Kids Prefer Cheese
Credibly promising to be irresponsible...since 2004!
Monday, October 27, 2008
Could it be that the biggest problem is in Emerging Markets?
Latin America and Eastern Europe seem ready to melt down. Commodity prices are falling and their currencies are under a lot of pressure. It's the same old story from 1982, tons of borrowing in other currencies (Euro, $, even some in the Yen). Paul Krugman says beware the "mother of all currency crises" (and he should know because, as he just happens to mention, he "invented" their study), Dani Rodrik is calling for massive rich country and multilateral institutional lending to emerging economies. Tyler links to an article describing the grim situation in Eastern Europe and the high amount of exposure to it that European banks face.
Argentina is heading for another sovereign default. Brazil's currency and equity markets are falling and precarious. Chile and Mexico seem stronger but quite vulnerable.
Here's what the Telegraph reports on the exposure of European banks:
"The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.
They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles."
Sunday, October 26, 2008
Obama will make Greg Mankiw a better father??
It's true people, the G-man says so himself in this post (where amazingly he refers to himself as being upper-middle class):
"If you are one of those people out there trying to induce me to do some work for you, there is a good chance I will turn you down. And the likelihood will go up after President Obama puts his tax plan in place. I expect to spend more time playing with my kids. They will be poorer when they grow up, but perhaps they will have a few more happy memories."
Vote for Obama, people. Think of the children.
Who's your daddy?
“From everything I’ve heard, Babe Ruth only had one home run, and he kept hitting it over and over.”
--Steve Jobs (when asked if Apple needed to make more variations of the iPhone)
People, he walks the walk so he can talk the talk. Apple is now the 3rd largest phone maker in the world and they've sold over 13,000,000 iPhones. And they are making a lot of money doing so:
"The numbers are stunning. In the quarter ended in September, Apple said iPhone sales represented 39 percent of the company’s $11.6 billion in revenue (adjusted for some accounting technicalities). That means Apple sold $4.5 billion worth of iPhones in the quarter."
Here’s another stunner: Apple’s $4.6 billion in revenue from phones is more than its sales of computers. Analysts expected Apple to sell about $4 billion in Macintosh computers and $1.6 billion in iPods in the quarter."
Don't hate the player, pity the Blackberry.
Saturday, October 25, 2008
Zeke throws his daughter under the bus
It hasn't been a good last couple of years for Isiah Thomas. First there was the sexual harassment suit against him (where his then employer had to pay the complainant $11.6 million), then there was getting fired from his coaching gig. Now there's this:
"Authorities were called early Friday to Thomas’ Westchester County home, where police said a 47-year-old man was taken to the hospital and treated for an overdose of sleeping pills. Several media outlets reported that police confirmed it was Thomas who went to the hospital.
But reached on his cell phone Friday, the 47-year-old NBA great told the New York Post he had not been treated for a sleeping pill overdose, and that it was 17-year-old daughter Lauren who had a medical issue.
It “wasn’t an overdose,” he told the newspaper. “My daughter is very down right now. None of us are OK.”
“It wasn’t his daughter,” Harrison Police Chief David Hall told The Associated Press. “And why they’re throwing her under the bus is beyond my ability to understand.”
“My cops … know the difference between a 47-year-old black male and a young black female,” Hall said."
Now I am not necessarily a big believer in just believing the cops, and I haven't seen a picture of the daughter (could she possibly looks like a middle aged man), but I have to say I don't find it hard to believe that Zeke would try to have someone else take his heat for him.
Krugman cashes in
Friday, October 24, 2008
Robert Samuelson channels Chris Buckley
Or more specifically he channels Buckley's very funny novel Boomsday where young people push for the government to give tax incentives to induce aging baby boomers to "voluntarily transition" to the afterlife.
Here's RJS in full rant:
"What should you -- the young -- do? First, get angry -- at the media and think tanks for discussing this problem in misleading euphemisms (for instance, the problem is not an "entitlements crisis"; it's excessive benefits for the old); at the candidates for exploiting your innocence; and at yourself for your gullibility.
Next, start picketing AARP. It's the citadel of seniors' political power and the country's most powerful "special interest." It wields a virtual veto over roughly two-fifths of the federal budget. Your activist groups ought to be there every day with placards reading "Give Us Generational Justice" or "Get Off Our Backs." Ask direct questions of federal candidates about what benefits they'd cut, which they'd keep and why.
