Here to help.

Hilarity from Anthropologie

"shop local" ....in a chain. Awesome.

Literary current events.

I'm a bit worried about that massive helmet of hair on Blagojevich. He could be hiding another Voldemort under there.

Somebody warn the commission.

Irrationality ensues.

Hilarity of the day:

Headline on CNN news: "America's high hopes for Obama."

Ya' think?

Econtastic.

insurance requires uncorrelated risk, which is why "insurance" works against uncoorelated risks (like hurricanes, which when you have a broad base, one hurricane that hits some of your base isn't going to put you under) but not against corelated risk, like a housing market deflation (as in, it shrinking, not necessarily in the economic 'deflation' term) where your whole base can take a hit.

This has been a reiterated insight from this week's econtalk with Arnold Kling.

This is why we can't really have an exchange market to reduce risk in mortgages as we do in futures (oil, farm products, etc.), according to Kling. That is vastly profound....however....

I do wonder, if you increased your time horizon, and likely therefore your interest rates and capital holding requirements (you need to pay people more to allow you to lock up their money for longer and hold more cash on hand to avoid any runs or other catastrophies resulting from a downturn), if you couldn't do the same effect of broadening your base, but in a time, vs. a geographic, sense. Wouldn't this serve the same risk-diffusing purpose as insurance?

...related to that bernanke article I mentiones...and the latest econtalk.

One additional issue, and a seemingly large one as we consider fannie/freddie having increased risk of defaulting on cdo's (Collateralized Debt Objects--at least a somewhat large bomb that hit the economy in the last few months)/securitized mortgages: their (Fannie/Freddie's) artificially-low-due-to-implicit-govt-support rates allowed the cancer to grow undetected for longer than it would have under typically rising rates in a regular bank that needs to pay larger interest in coorelation to larger risks. And, as they had their fingers in ~60% of the country's mortgages, their securitized mortgages got to spread that cancer far and wide.

But, at least more people bought houses. *sigh* That's good, I guess...

Opportunity. Cost?

Wisdom can be gained when you'd fully bought into something and found out it was wrong.

another option for "gay marriage"...or "marriage" in general.

It seems that people think the only way to solve issues is to get the government involved...another option is to get the government out of the marriage certification business altogether, and allow/enforce contracts between individuals that would emerge following the dissolution of special state-enforced shorthand contracts called "legal marriages." Then, any consenting individuals could determine to enter into asset sharing contracts, the breaking of which may require judicial intervention.

We may still then disagree about the definition of marriage, which is fine, but the disagreement wouldn't get to have the guns of the government backing it up. Remember, the only reason the State began certifying marriaages (issuing "marriage certificates"...why the hell does the government get to "allow" you to get married!!??) is to ensure that blacks and whites weren't getting married, as miscgenation was considered an abomination.

The state is evil.

Incidentally, and interestingly, this would serve to reduce the divorce rate. Why is that?

I think I like the Bernanke. And the market isn't to blame for mortgagegate...or, at least, your Government is to blame as well.

Don't know a thing about Fannie/Freddie? Mortgage stuff confusing you a bit? Well, me too, so I used a paper to learn a bit about it.

Recently, I wrote a paper discussing HUD's regulatory analysis of a proposed federal rule increasing Fannie/Freddie's target goals (whenever some government agencies propose a federal rule with a certain dollar value of impact, they need to do a certain kind of cost/benefit analysis called a regulatory analysis. My paper is an analysis of that analysis). Fannie Mae and Freddie Mac, if you weren't aware, are called Government Sponsored Enterprises or GSEs, as they are uniquely related to the Federal government. They're not exactly public nor private, and are regulated heavily by the government, specifically Housing and Urban Development, who sets the goals for the mortgage companies, essentially telling them what they need to be buying and when, and attempting to measure whether they are meeting the goals that Congress/HUD sets for them.

