Did that voice inside you say

Early in the life of this blog (summer of 2006), I had written:

Markets are interpersonal. Not so much relational, they are the transactional potential and realization of agreements over time. And unlike the individualism of emotion, more than one person must agree on a price to make it real, which is why the market mechanism and the price information it yields can be so valuable in informing public policy.

Jesse Livermore gives me that deja vu all over again:

But this "yuck" factor is intangible, and these markets can produce material benefits. It is vital that policymakers get correct information about what will happen in the world. Prediction markets could send strong signals that swine flu was about to spread wildly, or that Mugabe's regime was about to collapse. These markets are far from omniscient, but they often represent quite a good way of pooling collective knowledge. These merged individual intuitions can provide an additional piece of information about what will happen in the future.

I'll take knowledge and a queasy feeling over sitting and hoping.

I'm angry at our President today

Usually, I've got a simmering annoyance at whoever happens to be sitting in the Oval Office. But I spiked to a boil after seeing this.

I guess I value children more than teachers' unions. A lot more.

So not funny

Appeals Judge Sonia Sotomayor claims that unelected officials make the law.

Quotes of the day

I don't believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.--Abraham Lincoln

The desire to bring back the boring, small banking industry of the nineteen-fifties is understandable. Unfortunately, the only way to do that would be to bring back the economy of the fifties, too. Banking was boring then because the economy was boring.--James Surowiecki

In 1787, the British government had hired sea captains to ship convicted felons to Australia...On one voyage, more than a third of the males died and the rest arrived beaten, starved, and sick... Instead of paying the captains for each prisoner placed on board ship in Great Britain, the economist suggested paying for each prisoner that walked off the ship in Australia. In 1793, the new system was implemented and immediately the survival rate shot up to 99 percent.--Tyler Cowen and Alex Tabarrok

Under Arnold Schwarzenegger, the best governor the states contiguous to California have ever had, people and businesses have been relocating to those states. For four consecutive years, more Americans have moved out of California than have moved in. California's business costs are more than 20 percent higher than the average state's.--George Will

So we have a President with basically no business experience, guided by a bunch of Ivy League policy wonks most of whom have limited real world business experience, deciding how big businesses should be and where young people ought to work. ... Put simply, Obama is selling our children's birthright. And for what? The false hope that government regulation can prevent economic downturns? It never has and it never will.--Stephen Bainbridge

It is not a rare phenomenon that what is legal may also be quite irresponsible. That appears in the First Amendment context all the time. What can be said often should not be said. Prof. Reidenberg's exercise is an example of perfectly legal, abominably poor judgment. Since he was not teaching a course in judgment, I presume he felt no responsibility to display any.--Antonin Scalia, on Reidenberg's invasion of privacy

Every once in awhile, through pure accident of history, an individual rises to a position of fame and responsibility in American society for which he has no business rising and for which he or she simply lacked the experience and mental fortitude to cope. In my lifetime, I can think of three such people: Dan Quayle, Janet Reno, and David Souter.--Todd Zywicki

[Souter's majority opinion on Virginia Bankshares] is a long, tortured expedition to a deeply baffling place. It is the jurisprudential equivalent of a short story by Robert Aickman, except that Souter opinions are much longer. No, not like an Aickman short story; like being a character in an Aickman short story. I read in the New York Times that Souter likes to go on long walks in the forest at night with his flashlight. Law imitates life, I guess.--Tom Smith

What does the government do in light of the subprime mortgage debacle?

It makes more of them, of course:

What isn't well known is that a parallel subprime market has emerged over the past year -- all made possible by the Federal Housing Administration. This also won't end happily for taxpayers or the housing market.

Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent -- nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in "serious delinquency," which means at least three months overdue.

The FHA is almost certainly going to need a taxpayer bailout in the months ahead. The only debate is how much it will cost. By law FHA must carry a 2% reserve (or a 50 to 1 leverage rate), and it is now 3% and falling. Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.

Jack Kemp, 1935-2009

Pro football gave me a good perspective. When I entered the political arena, I had already been booed, cheered, cut, sold, traded, and hung in effigy.--Jack Kemp

WSJ op-ed here:

Across his career, [Kemp] ventured into neighborhoods where Republicans too rarely tread. His policy innovations included enterprise zones, public-housing vouchers and a free-trade pact for all of North America. ... One historic imponderable is what might have happened if Reagan had chosen Kemp as his running mate in 1980.

Photo link here.

Jon Stewart apologizes for calling Harry Truman a "war criminal"

And I may have mentioned during the discussion we were having that Harry Truman was a war criminal. And right after saying it, I thought to myself that was dumb. And it was dumb. Stupid in fact. So I shouldn't have said that, and I did. So I say right now, no, I don't believe that to be the case. The atomic bomb, a very complicated decision in the context of a horrific war, and I walk that back because it was in my estimation a stupid thing to say.

Good for him.

The problem with socialism

is that you eventually run out of other people’s money.