You need to appeal to the shame and guilt of older Americans by reminding them that their present self-absorption is not a victimless exercise. Only if older Americans act on their rhetorical pledges of worrying about their children will the political climate change. If you -- the young -- don't stand up for yourselves, believe me, your elders and your politicians won't."
Thursday, October 23, 2008
What kind of flower are you?
Why you're a gardenia of course! At least according to Steve Malkmus.
The Tao of Steph
"Get caught up in life!"
Perhaps stirred by getting his first pre-season start, sensei Starbury waxed eloquent on the court in the Knicks loss to Boston Tuesday night. Steph was Mr. Miyagi and Eddie House was Daniel Larusso.
Steph: "You're a bum"
House: "Don’t worry about me. You better worry about Ray Allen,”
Steph: “You’re nothing!" “You’re caught up in basketball. Get caught up in life.”
Hat tip to Ball Don't Lie
On pins and needles
French President Sarkozy apparently hasn't heard that all publicity is good publicity. He is threatening to sue a company selling a Sarkozy voodoo doll. Here's the story from the BBC:
"The doll comes with pins and a manual with instructions on how to put the evil eye on the president.
Users can stick the pins into choice quotes from Mr Sarkozy which are printed on the doll.
The quotes on the Sarkozy doll include "work more to earn more" and "get lost, jerk" - which he reportedly said to a bystander who refused to shake his hand at an event last year".
Good stuff, but possibly the best part of the article is the last sentence:
"Voodoo has become associated with zombies and sticking pins into dolls to curse an enemy, but practitioners say this misrepresents their religion".
Wednesday, October 22, 2008
Hedging: yer doin' it wrong!
Companies throughout Latin America, but especially in Brazil and Mexico have collectively lost billions of dollars when their use of financial derivatives to bet against the US dollar turned out badly.
The WSJ has details:
"Throughout Latin America, companies are telling investors they have lost millions, in some cases billions, of dollars due to foreign- exchange gambles that, in some cases, had little to do with their core businesses.
For now, however, such losses appear to be most widespread in Brazil and Mexico. In Brazil, the growing list of blue-chip casualties includes paper-pulp giant Aracruz Celulose SA and industrial conglomerate Grupo Votorantim. In Mexico, trading in tortilla maker Gruma's stock was halted earlier this month after its potential losses mounted to $684 million.
The surprise disclosures have sent stock prices tumbling, and regulators in both countries are investigating whether companies adequately disclosed their trading risks to investors.
Some local reports have speculated that the damage in Brazil alone could exceed $30 billion and may affect two hundred companies.
The bad bets were made using currency derivatives -- contracts tied to the value of the U.S. dollar. Companies lost badly when the dollar shot up in value starting in early September as investors cashed out of investments in emerging markets, fleeing to safer havens. And as companies raced to close out their positions they forced local currencies to tumble still further."
At least one company started out correctly using futures to hedge their business exposure to exchange rate fluctuations but got tired of "losing money" that way and decided to go into the gambling business:"
"Executives at Comercial Mexicana, whose stores sell digital cameras, TVs and other imported products, had protected itself against exchange-rate fluctuations by buying up dollars on futures markets. But, in recent months, with the peso's continuing rise, that insurance proved costly.
So, starting during the summer, Comercial Mexicana's treasury department stopped buying dollars as insurance and instead began laying bets against the U.S. currency, according to people familiar with the matter.
The retailer, along with other companies, made the bets using currency contracts sold by big banks, including J.P. Morgan Chase & Co. and Barclays PLC, both of which declined to comment.
Under the deals, the banks offered financing and currency trades at favorable rates. But there was a hitch. If the U.S. dollar strengthened beyond a certain threshold, then the companies would have to sell dollars at a loss. In some cases, the contracts had triggers that doubled the number of dollars the companies owed.
Comercial Mexicana purchased the contracts from five different banks. At first, the deals were profit makers.
But when the company's finance chief, Francisco Martinez de la Vega, returned from a two-week European vacation on Oct. 1, he found a situation spiraling out of control.
By then, investors panicked over the widening financial crisis had begun pulling money out of Mexico and other emerging markets. Since Aug. 1, the peso has dropped 24% against the dollar, and in October careened through its biggest daily drops since a 1994 currency crisis.
Comercial Mexicana suddenly faced huge losses. Mr. de la Vega had to call in bankers from Credit Suisse over the weekend of Oct. 4 to help him analyze the situation. The total cost to close the position: $1.4 billion".
Tuesday, October 21, 2008
What do you do when a Moron calls you a moron?
Well if you're Tyler Cowen, you give him more airtime!