The largest goals of the GSEs are: Low and Moderate-Income Housing goal, Underserved Areas Housing Goal, and Special Affordable Housing Goal. These three areas are all measured as percentages of dwelling units whose mortgages were purchased by the GSE and qualified for each goal. These goals were all increased from their previous levels in a stepped, yearly amount by the 2004 rule, so as to give the GSEs time to react and innovate ways in which to meet the goals. This rule that was the basis of my paper is a revisiting of previous rules enacted by HUD in 1995 and 2000, setting purchasing goals that were to be in effect from 2005-2008, which we now in retrospect see as the peak and collapse of the housing market in the U.S., and subsequent federal conservatorship (i.e. nationalization) of the GSEs.

In 2007 (yes, I realize that this is quite a bit after the rule, but his comments are not so crazy that they shouldn't/couldn't have been considered earlier), Bernanke offered a few ways that some of Fannie/Freddie's main business should be modified, that main business being:

[T]he purchase of mortgage-backed securities and other types of assets for their own investment portfolios. This line of business has raised public concern because its fundamental source of profitability is the widespread perception by investors that the U.S. government would not allow a GSE to fail, notwithstanding the fact that--as numerous government officials have asserted--the government has given no such guarantees. The perception of government backing allows Fannie and Freddie to borrow in open capital markets at an interest rate only slightly above that paid by the U.S. Treasury and below that paid by other private participants in mortgage markets. By borrowing at this preferential rate and purchasing assets (including MBS) that pay returns considerably greater than the Treasury rate, the GSEs can enjoy profits of an effectively unlimited scale. Consequently, the GSEs’ ability to borrow at a preferential rate provides them with strong incentives both to expand the range of assets that they acquire and to increase the size of their portfolios to the greatest extent possible.

Bernanke's main 3 points were (from my paper summary):

1. A stronger regulatory framework in which the regulator has capabilities of adjusting the GSEs capital requirements (as it stood, they held capital equal to appx. 3.5% of assets, vs. 6-10% at other banks, while their investment mix in a private bank would have likely required even higher than 10% capital/asset ratio in reserve).
2. Establish a clear and credible receivership process, establishing that share and debt holders could suffer financial loss and not expect a governmental bailout.
3. Anchor portfolios to a well-understood public purpose approved by Congress (under the then-current situation, studies showed that affordable housing goals achieved very little in terms of increasing homeownership among low-income families).

The remainder of his short speech may be read here, and while some of it may be confusing, I encourage you to read it, especially if you believe primarily that more government regulation is the answer to preventing situations like this in the future.

While it is foolish to say that "this" or "that" caused the current situation, it is important to realize that governmental regulation at least played a small (and I would say a large) part in creating the laxity in private oversight that people would feel inclined to participate in when their money is on the line. This is a problem that would be exacerbated, not fixed, by increased government regulation.

The state of your local Shawn.

..I gotta admit, the screaming and dancing here in Georgetown (until at least 2:30 when I went to a thankfully-interior room to sleep) was a bit contagious, despite my knowledge of economics and subsequent disgust for notions of a Presidential economic/social saviour...but now I really feel scared, literally scared, that he'll be shot. My assumption, strengthened by the apparently (I've heard no numbers) high voter turn out, is that the "reaction graph" has to be a reverse bell curve, and the people on the opposite side of all the crazy, jubilant revelers are conversely angry/slighted/offended/disparing, and the mirror image of that mania is terrifying.

I'm having a hard time sleeping...this is unprecedented.

Roger Ebert: Stick to movies, chap.

ROGER, Roger, roger. Just as your capital letters have denigrated, so has your potency.

In a recent review, Mr. ebert waxes political and economic, showing his absolute concern for the working man (and utter ignorance in matters economic/corporate--strangely, therefore, showing his lack of concern for the working man). Basic econ, mr.ebert (now you're losing spaces)...a company can not just willy-nilly "cut their wages, pollute their work environment, deny them health care, force them to work unpaid overtime, bust their unions and other crimes". I would have agreed with you 5 years ago, when I was a foolish 25 year old. Now, you're a 67 year old fool. That is greater than 2.68 times as bad, because you have had longer to learn.

