Image links here, here, here, here and here.Today's young women make $1.17 for every $1 their moms earned back in 1980. Young men, however, are earning 10 cents per dollar less than their fathers did 30 years ago, new research shows.--Annalyn Censky
Big losers had to have been small losers first. You have to be down 2% before you can be down 5% before you can get down 10% and so on. Cut your losers at the knees before they cut your throat.--Michael Martin
It's a cliche to say risk management is the combination of art and science. You need to know something about history, statistics, and programming to be useful as a risk manager. You also need common sense, and that is best informed by experience ...--Eric Falkenstein
... now it’s looking increasingly as though Corzine demonstrated virtually all of the pathologies of the rogue trader more generally. Lots of financial firms make big bets and blow up. But what we saw at MF Global was much more than that. In fact, as Corzine detailed at great length in his prepared testimony last week, his big sovereign-debt bet didn’t actually lose money at all. But MF Global died all the same, because the bet was so large and risky that it caused a fatal cascade of downgrades and margin calls.--Felix Salmon
In a democracy people are free to express and debate their opinions. This is valuable in itself. But it has also been held to be instrumentally important because it is claimed that through open free debate true ideas will conquer false ones by their merit. Democracy thus has an epistemic value as a kind of truth machine. In a democracy therefore there should be no dogma, no knowledge that cannot be questioned. Not only is this view mistaken, but it is so obviously wrong that it is astonishing that it has ever been taken seriously.--Philosopher's Beard
“Public choice” economics explores the problems of concentrated interests. There are fewer corn farmers than taxpayers, and the gains from ethanol subsidies are large for each corn farmer, while the costs per taxpayer are quite small. The costs of coordination and the financial incentives mean the farmers will get their way so long as the government has the power to subsidize or penalize. This simple dynamic explains much of how our government allocates resources.
...And, unlike Marx or Citizens United, it is something the Tea Party and Occupy can agree upon. Although it may seem far-fetched at first glance, if Occupy found common ground with the Tea Party or the sentiments behind it, much could be done politically. After all, there are many 99 percents. But so far, Occupy has absorbed or been co-opted by various one percents.
...For example, in education policy, teachers are the one percent, while students and parents are the 99 percent. But it is generally the power of the concentrated teachers’ unions that drives decisions about education spending and policy. The fact that teachers unions support Occupy undermines its power. A true movement of the 99 percents would be on the side of students, not teachers.
...Examples abound that cut across typical ideological lines. For instance, military contractors are the one percent, while soldiers and the citizens they defend are the 99 percent. It is for this reason that in the recent census, 7 out of the 10 richest counties surround Washington, D.C.--M. Todd Henderson
Any time someone gets fired, a manager has failed. He or she hired the wrong person, moved someone into the wrong job, or screwed up in some other way. When it’s necessary to show an employee the door, it’s going to be because we’ve tried and failed to fix whatever in the relationship and the structure wasn’t working. It’s never going to be because the person fits a category that someone has outlined for us. That, in fact, is the opposite of leadership.--Liz Ryan
Fail a lot before you are paying for the failure….I got fired or asked to leave from all my jobs.--Mark Pincus, CEO of Zynga
In 2002, a schoolteacher with previously normal sexual desire began experiencing sexual desires that he was not used to. He began looking at child pornography and engaging in sexual activity that was not common to him before this point. Little did he know, he had an egg-shaped tumor in the orb frontal cortex of his brain, and when he had the tumor removed his sexual desires stopped. A little while later the desires reappeared, so he went back to the doctor’s office. Lo and behold, the tumor had returned to the same region of his brain.--Mike Friesen
... changing your offense makes all your seniors freshmen.--unattributed
In the same way that there are people who never thought they'd see a black American president, there are also people who never thought they'd see a black basketball star dressed like a nerd. ... If you happen to be someone who looks at Durant, James, or Amar'e Stoudemire's Foot Locker commercials — in which he stalks along a perilously lit basketball court wearing a letterman's cardigan, a skinny tie, and giant black glasses (his are prescription) — and wonders how the NBA got this way, how it turned into Happy Days, you're really wondering the same thing about the rest of mainstream black culture. When did everything turn upside down? Who relaxed the rules? Is it really safe to look like Carlton Banks?--Wesley Morris
On Dec. 12, 1991, [Paul] Kunz set up a Web interface based on a Web server to search a popular database of particle physics literature at Stanford, and sent an email to Tim Berners-Lee about it. It was the first Web site in North America and one of the first dozen in the world.--Liz Gannes
The smartest worriers are learning to code or marrying a developer.--Howard Lindzon
By virtue of its size, business model and popularity, Facebook is the rare company that doesn't need Wall Street to go public. It should press home the advantage and blaze a trail for others to follow.