Ok people, here's the deal. The moron in question,one Greg Ransom, in a comment on a post of Tyler's writes:
You're a moron when it comes to the ABC theory. As Hayek explains the theory, massive new global wealth and a desire for additional risk IS ENOUGH IN ITSELF to create an ABC boom and bust cycle -- THAT IS HAYEK, as I explained to you 2 decades ago. You simply don't know your Hayek. Hayek's ABC theory is NOT dependent of central banks and central bank interest rate policies to function.
But I'm guessing you haven't read enough Hayek to know that.
OK, got that? Hayek don't need no stinkin' central bank in his business cycle theory. We clear? Good.
But then I go to Mr. Ransom's (i.e. the moron's) blog and find the following post:
"THE FED CAUSED THE CRISIS: Hayekian wisdom from the magnificent Anna Schwartz:
"If you investigate individually the manias that the market has so dubbed over the years, in every case, it was expansive monetary policy that generated the boom in an asset. The particular asset varied from one boom to another. But the basic underlying propagator was too-easy monetary policy and too-low interest rates that induced ordinary people to say, well, it's so cheap to acquire whatever is the object of desire in an asset boom, and go ahead and acquire that object. And then of course if monetary policy tightens, the boom collapses."Be sure to read the whole thing."
Man, that's a real "what u talkin' about Willis" moment, innit? Central Banks aren't relevant to Hayek's ABC, but the thesis that "the Fed caused the crisis" is "Hayekian wisdom".
I guess that maybe explains why Tyler has published a book on Austrian business cycles while Mr. Ransom rages in all caps on other people's blogs.
Update: People, this just keeps getting better. Mr. Ransom is the first commenter on Tyler's post (the first link at the top of this post) and he says "I am really frustrated with the low level of debate". This from a fellow whose debating strategy can be summed up succinctly: ad hominem
(Of course I am doing the same here, but I freely admit to being delighted by the level of debate)
Joe Biden promises an "international crisis" if Obama is elected
I am not sure exactly what Joe was going for here, but it sure came out weird to say the least.
ABC News' Matthew Jaffe Reports: Sen. Joe Biden, D-Del., on Sunday guaranteed that if elected, Sen. Barack Obama., D-Ill., will be tested by an international crisis within his first six months in power and he will need supporters to stand by him as he makes tough, and possibly unpopular, decisions.
"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy."
"I can give you at least four or five scenarios from where it might originate," Biden said to Emerald City supporters, mentioning the Middle East and Russia as possibilities. "And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right."
What makes Angus happy
Last week Lebron posted, asking his readers "what keeps you sane?" I make no claim of sanity but things that make me happy include speaking Spanish, good music and animals.
When I can get all three in a single package, well that makes me very, very happy.
Here are two examples, one pretty new and the other dating back from when Mrs. Angus and I lived in Chilangolandia:
Monday, October 20, 2008
Great moments in Scottish History
Ladies and gentleman, Andy Murray (the best looking Scot in history) beat Roger Federer on Saturday and Gilles Simon on Sunday to win the Master's Series event in Madrid. Murray has won 4 titles this year and will finish the year ranked #4 in the world. Too bad Robert Burns is dead.
Feast your eyes people:
They just don't get it
India's first (unmanned) moon mission is to lift off today. I am not making this up. People go and read "The White Tiger" and tell me if you think this is a smart use of funds for India.
Many Mexican teachers are on strike over an agreement between the government and their union to abolish the practice of buying one's job, requiring proof of literacy from all new teachers, and instituting remedial training for non literate current teachers.
Finally a bit closer to home, the totally irony-challenged President of the United States of America said this weekend: "It is essential that we preserve the foundations of Democratic capitalism, a commitment to free markets, free enterprise and free trade."
Sunday, October 19, 2008
This Week in Piracy
From the AP:
"It's been a busy, profitable week for : They hijacked one South Korean bulk carrier Wednesday, released another South Korean cargo ship Thursday and let a hijacked Thai ship go Saturday after getting a ransom."
But that's not all folks:
"Nearly a dozen ships and over 200 crew remain in the hands of pirates, including the hijacked Ukrainian arms ship MV Faina, for which pirates have demanded an $8 million ransom.
U.S. warships are still surrounding the Faina to keep the pirates from unloading its cargo of battle tanks and heavy weapons."
Maybe it's a good time to take a long position in grappling hooks, peglegs, eyepatches and parrots?
