Quotes of the day

Too much schooling is a bad thing.--Eric Falkenstein

Some claim that what sets us apart from other animals is our use of tools. Au contraire. Even sea otters -- a species that has neither reached the moon nor invented the beer cozy -- use stones to crack open the shells of their prey. No, what makes us unique is our staggering imagination and creativity, mostly when it comes to ostensibly obeying laws while utterly circumventing their spirit. We are homo loopholeus.--Patrick Hruby

... the startup job creation rate has collapsed during the last three years and actually fallen lower in 2011 than ever before. I’ll ask: Why did the IRS start cracking down on companies that hire American contractors in 2009?--Tim Kane

One 'sure-fire' way to reduce poverty

is to force single people to marry. There oughta be a law!

A law to replace the Community Reinvestment Act, which helped reduce poverty by enabling home ownership (for those who couldn't afford it).

Photo link here.

Chart of the half-century: Stock returns by debt rating

Source here.

My favorite representative reminds me of Gwyneth Paltrow's favorite teacher

Which is more important, dealing with a tangled budget or tangoed metrosexual?  A question only for America.  Photo links here and here.

Chart of the day: Pre-election year not trading well for stock market

Source here.

I was a crafty liar, but you should have known I was lying!

That B.M. is a real piece of work.

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

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

The killer is that what protects you in a crisis is also what leaves money on the table pre-crisis. The best trades and market positions in the pre-crisis regime are the ones that cause the greatest losses in the crisis.--Rick Brookstaber

Today, Israel is not the belligerent party in the Israeli-Palestinian conflict. It is Israel that has offered partition, and the Palestinians who have consistently refused it. Netanyahu inherited a winning hand. He could have put a peace plan on the table, leaving the Palestinians to refuse it. He could have declared that Israel wanted to withdraw from the West Bank and would do so if its security was guaranteed by an agreement with the Palestinians or a third party. He could have offered state housing help for those who would leave the settlements even before an agreement. Instead, he mumbled something half-heartedly about two states, and then moved on to fight for enlarging settlements.--Gadi Taub

As the rain and the snow come down from heaven, and do not return to it without watering the earth and making it bud and flourish, so that it yields seed for the sower and bread for the eater, so is my word that goes out from my mouth: It will not return to me empty, but will accomplish what I desire and achieve the purpose for which I sent it. You will go out in joy and be led forth in peace; the mountains and hills will burst into song before you, and all the trees of the field will clap their hands.--Isaiah

So men may in any dispensation despise the grace of God, but they cannot extinguish it.--A.W. Tozer

There are two things to say about this. The first is that the consumption of culture is not always worthless. Is it really better to produce yet another lolcat than watch The Wire? And what about the consumption of literature? By Shirky's standard, reading a complex novel is no different than imbibing High School Musical, and both are less worthwhile than creating something stupid online. While Shirky repeatedly downplays the importance of quality in creative production—he argues that mediocrity is a necessary side effect of increases in supply—I'd rather consume greatness than create yet another unfunny caption for a cat picture. The second thing is that it remains entirely unclear if the creative and generous acts made possible by the internet are really a replacement for time spent watching sitcoms. After all, people have always had hobbies; although they watched plenty of bad television, they also read newspapers and built model airplanes, went on hikes and volunteered at the local shelter. In other words, we weren't quite as mindless or disconnected as Shirky seems to believe. In his zeal to celebrate the revolutionary capabilities of the internet, Shirky downplays the virtues of the world before the web. And then there is the terrifying possibility (not addressed by Shirky) that our online life is detracting, not from time spent watching TV, but from our interest in things that have nothing to do with technology, such as talking with friends or taking walks in the park. It's easy to find quibbles with an argument as audacious and thought-provoking as that put forward in Cognitive Surplus. The fact is, Shirky has written an important book about an interesting moment in human history. We have arranged our modern lives to maximize free time. Now, thanks to the virtual infrastructure of the internet, we are able to collaborate and interact as never before. The question is what these collaborations will create. A surplus, after all, is easy to squander.--Jonah Lehrer