...Mr. Zuckerberg's has two options: a traditional IPO, in which banks distribute shares to investors in exchange for a percentage of total proceeds; and the little-used "Dutch auction" that cuts out the Wall Street middlemen by making the allocation of shares dependent on prices bid by each investor.
...The biggest difference between the two systems, apart from the lower fees paid by companies in auctions, is that when IPOs go Dutch, banks don't choose who gets shares, giving all investors a fair shake and avoiding potential conflicts of interests.
...This is particularly important for "hot" IPOs, like Facebook. Since these deals often record sharp rises in the first days of trading, there is a temptation for banks to dole out shares to their favorite investor clients, who stand to profit if they get in early.
...Wall Street's penchant for being both poacher and gamekeeper has left banks with conflicted loyalties; they take companies public while at the same time trying to keep hedge funds and other high-paying customers satisfied.--FRANCESCO GUERRERA
Tuesday, December 13, 2011
Quotes of the day
Monday, December 12, 2011
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.How about a 2% wealth tax for those who have net worths above $25 million?
...
-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.
Quotes of the day
Stille Nacht, heilige Nacht,Image links here, here, here and here.
Alles schläft; einsam wacht--Joseph Mohr
In the beginning God disclosed himself, and that self-disclosure was with God, and that self-disclosure was God.--Don Carson of John 1:1
If you believe, then unbelievable things can sometimes be possible.--Tim Tebow
Tebow. TEE-bow. Verb. To defeat an opponent while overcoming a major impediment. Ex.: Despite having a 102-degree fever, Lucy managed to Tebow her competition for the Miss America pageant through her great determination.--Peter King
Corn grits, cocoa, condensed milk, white bread and sugar. This was America's menu for the starving millions in Soviet Russia during the 1921-23 famine – one of the greatest human disasters in Europe since the Black Death. The famine relief was spearheaded by Herbert Hoover, whose biographers credited him with saving more lives than any person who has ever lived.--CYNTHIA HAVEN
... to the extent you measure poverty as a relative concept, you ensure that no public policy can eliminate what you call poverty.--Arnold Kling
So much for Obama's endlessly repeated promise that if you like the health insurance you have, you can keep it.--David Henderson
We have 37 Christmas trees here at the White House--37! That's a lot, right? Yes, that's a lot of trees. And we also have a 400-pound White House gingerbread house.--Michelle Obama
There is surely no such gulf between Marx and Keynes as there was between Marx and Marshall or Wicksell. Both the Marxist doctrine and its non-Marxist counterpart are well expressed by the self-explanatory phrase that we shall use: the theory of vanishing investment opportunity.--Joseph Schumpeter
North Korea has warned South Korea of "unexpected consequences" if it lights up a Christmas tree-shaped tower near their tense border.--BBC News
Many [New York Times reporters] them seem to have a congenital inability, or, at least, unwillingness, to distinguish between libertarians and conservatives. The differences are not small.--David Henderson
Everybody was laughing because when I signed my tax returns this year I had to get completely wasted.--Lady Gaga
Liberals are inclined to see progressive policies as the solution to family breakdown. Conservatives are inclined to see progressive policies as the cause of family breakdown. I think that the reaction of libertarians is to squirm with discomfort. You think that the liberals are in a bad position intellectually, but you are reluctant to affiliate with conservatives on an issue where they are so. . .umm. . .conservative.--Arnold Kling
Undergraduate tuition at New York University is around $41,000, but parents can be assured their bright young things are still getting The People’s Education, reports the student newspaper The Washington Square News. NYU plans to offer not one, but two classes on the burgeoning social movement known as Occupy Wall Street, so that the 1 percent may study the 99 at both the undergraduate and graduate levels.--Adrianne Jeffries
... the current price of a college degree is not just the balance of four years’ tuition; one must also consider the cost, to students and employers, of the ambiguity hanging over what the degree actually means.