Saturday, October 18, 2008
Connie Mack has definitely left the building
Last week I posted to the effect that Terry Francona should not have taken his starter out of the game after pitching 7 innings of 4 hit shutout ball. I took a bit of a reaming in the comments, but that was dumb even though the Angels manager eventually out-dumbed him and the Sox won the game.
Now, in an even dumber example of the same strange self-destructive phenomenon, Tampa manager Joe Maddon pulls his starter after he'd pitched 6 innings of 2 hit shutout ball. This time, since Francona eschewed the suicide squeeze in the inevitable Boston comeback, the Sox win the game to extend the ALCS.
WTF people, Does Connie Mack have to choke a manager up in here?
Friday, October 17, 2008
KPC Fave wins Booker Prize
This week Aravind Adiga won the Man Booker prize for his debut novel "The White Tiger". Back in August I wrote the following:
3. The White Tiger by Aravind Adiga
An even better debut novel. This is a 270 page anti-India screed. It's lovely. It reminds me very much of an extended Thomas Bernhard rant, though there is way more action here than in a Bernhard book. Indian politics, corruption, caste system, and the heinousness of village life all get vigorously rubbed in your face. I read this all in a single afternoon here in Santa Fe. Just wouldn't stop and put it down to go outside. You gotta check this out.
This was something of an upset as "The Secret Scripture" was the favorite. If the favorite had won, that would have been the biggest travesty since "Cloud Atlas" didn't win in 2004.
Thursday, October 16, 2008
Rational Ignorance: yer doin' it right!
In a recent survey of over 3,000 American adults only 18% of them got all three of the following questions right:
1. What is the majority party in the US House of Representatives?
2. Who is the US Secretary of State?
3. Who is the Prime Minister of the UK?
All ur knowledge is belong to us!
Pujols Good, Howard Also Good, But Not AS Good
(From "Fire Joe Morgan," a site of REAL Baseball Knowledge)
Albert Pujols Was Not A Good Enough Pitcher To Win The MVP
I for one can't wait for the deluge of Ryan Howard-for-MVP columns from older dudes wearing RBI Glasses™. RBI Glasses™: Available at ShittyLensCrafters all across the country. Hey, here's the first one, from Bob Klapisch.
Me: Bob Klapisch, you're writing a column about your awards picks. What are you going to call it?
Bob Klapisch (stopping to think for exactly 0.00038 seconds): The Klappie Awards! I'm on break.
Bob Klapisch's Klappie Awards
MOST VALUABLE PLAYER, NL: Ryan Howard, Phillies.
Nope. Wrong. So so so so so so so wrong. You should be criticized on some sort of hypercritical baseball blog for that opinion.
We’re prepared to face the firing squad on this one, having passed over Albert Pujols.
Klapisch is talking about a literal firing squad. He has written his farewell notes to his wife and kids. But he's doing this because he's a man. A man taking a stand. A man choosing another man who is ranked 30th in his league in VORP for MVP. These are the kinds of causes for which a man like Bob Klapisch is willing to stare death in the face.
Mark DeRosa and Cristian Guzman had higher VORPs than Ryan Howard. VORP is not the final word by any means; it obviously has deficiencies. But hey, also: Ryan Howard was 6th on his team in OBP. Think about that.
But as unthinkably dangerous as the Cardinals’ slugger was, he couldn’t get his team to the postseason. Howard did.
You're right. Albert Pujols did not nearly pitch well enough, or for enough innings (Can you believe zero innings? What a bum!) for the Cardinals to to make the playoffs. (The Phillies had a team ERA of 3.88; the Cardinals 4.19. Albert Pujols? More like Albert Not A Very Good Pitching Coach!)
Pujols should have lobbied to have St. Louis the city moved to Oregon, where his Cardinals would have won the NL West by two games and he would be lauded as a clutch MVP baseball superhero with quality intangibles and a leader with the uncanny ability to come through when it counts. But unfortunately, Pujols has never been good at getting entire cities to spontaneously change their geographical locations.
Ryan Howard batted .168 in April. Albert Pujols' batting averages, by month (and I know batting average doesn't matter. Here they are anyway): .365, .373, .302, .347, .398, .321. Bob Klapisch, do you think for some reason that games played in April don't count in the standings? Ryan Howard batted .213 in August.
Granted, Pujols had better season-long numbers.
Granted, "The Wire" is a "better" show than "Hole in the Wall."
But Howard was in another reality in September, when impact players make their mark.
But "Hole in the Wall" and one very funny moment where a guy couldn't fit through the hole in the wall, and that is the kind of impact that impact TV shows make when it counts.