When you're in Texas look behind you

Via Felix, some good things to know from the Epicurean Dealmaker about Chuck Norris:

• Chuck Norris does not mark to market. The market marks to Chuck.
• Chuck Norris does not go bankrupt. Chuck Norris ruptures banks.
• Funds that pay Chuck Norris 2 and 20 survive; others don’t.
• Chuck Norris does not believe in leverage. Chuck Norris believes in crowbars.
• No-one defers Chuck Norris’s compensation.
• No-one subordinates Chuck Norris. All his equity is preferred.
• If Chuck Norris devised the bank stress tests, not even the Treasury Department would survive.

Once again, private trumps public

Company warned officials of flu 18 days before alert was issued. (Via Glenn Reynolds)

Intrade's swine flu contracts on the move

Intrade contract here.

DISCLOSURE: I am long and short various contracts.

Two way street

Gov. Paterson, who raised state taxes by $8 billion last month, just cost state taxpayers $300,000 more. The state has secretly settled an embarrassing federal racial-discrimination lawsuit, The Post has learned. The suit accused Paterson, back when he was Senate minority leader in 2003, of firing a white Senate photographer in order to replace him with an African-American.

Quotes of the day

U.S. government spending as a percentage of GDP is now equal to Canada's and rising, leading one Canadian op-ed writer to crow about Canada's low tax, free market economy. Damn that hurts.--Alex Tabarrok

When bus passengers yell at driver, it improves safety. Is this an argument for free speech in general?--Glenn Reynolds

Does Arlen Specter's defection from R to D strengthen the President's hand in Congress? Perhaps overall but not on judicial appointments because breaking (the equivalent of) a filibuster in the Senate Judiciary Committee requires the consent of at least one member of the minority. Before today, Specter was likely to be that one Republican.--Michael Dorf

Note that [Jon] Stewart is applying the same sort of revisionism to our war with Imperial Japan that both Pat Buchanan and PBS (via historian Niall Ferguson) each did last year to America’s fight against Nazi Germany.--Ed Driscoll

Joseph Biden is frankly a comic character and we are lucky to have him. Things are just too grim these days - what with the putative swine flu catastrophe, the economic decline and Islamopsychos on the rise in Iraq again. We need a little Biden in our life.--Roger Simon

You don’t need Obama here. I bought the cow.--Marine corporal Sean Conroy, to his Afghan comrades

I own a Mini. Cap and trade could push my resale value into the stratosphere. Not that I would support a policy for personal, mercenary reasons ...--Megan McArdle

Yeah, shut up, listen to the veterans, work hard, and knock someone in the mouth.--Rodney Harrison, to rookie Patrick Chung

Those dedicated to the study of the business cycle and poverty

seem impervious to them.

Anyone with a pension

is probably a greedy hedge fund investor.

Where is NOW when you really need them?

Saudi Girl, 8, Divorces Husband, 50.

My daughter is 8. Yuck!

Graph of the day

(Via Glenn Reynolds)

Universal healthcare is like splitting the restaurant bill with strangers

times a trillion or so. Overconsumption and overpayment are big issues.

Then, after the binge, no one can afford to eat (or live) anymore.

They say that looks don't count for much

... if so, there goes your proof.

Lyrics here.

Quotes of the day

Our automobile industry could be much more “American” if we really cared to make it so. But we don’t. Our behavior as investors and consumers is usually more rational than the claims we offer up in politics and in public discourse.--Tyler Cowen

We're Living In Odd Times When Miss California Gets Tougher Questions Than the President.--Dennis Miller

It's the Spock plot strands that give the new "Trek" its best shot at once again commanding the zeitgeist. Spock's cool, analytical nature feels more fascinating and topical than ever now that we've put a sort of Vulcan in the White House.--Steve Daly

I grew up on 'Star Trek'—I believe in the final frontier.--Barack Obama

The interesting caveat is [the Obama sensation] is a style of leadership more effective running a law review than running a country.--Ron Klain

But in a still-dangerous world, in which one's listeners now have names like Ahmadinejad, Kim Jong Il, Putin, Hu Jintao, Netanyahu, Sarkozy and Merkel, the costs for the rest of us of being "misinterpreted" for a compulsive lack of clarity could be high. As back in January 2007, the key question remains: Is this Hamlet-like style of leadership suited for conducting the presidency of the United States? More bluntly, is it leadership? As he heads towards the next 1,300 days, Mr. Obama might consider trying a different gift that served an earlier Democratic president, Harry Truman, quite well once in office: Plain speaking.--Daniel Henninger

[Jon Stewart] is certainly not the only American who would take that view [that dropping the atomic bomb on Hiroshima is a war crime], but it's a useful reminder that the most vocal and popular criticism of the Bush administration's war on terror policies comes from people who, if they were being as honest as Stewart, would also judge Lincoln (suspension of habeas), FDR (internment), and Truman (use of nuclear weapons) as war criminals or tyrants or worse.--Michael Goldfarb

I see these “revise and extend” stories most every time they let Biden out in front of the cameras.--Stephen Green

Jake, I understand what [Joe Biden] said. And I'm telling you what he meant to say.--Robert Gibbs, President Obama's press secretary

[Bill Clinton] is a fan of this [10 girls for every 1 guy] ratio.--Nouriel Roubini