...One root of the problem is the fact that the college degree is issued by the same institution that is in charge of setting, and enforcing, the standards of that credential, says [Salman] Khan, who holds four degrees himself. This is tantamount to investment banks rating their own securities, he says. Meanwhile, the accrediting agencies that are in charge of making sure those “ratings” are legitimate do not currently focus on what students coming out of those institutions measurably know.--Steve Kolowich
I heard this morning that the non-euro members who did go along [with the new rules giving the EU greater power] did so mostly because they hope to join the euro. Talk about the triumph of hope over experience! This is like supporting the death penalty because you're hoping to end up on death row.--Megan McArdle
What “Anglo-Saxon economists” are doing is confusing their own ideology with reality. Economists tend to look at economic problems as involving incentives. Align incentives properly, and problems are easily solved. The tricky part is all in the figuring out how to get incentives properly aligned.
...This turns a blind eye, however, to the role of ideological commitment. The strong commitment on the part of European central bankers to austerity may make the incentives irrelevant. All the incentives in the world might not matter because at some level the central bankers believe that the necessity for expansionary monetary policy is incommensurable with their other ideas about how the world works.
...To put it differently, the monetary experts in Europe may just be too ignorant of the peril they are in thanks to their world view. We cannot count on Draghi and others suddenly taking a more rational approach to monetary policy. They can remain irrational longer than Europe can remain solvent.--John Carney
Over all the notion that the path to safety for banks is to turn them into a service business seems misguided, coming from a place of consumer-finance rhetoric rather than serious thinking about the purposes of a financial industry. The point of a bank is not to reduce credit card fees and clearly disclose mortgage terms, but to provide credit. And the idea that “focusing on the underlying economics of a transaction” can distinguish between a loan and a bond – or a residential mortgage and an RMBS – severely undersells the ingenuity of the financial sector.
...Bair is probably right that the distinction between “prop trading” and useful activity drawn by the Volcker Rule does not prevent banks from doing all manner of risky things. It wasn’t really intended to: “prop trading” sounded sort of nasty, and people made money doing it, and we’d had a financial crisis, and a futile and stupid gesture was required, so presto, Volcker Rule. But that’s because clearly drawing that line is really hard, and replacing the line drawn by the Volcker Rule – in one sentence (“no prop trading”) or 300 pages – with another arbitrary one-sentence definition is equally unlikely to work.--Matt Levine
Players of an online video game called Foldit have helped researchers discover the structure of an protein-cutting enzyme produced by an AIDS-like virus found in monkeys. Scientists have struggled with the problem for a decade, but the gamers helped crack it in just three weeks.--Jacob Aron
... the bottom line is the bottom line, and the best way to get your boss to appreciate you more is to help him make more money for the firm.--Eric Falkenstein
In whatever it is that we try to do, grow trees, cure the ill, distribute food, keep the lights on or build houses, we would always prefer to do this in whatever manner it is that uses the least resources.
...We don't say that using 5 tonnes of copper to wire a house is better than using 500 kg to do the same job. Well, we don't say it is better just because we're using more copper that is. So why would we say that having a retail sector that employed more rather than fewer people would be a good idea?
...Quite, we shouldn't, for the claim is a claim that we should be using more of a scarce resource, labor, to get a job done, the distribution of consumer items. We should no more want to use more labor here than we should use more copper in wiring a house.--Tim Worstall
Friday, December 09, 2011
Quotes of the day: Grantland version
Image links here, here and here.To err is human, to forgive divine, and to be a fan is to never forgive. It is to remain scornful and withhold forgiveness until someone proves his or her own divinity, or demonstrates some fundamental unwillingness to err.--unattributed
Was Billy Beane just a lucky stock-picker? Somewhat.--Tyler Cowen and Kevin Grier
On one pole, you have people who hate [Tim Tebow] because he's too much of an in-your-face good person, which makes very little sense; at the other pole, you have people who love him because he succeeds at his job while being uniquely unskilled at its traditional requirements, which seems almost as weird. Equally bizarre is the way both groups perceive themselves as the oppressed minority who are fighting against dominant public opinion, although I suppose that has become the way most Americans go through life.
...the real reason this "Tebow Thing" feels new is because it's a God issue that transcends God, assuming it's possible for any issue to transcend what's already transcendent. I'm starting to think it has something to do with the natural human discomfort with faith — and not just faith in Christ, but faith in anything that might (eventually) make us look ridiculous.