While the Phillies were catching and passing the Mets (again), Howard batted .352 and hit 11 home runs — one every eight at-bats.
While the Cardinals were playing baseball, Albert Pujols batted .357.
Ryan Howard hit behind Jimmy Rollins and Chase Utley. If Albert Pujols hit behind Jimmy Rollins and Chase Utley, he would have had 493 RBI. Do the math. It checks out.
He finished the season with a mediocre .251 average, but otherwise led the majors with 48 HR and 146 RBI.
Sure, he hit by far the most home runs. RBI are bullshit. Here are things he didn't lead the majors in:
EqA VORP WARP1 WARP2 WARP3 OBP OPS SLG WPA BB BA R
Literally any defensive statistic. Any of them. Just pick one.
You know who led or was damn close to the lead in a shitload of those statistics? Albert Pujols. The 2008 NL MVP.
(Nod to the Bishop, who also knows baseball)
Wednesday, October 15, 2008
If it weren't for us gringos, Chavez would be broke
Oil production in Venezueala has falled by 25% since Chavez was first elected, from 3.2 million barrels per day down to 2.4 million, meaning that Venezeula has to a large extent missed out a lot from the recent oil boom. Not only that but,
"About half of this oil is now delivered at a discount to Mr Chavez's friends around Latin America. The 18 nations in his "Petrocaribe" club, founded in 2005, pay Venezuela only 30 per cent of the market price within 90 days, with rest in instalments spread over 25 years."
It turns out that we are his only retail paying customers,
"The other half - 1.2 million barrels per day - goes to America, Venezuela's only genuinely paying customer."
One reason why oil production is down is that Chavez has made the national oil company a footsoldier in his Bolivarian revolution,
"Meanwhile, Mr Chavez has given PDVSA countless new tasks. "The new PDVSA is central to the social battle for the advance of our country," said Rafael Ramirez, the company's president and the minister for petroleum. "We have worked to convert PDVSA into a key element for the social battle."
The company now grows food after Mr Chavez's price controls emptied supermarket shelves of products like milk and eggs. Another branch produces furniture and domestic appliances in an effort to stem the flow of imports. What PDVSA seems unable to do is produce more oil."
The article makes a guess that
"now that prices are falling, Mr Chavez faces huge financial problems. Nobody is sure at what point his government would be unable to pay its bills, but most sources consulted believe this would probably happen if oil falls to $80 a barrel."
FWIW, oil is around $75 a barrel this afternoon.
Chris Buckley gets Fatwahed
Chris Buckley puts it all rather well, I think.
First, his endorsement of Obama (as opposed to the increasingly evil, and entirely incoherent, J. McCain).
Second, his goodbye to the National Review.
An excerpt from the latter:
Within hours of my endorsement appearing in The Daily Beast it became clear that National Review had a serious problem on its hands. So the next morning, I thought the only decent thing to do would be to offer to resign my column there. This offer was accepted—rather briskly!—by Rich Lowry, NR’s editor, and its publisher, the superb and able and fine Jack Fowler. I retain the fondest feelings for the magazine that my father founded, but I will admit to a certain sadness that an act of publishing a reasoned argument for the opposition should result in acrimony and disavowal.
My father in his day endorsed a number of liberal Democrats for high office, including Allard K. Lowenstein and Joe Lieberman. One of his closest friends on earth was John Kenneth Galbraith. In 1969, Pup wrote a widely-remarked upon column saying that it was time America had a black president. (I hasten to aver here that I did not endorse Senator Obama because he is black. Surely voting for someone on that basis is as racist as not voting for him for the same reason.)
My point, simply, is that William F. Buckley held to rigorous standards, and if those were met by members of the other side rather than by his own camp, he said as much. My father was also unpredictable, which tends to keep things fresh and lively and on-their-feet. He came out for legalization of drugs once he decided that the war on drugs was largely counterproductive. Hardly a conservative position. Finally, and hardly least, he was fun. God, he was fun. He liked to mix it up.
So, I have been effectively fatwahed (is that how you spell it?) by the conservative movement, and the magazine that my father founded must now distance itself from me. But then, conservatives have always had a bit of trouble with the concept of diversity. The GOP likes to say it’s a big-tent. Looks more like a yurt to me.
While I regret this development, I am not in mourning, for I no longer have any clear idea what, exactly, the modern conservative movement stands for. Eight years of “conservative” government has brought us a doubled national debt, ruinous expansion of entitlement programs, bridges to nowhere, poster boy Jack Abramoff and an ill-premised, ill-waged war conducted by politicians of breathtaking arrogance. As a sideshow, it brought us a truly obscene attempt at federal intervention in the Terry Schiavo case.