It isn't simply a matter of completing the deep pass into the corner of the end zone or sinking the shot for three points at the buzzer; it's the business of sustaining the belief that democracy still works the way the Declaration of Independence says it's supposed to work, Jefferson's "aristocracy of virtue and talent" still out there in uniform on the level playing field, imparting substance to the nation's fondest memories and dearest hopes. Like the infantry platoons that won the Hollywood version of World War II, an American team in good working order affirms the doctrine of egalitarianism, erases the distinctions between race and class, rehabilitates the principle of justice under law. The coach doesn't start the kid at quarterback because the kid is underprivileged; the manager doesn't insist that the dugout vote Republican. On the far side of the left-field wall, wars bleed and children starve; men cheat, women rot, banks foreclose, politicians lie. Inside the park the world is as it was in the beginning, as green as the grass of childhood, as bright as the sky at noon with what the British novelist V.S. Pritchett regarded as "the emotion of being American… that feeling of nostalgia for some undetermined future when man will have improved himself beyond recognition and all will be well."--Lewis Lapham

Tyler is unimpressed with Sarah Palin's Scrabble strategies

and what that might suggest for her foreign policy aptitude.

I would say that our current White House leadership suggests problems with portfolio and game theory, too.

Quotes of the day

To have a right to do a thing is not at all the same as to be right in doing it.--G. K. Chesterton

For whatever reason, the Patriots place a higher monetary value on guys who play closer to the ball. That’s why players like Richard Seymour, Ty Warren, Tom Brady and Matt Light have been able to walk away from the bargaining table satisfied with their contracts. For the most part, New England has considered receivers and defensive backs to be fungible commodities, interchangeable parts that can be added and subtracted. It hasn’t always worked (they are still working to replace Samuel), but it’s their business model, and there’s been no indication they’re not sticking to it going forward.--Christopher Price

... home runs are distributed just about as unequally as income - the top 5% earn a disproportionate share of income, about 36%; and the top 5% of baseball players hit a disproportionate amount of home runs, about 36%.--Mark Perry

I think that politically, if not intellectually, the success of smoking bans is a heavy blow to libertarian credibility.--Megan McArdle

For costless and near-costless actions, small beneficial correlations are enough to justify changing your behavior. If you find a lottery ticket for a free lunch, you might as well hang on to it. But you shouldn't count on finding such lottery tickets with any frequency. In the real world, beneficial changes usually have a steep price, and a lot of "free lunches" are just scams.--Bryan Caplan

... the fact is that the Federal Reserve, which regulates most of the nation's largest banks, had enough power to prevent bank failures with better capital regulations. Preventing failure at Freddie Mac and Fannie Mae also did not require a systemic risk regulator—what was needed was tighter supervision by the Office of Federal Housing Enterprise Oversight, which regulates those institutions. That in turn would have required support from Congress, which generally was instead more prone to tampering with the regulator than with the housing enterprises it was supposed to regulate.--Arnold Kling

Obama has more reason to be mad at Johnson and FDR for bequeathing him intractable legacy costs than at Bush: they will substantially reduce the scope of the things that Obama can do. But I don't expect to hear him explain that he has to run a budget deficit because he inherited a legacy of unsustainable spending by his Democratic predecessors. The fact remains that Bush actually left him very little legacy of permanent spending to be drivng his future deficits.--Megan McArdle

MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later. This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.--Tyler Cowen

As people get richer and consumption rises, the marginal utility of consumption falls rapidly. Spending on health to extend life allows individuals to purchase additional periods of utility. The marginal utility of life extension does not decline. As a result, the optimal composition of total spending shifts toward health, and the health share grows along with income. In projections based on the quantitative analysis of our model, the optimal health share of spending seems likely to exceed 30 percent by the middle of the century.--Robert Hall and Chad Jones

How did Obama manage to spend all his political capital so quickly? Did it all go on the stimulus bill? Wasn’t the whole point of bringing Rahm in as chief of staff that he could work constructively with Congress to pass an ambitious agenda? And isn’t Obama himself the first president since JFK to have entered the White House from the Senate? I’m not sure when everything went wrong here, but I fear that the damage is now irreparable — and that Obama’s agenda is going to be severely scaled back as a result.--Felix Salmon

[Donald] Rumsfeld is in many respects an honorable man, deeply patriotic, a good friend to many and unfailingly loyal to those he has served and to a number who have served him. He is smart, cunning and capable of great geniality, all highly desirable qualities in a leader with such power. And the challenges he faced as secretary were considerable. But in the end, Rumsfeld's biggest failings were personal -- the result of the man himself, not simply of the circumstances he confronted. While he was unwilling to profess regrets to me, it is unlikely that he doesn't have some. Nor do I expect him simply to fade away. That has never been his style. Withdrawal is not on his list of Rumsfeld's Rules.--Bradley Graham