...My guess is that Ryan Fitzpatrick or Aaron Rodgers would blow him away on the GRE, but Tebow has profound social intelligence, at least when he speaks in public. It's not that he usually says the right things; he only says the right things, all the time. As a result, he fuels a quasi-tautological reality that makes his supporters ecstatic, even if they don't accept it as wholly valid.--Chuck Klosterman
It's easy to understand why Elway refuses to embrace Tebow. Elway came to the Broncos as the most pro-ready quarterback of his generation, yet people in Denver hammered him for 10 years. They were still making fun of his teeth in 1998. He must look at Tebow's fan base and think, Why do they love him so much? I was more polished than this guy as a senior in high school. This is insane. What am I not seeing?--Chuck Klosterman
(Table courtesy of Cav, who will be rooting against Tebow on Dec 18 for a few hours)
"I wouldn't say it's a lying game, but it's game of words. A lot of people get into politics because they'd like to change something. I think even Barack Obama is realizing you can have all these lofty goals, and people can buy into them, but at the end of the day the system's not changing for anybody. As a 21-year-old, I have no political goals. Maybe when I'm 40.
...With the NFL, if they come knocking at your door, you're not going to tell them no. But it's a tough business. The NFL doesn't like it when they have a smart guy who knows how much he's worth. The NFL now, it's about talent, and if you have talent, it doesn't matter what's going on. That's why you get a lot of guys who get in trouble who are still playing, and things happen and they do illegal stuff and they still get to go out and play, because as long as they can get people to watch them play, the NFL's making money. It's just about the spectacle. That's all it is.--Robert Griffin III
Dr Pepper was invented in Waco, and there is a Dr Pepper museum downtown. The first two floors are a perfectly normal, if you consider paeans to carbonated sugar water to be normal; the third floor is something called the W.W. "Foots" Clements Free Enterprise Institute, with quotes on the wall like "The first thing a genius needs is to breathe free air." It's all very Sean Hannity & the Chocolate Factory.--Michael Weireb
Wednesday, December 07, 2011
Quotes of the day
I guarantee you’ve never been in a meeting at work and someone said, “In order to hit our sales numbers this quarter, we’ve got to have discipline like a child.” No politician has ever said, “If I’m elected, I’ll run the country with wisdom like a child.” No coach has ever said, “In order for us to win Saturday’s game, we need to work hard like a child.” It’s difficult to find another context in life where being “like a child” is held up as something to emulate--Jon AcuffImage links here, here, here, here and here.
Failure is as important to healthy capitalism as success. The nation’s handful of huge banks, however, are spared the indignity of failure.--ADAM DAVIDSON
Speculation has long existed that U.S. presidents age at twice the normal rate, with many tabloid stories fixating on President Obama's every new wrinkle, gray hair and weight change. But a new study finds just the opposite: Most U.S. presidents live longer than predicted for men of their same age and era.
...
23 of the 34 U.S. presidents who died from natural causes lived longer, and in many instances significantly longer, than predicted. Their average age at inauguration was 55.1 years. Four presidents who were assassinated were removed from the analysis.--Jennifer Viegas
[Mitt Romney's 42-yr marriage is] a tremendous accomplishment and something in which he can rightly take pride. We applaud him.--Gingrich advisor
The motivations to impose a financial transactions tax are one part Occupy Wall Street and one part Willy Sutton. Some see it as a way of penalize bankers, or at least correcting excesses of “speculators.” Others are attracted to imposing a tax on financial transactions because, as Sutton used to say when asked why he robbed banks, “that’s where the money is.” Let’s hope this idea never makes it into actual public policy. The Robin Hood tax is so deeply flawed that it is unlikely to raise much revenue or fix the financial system.
...
It would lead to increased consolidation, increased risk taking and increased systemic risk in the financial sector. Robin Hood, you may recall, met his end when he went to his cousin for medical treatment. She doesn’t just bleed him — not an uncommon treatment at the time. She overbleeds him, and Robin Hood dies. So maybe this is a Robin Hood tax after all, something that will kill the thing it promises to fix. --John Carney
While the number of people who commandeered Zuccotti Park was pathetically small—several hundred a night—compared with the weight of media attention lavished upon them, their sense of entitlement to take other people’s property, whether public or private, is unfortunately widespread.--Heather MacDonald
I, hayseed that I am, had not realized that the New York Times and CBS – not the editors of the American Economic Review, the Journal of Political Economy, or the Quarterly Journal of Economics — are (or were to [former NY Times editor Bill] Keller’s regret) the true arbiters of what is good or bad economics.--Paul Gregory
If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever growing power which the advance of the physical sciences has engendered and which tempts man to try, "dizzy with success", to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will. The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society - a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.--F.A. Hayek
Chart of the day: Taylor Rule back in positive regime
Source here.