Granted...the average moviegoer doesn't understand either. But they're not being heard over the large airwaves. Shoot me an email, mrebert (before you start losing letters in your name), and I'll send you a book to teach you something. If that's too long, you can read a less 'intense' version. It's probably not as short as a movie, but vastly more profitable.

I don't even know what this *means*

I wasn't even sure what sport this was about, until I saw the url.

just a little snapshot.

One of the few times a picture from my phone has looked decent.

an adult's table guide to politics.

If you ever hear a politician complain about a foreign country, run away. In fact, tell the man he's a damn fool. If that doesn't make sense to you, let me know. If you want to, research "comparative advantage," or read Russ Roberts' 'The Choice.'

a comment on the alleged debate agenda.

Foreign
Policy
=
Freaking
Pandering.

15 or so minutes into the "debate," and there has been no comment whatsoever on foreign policy. Unsurprising, I guess, due to thee general tendency to discuss what is urgent vs. what is important.

he hate me.

Often, people will say that economists only care about money, while real people are much more complex. This is true, in that people do have multi-faceted motivations.

This is false, however, in that it is most assuredly NOT all that economists consider. This is borne out in the preponderance of views and positions that are popular among economists, and social suicide among the vast population (and patently unpopular for the economist to hold...I can attest to this).

Minimum wage (you hate poor people!), affirmative action (you hate black people/women), welfare (you hate poor people), affordable housing (again with the poor-hating), the vast majority of governmental regulation-including the FDA and EPA (now...this isn't quite widespread, but it does happen in much higher proportions than the general population), public schools (at least as they stand generally), employer-provided health insurance....etc.

I'm sure there are others, but you get the point. It would be much more profitable and socially beneficial (in terms of pretty liberal girls liking us more, and hip liberal guys wanting to be our friends), to jettison this whole thing and go with the social(ist) flow.

We either are masochistic, or we truly do want to save everyone...but we have a longer time horizon and lower value in being seen as a savior-a low discount rate on saviorhood.

"you two should know better" -or- "drink, drink, drink, drink it up!"

Quotations below via "NPR: All things considered"
18 September 2008
(transcript used expressly without consideration or permission)

Dr. LARRY SUMMERS (Former Treasury Secretary, Clinton Administration): "You know, it's very tempting to always think that the government should just stand back and let the private sector sort these problems out. That's the kind of thinking that made the Depression 'Great.'

Dr. Summers, you are a wise man, but haven't we shown conclusively that this sort of fallacy, this grade school myth told to encourage a child's faith in the ability of the government, is patently false? Don't you know in your incredibly educated mind what Friedman and Schwartz showed the profession...when was it...the 60's?...that it was the gross deflation caused by the fed taking 1/3 of the money out of circulation in something like 2 years (a government action), and then Roosevelt's subsequent arrogant tinkering with the economy that led to uncertainty and frozen capital, thereby further exacerbating the situation and prolonging the plunge for years into greatness? Perhaps the doctor disputes these causes that I thought were rather widely held, at least within the economics profession? Perhaps I drink the free-market punch, while he's sipping the government green tea. It's not comfortable to scold someone so ostensibly wise, but I can't avoid it. Dr. Summers gets a K (Krap Koolaid) for his comment, but he used to mix up some government koolaid for all the kiddies to sip, so he's comfortable with the unnatural stains on his hands.

Dr. MARK ZANDI (Chief Economist, Moody's Economy.com): You know, the financial markets are built on faith and trust. And there's no way to restore that faith and trust without the help of an aggressive federal government.