Quotes of the day

Children resemble their parents. When the resemblance is physical, we usually think it's funny or cute. But when the resemblance is financial, it's an Issue.--Bryan Caplan

"Live free or die!" sounds like a battle cry: We'll win this thing or die trying, die an honorable death. But in fact it's something far less dramatic: It's a bald statement of the reality of our lives in the prosperous West. You can live as free men, but, if you choose not to, your society will die.--Mark Steyn

If James Biden were to bring in a $100 million pension-fund investment, a $10 million “placement fee” would be payable immediately. In the end, no such fees were paid. But it gives you an idea of (a) how profitable hedge-fund investments are, for funds-of-funds; and (b) how big the incentives are for middlemen to go out and sell hedge funds to big investors.--Felix Salmon

For the time the [unemployment] rate was under 6%, [stock returns] showed an annualized real return of 3.7%. When the rate was over 6%, the real return jumped to 17.3%.--Eddy Elfenbein

He promised to stop the crazy deficit spending, cut up the credit cards, live within our means. And he did exactly the opposite. Schwarzenegger increased spending faster than we saw under Gray Davis.--Tom McClintock

Correct me if I’m wrong, but [Nancy Pelosi and the Congress] likes the CIA telling Bush the WMD dirt was all wrong, which means the Dems have to figure out when they want the CIA to be telling the truth, and when they want the CIA to be lying. --Jules Crittenden

... if you are going to use research by a brilliant Nobel-Prize winning new Keynesian economist in order to attack discredited ideas, then makes sure the discredited ideas being attacked are not . . . your own.--Scott Sumner

All this drivel in the blogosphere about velocity, multipliers, liquidity traps, Ricardian equivilence, budget constraints, etc, etc, are merely verbal tools that can be wielded to achieve any desired outcome. It’s an insiders game. The real battle is elsewhere.--Scott Sumner

It's pretty clear that scientists who have a lot vested in the current model of Lyme (their careers, possible malpractice accusations), have at least for now won the debate. It's not quite so clear that they should have. And the government imprimatur has done a lot to seal the fate of the dissidents. This is all standard stuff to anyone who's read The Structure of Scientific Revolutions. But those revolutions happen because there are multiple possible centers of power. The government has the ability to potentially shut the revolutionary centers down.--Megan McArdle

Ron Sims, candidate for HUD deputy

does not have the cleanest of records (via Glenn Reynolds).

Correlation, tiresomely, once again refuses to imply causation

even when you ask it nicely:

I’ve seen a lot shakier plots used to justify some sweeping conclusions, and if those were justified, well, then I’m forced to conclude that Mexican lemons have improved highway safety a great deal.

Economic cycles and fertility

Calculated Risk notes:

... both the number of births, and the birth rate, declined precipitously in the late '20s as more and more families put off having children because of hard economic times (Times were tough for many families even before the stock market crash of 1929).

The original baby bust last throughout the '30s.

There is no evidence in this 2007 data of families putting off having children now. In fact the birth rate and total fertility rate were increasing in 2007.

Now we know who will pay off all that debt!

Have we reached the bottom of the stock market?

The Ron Insana Employment Index suggests Yes!

The Meredith Whitney Indicator agrees.

For the new reader, these are not official statistics, just narratives.

Rahm Emanuel exposes some liars, and covers up for others

I guess it all depends.

It seems to follow the ethics of "The president kept all the campaign promises he intended to keep".

Correlations in everything: how daughters affect their legislative fathers

reports Ian Ayers:

Ebonya Washington, an economist at Yale, has a great paper that was just published in the American Economic Review called “Female Socialization: How Daughters Affect Their Legislator Fathers’ Voting on Women’s Issues.”

She looks at members in the House of Representatives and looks to see whether their voting patterns change. She provides interesting evidence that, “conditional on total number of children, each daughter increases a congress person’s propensity to vote liberally on reproductive rights issues.”

I'm reporting that I am a bigger feminist than ever, since my 2 daughters arrived. But alas, I have still not drunk the kool aids of "affirmative action" nor "boys and girls are the same".