A definition:
A guideline for interest rate manipulation. It was introduced by Stanford economist John Taylor in order to set and adjust prudent rates that will stabilize the economy in the short-term and still maintain long-term growth. This rule is based on 3 factors:
1) Actual versus targeted inflation levels
2) Actual employment versus full employment levels
3) The appropriate short-term interest rate consistent with full employment.
Investopedia explains Taylors Rule
Taylor's rule suggests that the Fed increases interest rates in times of high inflation, or when employment is above the full employment levels, and decreases interest rates in the opposite situations. This method of controlling interest rates has been fairly consistent with interest policy decisions, even though the Fed does not explicitly subscribe to the rule.
Taylor's rule suggests that the Fed increases interest rates in times of high inflation, or when employment is above the full employment levels, and decreases interest rates in the opposite situations. This method of controlling interest rates has been fairly consistent with interest policy decisions, even though the Fed does not explicitly subscribe to the rule.
Epitome of a bad track record
The National Retail Federation's predictions of holiday sales:
| Year | NRF Survey Forecast | Actual Holiday Sales |
| 2005 | 22% | 1% |
| 2006 | 18.90% | 5% |
| 2007 | 4% | -0.40% |
| 2008 | 2.20% | -6.00% |
| 2009 | -43% | 3% |
| 2010 | 9.20% | 5.50% |
Tuesday, December 06, 2011
Quotes of the day
We knew toil and hardship and hunger and thirst, and we saw men die violent deaths as they worked among the horses and the cattle, or fought in evil feuds with one another, but we felt the beat of hardy life in our veins, and ours was the glory of work and the joy of living.--Theodore RooseveltPhoto links here and here.
95% of individual traders lose money over ANY 10-year period.--Joe Fahmy
I am the 5%.--Cav
Majority of the money management industry believes through better study of the facts, the investor can beat the markets. Wisdom of Crowds disputes this generally held notion. The edge does not lie in superior information/higher intelligence alone. The game is won or lost elsewhere. Just ask Tebow’s critics.--Vedant Mimani
This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.—Western Union internal memo, 1876.
... the ranks of police officers have fallen by less than 1% after rising by 9% since 2000 alone. That, and the fact that America is a far safer place today than 10 or 20 years ago, suggests that Vice President Biden's claim that "the result [of police layoffs] has been—and it's not unique—murder rates are up, robberies are up, rapes are up," is simply, as the Washington Post observed, "absurd."
...It's important to keep the long rise in local government employment in mind amid the debate over sending more federal aid to cities and states. Steadily increasing municipal-government payrolls, combined with sharply higher employment costs—including rich pension benefits and soaring health-care outlays—have made many local budgets unsustainable. The National Governors Association recognized as much last year when it issued a report predicting a long period of fiscal "austerity" that local governments must solve in part by better controlling personnel costs.
...That almost certainly means that more layoffs are coming. But hyperbolic talk aside, local governments are well-staffed by historical standards and have the troops to do the job at hand.--Steven Malanga
We can agree at the injustice of transferring money from moderate-income pensioners to wealthy bondholders. But I think the even more important question is what makes the average Joe better off. And it's not clear to me that "stiffing the creditors" is the right answer.
...For starters, some of those creditors--maybe a lot of those creditors, depending on the country--are insurance companies and pension funds that serve the aforementioned Average Joes. But leave that aside. Europe is not, at least as I understand it, making the creditors whole because of their abiding love for foreign holders of European sovereign debt. They're stepping in and guaranteeing this debt in order to prevent a run on their banks and their bond markets.
...Runs on financial markets, as far as I can tell, do not righteously limit their damage to rich jerks who didn't need the money anyway. In fact, the people who suffer the worst from a rapid contraction of the credit markets are the poor. They're the ones who actually end up hungry and on the street when companies start failing and they can't get jobs.--Megan McArdle
To backtrack a couple thousand years, the general assumption regarding the fall of Rome is that the contemporary leadership was characterized by the same kind of ignorant as POTUS. The historical record, however, clearly displays that the intelligentsia of the time was well aware of Rome’s failings, they just couldn’t figure out a way to fix them. Pointedly, the corruption of the Senate and political control by wealthy elite paved the way for the dissolution of democracy and the onset of empire. They were not ignorant, contrary to popular belief, just overrun by socioeconomic trends too powerful to harness.