No, sir. Faith and trust within financial markets are built on belief that contracts will be upheld and that a system will continue in something like the trajectory you expect it to-the more oriented toward enforceable contracts the better. There may be a role for government in this, in terms of a judiciary, but that does not necessarily follow. There are several examples of complex ordering systems of commerce and trade existing separately of government force, and at least a nominally valid case to be made for a completely private judiciary (see Rothbard's 'For a New Liberty' on this, though I'm personally rather comfortable with a governmental role in this aspect). All that to say, it does not necessarily and inevitably follow that because we need faith and trust, we need governmental inter-action/-vention, much less that we need an aggressive government...at the federal level, no less. I give your comment a K, sir, and wish you all the best. Remember: never eat the koolaid right out of the pouch, it tastes horrible. If you're in the habit of drinking it, though, you probably already know that. Since I can't assume that a PhD is a fool, you must therefore be used to that kool sip of refreshment with all artificial colors and flavors. Drink up!

I realize that this quote is a soundbite, but it is so patently wrong, twisted, and misappropriating of the role of government that it simply can not be allowed to stand. Here, within this broad, vast freehold of the internet that is my kingdom, it shall not.

Wait...you mean only like four people will ever see this? Neither Dr. Summers nor Dr. Zandi will ever know or care about my vicious jabs? Ah.

Onward, Sancho!!

And now, in this corner, weighing in at a-paltry-lack-of-substantive-experience...

With all due respect...Professor Walden has been quaffing the koolaid (kookaid?) when it comes to his assessment of the current housing/wall street/etc. debacle that's going on. Let's be honest, however...Professor Walden is, well, a professor...and he graduated from Cornell the year I was born. Yikes. I'm a first year grad student, and I'm not even taking 'grown up' PhD classes, but master's sections in econ classes. Oh, and I've never had an econ class in the past. Is that enough qualification? Alright, on to the kookiness.

1) You're going to compare the federal government to a doctor? I'm not even such a fan of doctors, but that's just disrespectful...to doctors. Doctors are highly trained, (arguably overly) specialized individuals. We all know about the pillage brokers, as Mencken referred to politicians, and what they're actually skilled at. This, as Munger stresses, is a look-at-me play perfectly timed for election posturing. To call them a doctor infers that they have some knowledge of that which they are operating on. Granted, Mr. Paulson knows a lot more than the average legislator...but not as much as the financial professionals know about their industry. There's more that can be said here, but let's leave it at "there is a huge dearth of true knowledge (vs. information and twisted incentives) among those in the government making the calls here".

2) "we" are going to have some asset in the future? HA. Unlikely, sir...unlikely. ASSUMING that there is some sort of efficient management that can occur through the government oversight of these assets (wow...I can't believe I said 'efficient' 'management', and 'government' in the same sentence), there will be no sort of disbursement to "the taxpayers", and no incentive to do so. Makes me think of non-profits, who have an incentive to increase the perquisites and decrease the left-over profits.

3) To continue on professor Munger's point, and professor Walden's analogy, the patients about to die on the table are corporations that made shit decisions, and made those decisions largely because the incentives were aligned against them, or more precisely, were aligned in precisely the right way to obtain exactly this wrong outcome. Russ Roberts has been detailing some of these incentives over the past few days at Cafe Hayek, primarily focusing on the governmental interventions in the housing market over the past few years.

What "we" should do is put those patients in quarantine, and allow them to die (note that I've tweaked the analogy to allow many patients, vs. the singular patient that Professor Walden described: we're not all dying, it's the infected ones that are). It's unfortunate; I'd like us all to live forever, but that's simply not possible at this point, and this rescue will simply allow the disease to spread its effects into more cities, towns, and countries.

Two out of the three parties in this party have a suspect incentive to desire this bailout, while the third has had little incentive to ever learn about the issue in the first place, and is now largely hearing voices from the first two camps. Is it surprising in the slightest that this would be an epic fail?

another PSA...Political Service Announcement.

