married richer classmate men, and so felt less need to earn money themselves. Why don’t the study’s authors want us to hear about that?--Robin Hanson

The benefit-cost evaluation of any suggested widespread [medical] screening would depend on the net effect of the factors I discussed. First of all, benefits depend on the size of the gain in treatment from early detection of a disease or other medical problems. This gain has to be adjusted for the probability of finding a serious problem since the lower that probability, the less the expected gain from extensive screening. Costs start with the cost of the methods used to screen, including the value of the time and inconvenience of individuals being screened. The likelihood of various side effects from these methods also must be weighed. The fear engendered by false positives can be important, although that has to be balanced against the peace of mind that comes from getting (true) negative results. Preventive care is often considered the gold standard of good medical practice. It is easy to get both doctors and patients to agree when either the government (i.e., taxpayers) or insurance companies (i.e., others who are insured) pay the vast majority of the costs. A rethinking of this standard is warranted, and such a rethinking would be encouraged if individuals paid a much larger fraction of their out of pocket medical expenses.--Gary Becker

The world is filled up to groaning with untruths. They hook themselves into our flesh and hearts, tugging us in wrong directions, distorting us. We learn hunger for what does not fill, thirst for what does not slake, longing for what brings no comfort. We are taught that none of us is beautiful. We come to feel we do not belong. We come to believe that home is a house, and love a feeling. The world overflows with untruth, and our children are tempted to drink from this arid fountain every day.--Tony Woodlief

Quotes of the day

The great thing about science is, your bad ideas don't count against you. Trading is a little bit different. Your bad ideas can lose you money.--Jim Simons

Far better to admit ignorance or postulate mystery than to tell untruths.--Don Carson

The Harvard psychologist Daniel Gilbert says that every psychologist must, at some point in his or her career, write a version of what he calls “The Sentence.” Specifically, The Sentence reads like this:

The human being is the only animal that ______.

The story of humans’ sense of self is, you might say, the story of failed, debunked versions of The Sentence. Except now it’s not just the animals that we’re worried about.--Brian Christian

Obama may think he’s set a clever trap for the Republicans in the upcoming budget negotiations. Why not let them be the bad guys? But in so carelessly abdicating his own responsibility for managing the nation’s finances, Obama also is giving up control. He shouldn’t be surprised if the U.S. bond markets, not Republicans, end up determining his political destiny.--Evan Newmark

The New York Times ran an editorial yesterday arguing that the EPA’s proposals to regulate carbon dioxide emissions cannot reasonably be characterized as the borderline-illegal efforts of a rogue agency, because those proposals originated during the Bush administration. Or something like that. At least they’re saying that House Republicans cannot without hypocrisy so criticize the EPA, presumably because all Republicans are required by the Times hypocrisy police to endorse all policies of all past Republican administrations. I wonder if the Times plans to level the same charges against the 26 House Republicans who voted last week against the extension of the Patriot Act. Oh. Guess not.--Steve Landsburg

Anywhere in the world that social psychologists see women or minorities underrepresented by a factor of two or three, our minds jump to discrimination as the explanation. But when we find out that conservatives are underrepresented among us by a factor of more than 100, suddenly everyone finds it quite easy to generate alternate explanations. ... [Daniel Patrick] Moynihan was shunned by many of his colleagues at Harvard as racist. Open-minded inquiry into the problems of the black family was shut down for decades, precisely the decades in which it was most urgently needed. Only in the last few years have liberal sociologists begun to acknowledge that Moynihan was right all along. ... [Larry Summers, wondering publicly whether the preponderance of male professors in some top math and science departments might be due partly to the larger variance in I.Q. scores among men] was not a permissible hypothesis. It blamed the victims rather than the powerful. The outrage ultimately led to his resignation. We psychologists should have been outraged by the outrage. We should have defended his right to think freely.--Jonathan Haidt

Considering that there are about 7 million more unemployed now than three years ago, it suggests the pool of available labor could be 15% bigger than the unemployment figures suggest.--Paul Ashworth

These [technology] companies all revolve around engineers in almost a cultish way. Their investors and competitors always note how good the team is– which is saying something in a Valley locked in a full-scale talent war. They are insanely picky about hiring engineers and when they find a good one they will pay him nearly anything. Asana gives engineers $10,000 to pimp their desks. Zuckerberg has described Quora co-founder Adam D’Angelo as one of the best — if not the best– engineers he has ever met. And Path’s team was reportedly one of the assets Google was so willing to pay up for. But unlike companies like Google and Amazon who rigorously hired based on college degrees, GPAs and standardized test scores, Facebook and the companies that have spun out of it have hewed toward sheer, raw, hacker-like genius. That’s created a more entrepreneurial culture inside the company. Justin Rosenstein– who was at Google and then Facebook before leaving to co-found Asana with Moskovitz– says that working at Google is often described as a wonderland for academics, while Facebook’s early days were more of an extension of a messy dorm room full of engineers hacking away all night, then collapsing most of the day.--Sarah Lacy

Then I made a big mistake. I wrote back, “it would be the second best-selling business biography ever: after Warren Buffett’s biography.” Never, NEVER, imply that one billionaire might be a bigger sell than another billionaire.--James Altucher

We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally. Nokia, our platform is burning.--Stephen Elop, Nokia CEO