...Returning to modernity, it is clear from McArdle’s post that Netflix CEO Reed Hastings was, with the spin-off strategy, attempting to address very real structural issues within his firm. The plan clearly ended up as an online Bay of Pigs, but the drivers behind it are completely explicable with a modicum of research. I would argue that the behavior of politicians is similarly intelligible, with electoral money-raising, pandering to constituents and poll-watching replacing rising digital streaming rights as major motivational culprits.
...Labeling corporate or political celebrities “idiots” is to some extent to self-identify as part of the problem. Getting rid of these “idiots” will solve nothing, except to provide new vessels for sneering, self-congratulatory scorn. Focusing on the forces that makes these people appear to be morons, and widely publicizing these drivers to the point where they enter the general consciousness, actually provides an avenue for progress.--Interloper
Local McDonald's employees tell SF Weekly the company has devised a solution that appears to comply with San Francisco's "Healthy Meal Incentive Ordinance" that could actually make the company more money -- and necessitate toy-happy youngsters to buy more Happy Meals.--Joe Eskenazi
One 'sure-fire' way to reduce poverty
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.
It's not the law; IT'S THE REGULATORS
John Carney on the realities of the Community Reinvestment Act:
To believe anything that Hollander claims you have to be a statutory fundamentalist, someone who believes all that matters is what the law says. To put it slightly differently, you have to believe the actual operation of the law and the activities of regulators it empowers are irrelevant.Image link here.
There are plenty of these people. Former FDIC chair Sheila Bair is one of them. She once asked, “Where in the CRA does it say make loans to people who can’t afford to repay? Nowhere!"
This is like arguing that no person could ever have been wrongly imprisoned because the law says only the guilty should go to jail.
"Where in the criminal code does it say the innocent can be imprisoned? Nowhere!"
The truth is regulators took the view that banks should drop every traditional lending standard to comply with the CRA. The regulators wanted down payments to come down or be eliminated altogether. They told banks not to use credit histories anymore, to relax income requirements, to develop automated underwriting programs that took human judgment out of mortgage lending.
A 1999 study by the Treasury Department concluded the CRA was influencing the lending practices of institutions that weren't covered by the law.
...Hollander, like so many who have come before him, want all of this to just vanish down the memory hole. It's a convenient story for people who desperately want to trust that benign regulators will prevent another financial crisis. It's a far scarier world when you realize that regulators were in on the mess from the start.
Monday, December 05, 2011
Congress: Do they do anything? No!
But because of them, no one else can either. They're like Hotel California; my legislation checks in, but it can never leave. ... how many of you out there have a Fantasy Congress league?--Fred Armisen as President Obama, on the question 'Who really has power?'
Quotes of the day
Ironically, the topic of [my Harvard economics] lecture that the protesters chose to boycott was economic inequality, including a discussion of recent trends and their causes.Image links here, here, here and here.
...like most economists, I don’t view the study of economics as laden with ideology. Most of us agree with Keynes, who said: “The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique for thinking, which helps the possessor to draw correct conclusions.”
...That is not to say that economists understand everything. The recent financial crisis, economic downturn and meager recovery are vivid reminders that we still have much to learn. Widening economic inequality is a real and troubling phenomenon, albeit one without an obvious explanation or easy solution. A prerequisite for being a good economist is an ample dose of humility.
...My fervent hope is that any students who are still protesting the class will return — and that, while recognizing our limitations, they will learn from us what they can. A few might choose to become economic researchers themselves. Their contributions will surely be welcome. They might even improve the next generation of textbooks.--Greg Mankiw
"Veritas Christo et Ecclesiae" which translated from Latin means "Truth for Christ and the Church."--Harvard motto, adopted in 1692
If there’s any strong ideological undercurrent in Mankiw’s teaching, I would say that it’s Nerdism: the belief that people should listen to, and learn from, nerds…. Because believe me—and I say this with genuine respect and affection—Mankiw is a nerd’s nerd.--Connel Fullenkamp
Down-on-her-luck protester Tracy Postert spent 15 days washing sidewalks and making sandwiches at Zuccotti Park — then landed a dream job at a Financial District investment firm thanks to a high-powered passer-by who offered her work.--CYNTHIA R. FAGEN
I'm in the sort of sustainability space around kind of bringing synergistic value-add to other people's work around this kind of space.--Dan Palotta's Valley Girl 2.0
You should meet this guy with the SIO. He's sort of this kind of social entrepreneur thinking outside of the box in the sustainability space and working on these ideas around sort of web-based social media, and he's in a round two capital raise in the VP space with the people at SVNP.--Dan Palotta, again
It was fifeteen years ago today that Fed Chairman Alan Greenspan gave his famous "irrational exurberance" speech, suggesting that U.S. equities were overvalued.