If you think that the President can do much more than "do no wrong" for the economy (vs. fixing it), you're deluded--or a fool.

People who know way more than me seem to continually stress that the President's (sole?) effect is in foreign policy, and that virtually every single political answer to a problem makes the problem worse...unless they move toward deregulation, but that's a politically suicidal move to make at this point, so don't expect to see it.

most depressing...

Most depressing song ever:

Sufjan Stevens - John Wayne Gacy, Jr.

It's a beautiful day in the (off contract) neighborhood...

...it's an exciting time to be coming off your mobile phone contract. :) and, better yet, coming off Sprint with viable alternatives available elsewhere. I always felt shady in the past talking to retentions, saying I was considering leaving, because nobody had a phone that I felt compared with my Treo 650/700p. Now there's the very awesome looking BB bold, this HTC Dream, the sony xperia....and, of course, the very awesome Touch Pro.

I really will be calling and saying "make me an offer I can't refuse, or I will take my and my wife's monthly contract elsewhere".

Now, I just have to get her to quit using dumb phones and calling me all the time to find information for her...but I'm not planning on that happening. :)

Maybe we Libertarians *don't* just hate people.

Despite being continually seen as heartless, we must soldier on.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

Frederic Bastiat, The Seen and the Unseen, at EconLib

Iz Laybur Day.

moar funny pictures

My first self-created lolcat. Yes, that's the desk in the front bay window. It's my favorite part of the house.

Digg and misplaced hopes.

Tripping around on Digg, I happened upon the following article:

McCain Would Rather Win an Election than Pick a Qualified VP.

Now...I commented in the story, but here you go. As one of my professors (the inimitable Russ Roberts) said the other day, upon seeing 3 prius's in a row (in northern California, of course, and at a farmer's market, no less...it just doesn't get any more stereotypical than that), all festooned with Obama stickers, "man, are these people in for a disappointment." Until all of you really and truly learn this, you're going to be disappointed by every single election/aftermath:

"________ (insert politician's name here) would rather win an election than ________ (insert verb phrase here)."

the difference.

"The answers aren't in a book or Wikipedia"...and that's the difference between knowledge and information, and that's why nobody knows how to make a pencil.

What would I miss?

Know what's a beautiful thing?

Seeing a woman with a man, and knowing that she knows he's screwed up and deficient, but she's still there, rubbing his back, laughing at his stupid jokes.

Because it's just been too long.

from "overheard in new york":
"66-
Suit lugging huge rolling suitcase to hobo taking up two seats on train: Pardon me.

Hobo (sliding over, looking at huge suitcase): What do you have there, a dog or something?

Suit (with deadpan look on his face, stroking suitcase fondly): I used to. (sighs)

(hobo slowly inches away)
-99"

if you know why...

Please pray. This is tough.

why Palm isn't dead...and neither is Sprint.

Jump in on the dogpile all you want, but the Palm Centro, combined with chatter email, is one bad ass communication device that easily rivals a blackberry (disclaimer: while I am a tech geek, and have several friends who have blackberries, I do not have and have not extensively used one myself), and certainly seems to get more things done more efficiently than an iPhone...except for doing it as slickly, which I concur is an aspect.

The Centro seems to be loads better than my current 700p, and coupled with sprint SERO plans, presents by FAR the best mobile communications options in mobile services today, in terms of cost vs. capabilities. For $30/mo, plus applicable taxes, you can get 500 daytime minutes, unlimited nights/wkends (starting at 7), unlimited texts, and unlimited (up to 5gb...but nobody is truly unlimited that i know of, and good luck hitting 5gb with a mobile phone, even using occasional tethering--coughcoughUSBMODEMcoughcough--on your plan) internet/data. with chatter, and an applicable IMAP email address (like gmail), you get email pushed to your phone within seconds of receipt. beat that...just try to anywhere else. I've been looking, and I can't.

That all said...If I could get comparable AT&T service for anywhere CLOSE to what I'm paying for sprint (as compared to ~2x+ the cost), I'd be there in a heartbeat, even paying full non-subsidized price for an iPhone.

Shawn against Government. Shocking, I know.

More efficient Thermoelectrics.

...that is cool; and one great example of why I get worried when I see government subsidies for this or that "alternative energy source." I think...man, if government subsidies were greater, this guy would never have been trying this, b/c he would have (logically) been chasing the grant money elsewhere. How many brilliant people do we have looking at the wrong problems?

This is precisely why I oppose a "Manhattan Project" on energy, as I recently had a friend propose as a "solution" to the "energy crisis."

h/t: TotM

ye olde Milton...the Friedman variety.

We now have several decades of experience with government intervention. It is no longer necessary to compare the market as it actually operates and government intervention as it ideally might operate. We can compare the actual to the actual. If we do so, it is clear that the difference between the actual operation of the market and its ideal operation – great though it undoubtedly is – is as nothing compared to the difference between the actual effects of government intervention and their intended effects.”

—Milton Friedman, 1962

Ayn Rand: facial expressions :: Charles Dickens: character descriptions

The way that Ms. Rand writes her characters' perceptions of facial expressions is so unbelievable. Is it really possible to percieve that much in a look--an unspoken conversation--or is she simply putting words to the subconcious perceptions that we all make, the unspoken words we speak, as an artist sketches the lines we absorb without noticing, these things that we see without knowing we've seen them?

a "welcome to the city" gift?

So...the Supreme Court struck down the D.C. gun ban, finally. I'm hesitantly ecstatic...only out of my relative ignorance as to the process, and subsequent fear that there's "something else" that could happen. Though...the supreme court is pretty...well...supreme.

competing fools.

For if there is more tragic a fool than the businessman who doesn't know that he's an exponent of man's highest creative spirit--it's the artist who thinks that the businessman is his enemy.

-Ayn Rand, Atlas Shrugged, p. 719

I've said it before...

But it's just sticking out, so I'll comment on it:

This whole "corporations are evil and nefarious" thing is interesting. I certainly used to subscribe to it...and then I started reading some economics (Sowell's 'basic economics' is great, as anyone who speaks to me or reads this knows) and it eased a bit of my vitriol and worry over a corporation's actual "power" over consumers.

My worry over the government's power (especially in the realm of granting monopoly power...which is the only real time you have a monopoly) has grown exponentially, however...so maybe everyone should just keep on directing their anger at companies and trusting politicians in order to maximize their happiness.

Ignorance, after all, is bliss.

first impression of boston?

A bunch of dudes with sleeveless shirts on. I thought I left the rednecks behind?

unexpected effects.

Reading Atlas Shrugged almost makes me want to smoke.

If you know me, you realize the preposterousness of that sentence.

a new appreciation.

A wonderful thing about an appreciation of the wonders of creativity, of capitalism, is that things that look so familiar become new and wonderful. The glow of an HID bulb, tiny in size, brilliant in lumens, can be exciting, because you see the creativity behind the creation, and can be excited about the future, the possibilities, that this system uniquely in our history presents.

Barack OMFG.

I'm a big believer in evidence. I'm a big believer in fact. You know, if somebody shows me we can do something better through a market mechanism, I'm happy to do it. I have no vested interest in expanding government or setting up a program just for the sake of setting one up. It's too much work.

-Senator Obama

That a politician would say that he has no vested interest in the political machinations of "government" is so horridly untrue that it would be laughable, were it not something that caused my peers to look starry-eyed at the man for saying.

economics while waiting in line.

The next time you think that oil companies (or anyone else, for that matter) conspire to make "obscene" profits by simply charging higher prices, stop by Costco, and look at the insane lines for gas that's...what...$.10 cheaper per gallon? Worry not, the profit motive and competition are hard at work to drive down prices always and everywhere.