...Between then and now, on an annualized basis,
the return on the U.S. stock market has been 5.55 percent.
the return on the U.S. bond market has been 5.98 percent.
Score that as one point for Alan.--Greg Mankiw
America looks like Mexico of the 70’s – 90’s. The last election cycle brought us the biggest economic crisis in 70 years. The next election will be no different. Dozens of landmines have been planted. They are timed to go off in 2013. Some may be fixed, others kicked further down the road. However the odds of the country addressing all of the things that have been programmed to explode is, in my opinion, close to zero. One or more of these things is going to trip us up. There are too many big issues to confront. When history looks at this period it will point to the incredible mismanagement of the economy that has taken place. A crisis is being programmed. It will go off like clockwork; it is now set on autopilot. I blame the partisan politics in D.C. for setting the country up for a big fall. But the reality is that the politicians are deeply divided because the voters are equally divided.--Bruce Krasting
Why are men less willing to work with a woman who attempts to negotiate?--John Carney
1) Does imprisonment reduce crime? Yes.
2) Do many crimes cause considerable harm and hardships to victims? Yes.
3) Does America imprison too many people? In light of my answers to 1) and 2) you might expect my answer to this question to be “no”, but it is a strong “yes”.--Gary Becker
Hang up some stained glass windows. Where? I don’t know. I’m not in charge of logistics. My job is awesome ideas. And nothing says old school like a 3,000 pound stained glass window.--Jon Acuff
Friday, December 02, 2011
Quotes of the day
My more liberal friends argue, based on Keynesian principles, that we need dovish fiscal policy as well. They often argue for short-run fiscal expansion coupled with long-run fiscal contraction. The problem is that fiscal policymakers cannot bind their future selves. It is hard to make commitments to future fiscal contraction credible, especially as short-run actions expand the budget deficit.
...My more conservative friends argue, based on monetarist principles, that a dovish monetary policy risks future inflation. In my view, however, there are bigger risks than inflation just now. They include prolonged high unemployment and meager growth.--Greg Mankiw
People talk about Main Street vs Wall Street. It should be Main Street vs the Beltway.--David Friedman
Professors are terrible at evaluation. Their method of judging student work is very simple: How close is it to what I would have done? The better you can imitate the professor, no matter what the class, the higher your grade.--Seth Roberts
In short, education becomes little but a vast public subsidy for private ambition. ... The result is a spiral of credential inflation; for as each level of education in turn gradually floods with a crowd of ambitious consumers, individuals have to keep seeking ever higher levels of credentials in order to move a step ahead of the pack. In such a system nobody wins. Consumers have to spend increasing amounts of time and money to gain additional credentials, since the swelling number of credential holders keeps lowering the value of credentials at any given level. Taxpayers find an increasing share of scarce fiscal resources going to support an educational chase with little public benefit. Employers keep raising the entry-level education requirements for particular jobs, but they still find that they have to provide extensive training before employees can carry out their work productively. At all levels, this is an enormously wasteful system.--David Labaree
Today Lipitor, the world's best selling drug and Pfizer's single most profitable product, loses patent protection and goes generic. If Lipitor (generic name atorvastatin) holds true to form for other generic transitions, Pfizer can expect to lose much of its market share and the price of atorvastatin will eventually plummet by as much as 80%. But while everyone is celebrating the "birth" of yet another cheap generic from an expensive blockbuster, it would be good for policymakers and the press to pause and reflect on where generic drugs come from.
...The stork doesn't bring them to your local pharmacy. They are often the products of years or even decades of enormously expensive and painstaking research by innovative (and yes, profit-driven) companies.
...What is the proper response to Lipitor going generic? Thank God for blockbuster drugs.
...Because without those drugs we wouldn't have the tremendous health gains from statins and other widely used drugs to treat stroke and hypertension - or the cheap generics that the health care system gains once those drugs lose patent protection.--Paul Howard
A corporate CEO's pay is determined by how well he or she manages two entities: the company; and the board. If you manage your board well, you can manage your company poorly and still make a lot of money. Conversely, I thought that Leland Brendsel managed Freddie Mac pretty well, but several years after I left he got ousted by the board in an accounting "scandal" that consisted of holding down accounting earnings to more closely reflect economic earnings. His successor, Richard Syron, managed the board well, but he was a disaster for the company--and for the whole financial system.--Arnold Kling
... I see [Adam Smith's] two preeminent works amounting to a unified theory, a blueprint for a more stable and sustainable version of capitalism; a conscious capitalism. The Wealth of Nations presupposed actors in the capitalist system operating on the moral framework he laid out in the Theory of Moral Sentiments. The free market has no conscience of its own: it is made up of billions of people transacting. Though Smith asserts that each of these people are guided by their self interest, he presupposes that each of the actors in the marketplace are guided by some internal morality and an awareness of one's place within the broader context of his community — locally and globally.
...The current version of capitalism is not the one envisioned by Smith at all. He was seeking to create a system defined by efficient allocation of resources driven by self-interest, but guided by self-restraint. This is conscious capitalism.
...The current version of capitalism's guidance from self-interest in the corporate world is evidenced in the legal duty to maximize shareholder value, which opens directors up to a lawsuit from their shareholders if they make a decision that fails to make the highest possible profit for their shareholders. Thus, the duty to maximize shareholder value handcuffs directors that want to make decisions that seek to create benefit for people and planet as well as financial returns.
There is debate whether this duty exists, but it is such a dominant perception among directors that it is the practical reality. In order for corporations to be free from the shackles of maximizing shareholder value, the fiduciary duties must be broadened.--Kyle Westaway
Westaway's thoughts on Adam Smith really inspired me, but I was sorely disappointed when he put his hope on legislating forward. Let's look at the track record, Kyle!--Cav
Earlier this year, some very smart people in Washington even suggested that states, which cannot place themselves in bankruptcy, be allowed to do so to solve their pension and employee compensation problems. One argument repeated over and over by advocates of this option was that a bankruptcy judge would void onerous union contracts and pension obligations. In Greek theater, critics once called this the "deus ex machina" ending, where a god in a chariot descended on the stage and untangled all of the complications of a plot that the playwright couldn't resolve in any other way.
...But there is no deus in municipal bankruptcy law; instead, parties involved must do exactly what they have failed to otherwise do, which is to sit down and negotiate their way to a settlement with the judge serving as a referee. And elected officials who somehow think that bankruptcy will give them political cover when they have to cut services and raise taxes are just kidding themselves. Taxpayers rarely blame the consequences of a municipal bankruptcy on the judge.--Steven Malanga
If you wouldn't object to China sending products to the United States for free, then on what basis would you object to currency “manipulation” that allows you to purchase undervalued Chinese imports at a huge discount and great bargain?--Mark Perry
If you're married, and you have a wife, and you really love your wife, is it good enough to only say to your wife 'I love her' the day you get married? Or should you tell her every single day when you wake up and every opportunity?--Tim Tebow
Image links here, here, here, here and here.
Thursday, December 01, 2011
Quotes of the day
... much of the money raised from any “millionaire” tax hikes would go to fund the growing phenomenon of public-sector millionaires. How’s that? Well, most dictionaries define a millionaire as someone with wealth (i.e., assets) of $1 million. By that definition, many New York teachers and the vast majority of police and firefighters are millionaires, because the “net present value” of their retirement benefits is well in excess of $1 million. ... City pension costs have jumped from about 4 percent of city tax revenues to 20 percent over the past decade, crowding out other vital public investments.--LAWRENCE MONE
Who but Bernie Madoff guarantees [a return of 8% on his NYC pension] permanently?--Joel Klein
When President Barack Obama jets to Scranton, Pa., Wednesday to promote his jobs package, he'll log his 56th event in a presidential battleground state this year, putting him well ahead of President George W. Bush's record-breaking swing-state travel in 2003. Mr. Obama's extensive travels this year have opened the president to criticism from Republicans that he is intertwining campaigning and governing at a time when he has called for bipartisanship on intractable national problems. Most of the cost is typically borne by taxpayers.--JONATHAN WEISMAN And CAROL E. LEE
Over the last two years gun ownership among Democrats (including Independents who lean towards the Democrats) surged a staggering 10 percentage points from 30% to 40%, while Republican ownership was essentially unchanged ... Second, the number of women who reported household gun ownership also surged by 10 percentage points to 43%, whereas male ownership was essentially unchanged. I'm really not sure what this all means, except clearly female Democrats appear to be a lot more uncomfortable with the reality of the Ice Age than male Republicans do.--Albert Edwards
In my more cynical moments, I can even imagine this winning Best Picture.--Jeffrey Overstreet
Subscribe to:
Posts (Atom)