So, to paraphrase a real conservative, Ronald Reagan: I haven’t left the Republican Party. It left me.
(Nod to Anonyman)
No Bradley Effect?
Tuesday, October 14, 2008
The NFC Least
When I lived in the DC area I was continually assaulted by the relentles pimping of the Washington Redskins by WAPO columnists. Now in this new era of communications, they are still doing it to me long distance via PTI.
The big trope this year has been that the NFC East is the toughest division in any sport since Ali and Frazier were mixing it up. "Three playoff teams", "Best division in football" and the like. It's not just Tony & Mike though, here are links to others banging that selfsame drum.
Thus it made me happy yesterday to scroll through Yahoo sports and see that the NY Giants had been thrashed by the lowly Cleveland Browns, the 'Skins gave the hapless St. Louis Rams their first W, and Dallas fell to the Arizona Cardinals.
I know, I know, "any given Sunday", but for one week at least mabye things will quiet down.
Well that didn't take long
According to humorist Andy Borowitz, Paul Krugman has wasted no time going Hollywood after getting word of his prize.
Here's an excerpt:
"Mr. Krugman could not be reached for comment and instead referred all questions to his publicist, Sherri Hefstein, whom he hired minutes after winning the Nobel.According to Ms. Hefstein, Mr. Krugman plans to spend the next few months "building his brand" and will be adapting his book, International Economics: Theory and Policy, into a feature film to star George Clooney. "
Hat tip to Mrs. Angus.
Paulson finally puts out
Monday, October 13, 2008
I feel sorry for Paul Krugman....
because his well deserved Nobel Prize is always going to be tainted by the idea that the Scando committee wanted to send an anti-Bush message. Just look at this article on Yahoo news:
"Bush critic wins 2008 Nobel for economics""STOCKHOLM (Reuters) - , a fierce critic of the Bush administration for policies that he argues led to the current financial crisis, won the 2008 Nobel prize for economics on Monday."
While I think that Krugger has the right opinion about Bush but for all the wrong reasons, he (Krugman) is/was an excellent trade theorist and is, in my opinion, above the median quality level of all the Econ Nobelists. It's too bad that his receipt of the prize at this point in time will put focus on his political views rather than his economics skills which are/were mad!
Labels: homo economicus
Latin American currencies are getting hammered
The US dollar continues to strengthen, especially against some Latin American currencies:
Here's Mexico (graph is pesos per dollar), where the $ has appreciated around 30% in three months:
Here's Brazil, where the $ has appreciated around 40% in the last three months:
And finally Chile, where the $ has appreciated around 25% in the last three months:
Update: The situation is the same in Colombia where the $ has appreciated around 30% in the last three months (thanks to commenter marecha for suggesting this case).
Irony: yer doin' it right!
From the Associated Press:
"World Bank to protect poor from economic turmoil""WASHINGTON - The World Bank agreed Sunday to help strengthen their economies, bolster their financial systems and protect the poor against the financial turmoil in international markets."
This would be a welcome change from the Bank's previous policies!
Sunday, October 12, 2008
Put up or Shut up!
I have come the conclusion that all our gub'mint has done so far vis a vis the financial crisis is to make matters worse.
First of all, they helped kick it off with overly lax monetary policy and almost a complete lack of regulatory oversight over private firms selling mortage backed securities and derivatives.
Second, they picked which firms to save and which to let go down in a fairly arbitrary manner (bailout for Bear, toilet for Lehman).
Third, they put together an ill advised rescue plan, and when Congress balked, larded it up with $150 billion of pork to get it through.
Fourth, despite apocalyptic statements like those of Ben Bernanke (if this doesn't pass today we might not have an economy Monday) and others, nothing has been done to implement the plan in the 10 days since its passage.
Now, the NY Times reports that buying the so called toxic assets is on the back burner and the new plan is to directly inject capital into banks by buying shares. While I and many many others have advocated this approach over the buying asset approach, check out this sentence from the article regard implementation:
"Treasury officials said they hoped to make the first capital investments within the next two weeks."
Wow. Our goverment's statements and actions and lack of follow through have had, in my opinion, the effect of increasing fear and uncertainty rather than mitigating either.
People, they can't even follow the first rule for being in a hole.
Saturday, October 11, 2008
My Son's Dorm, and ....Blue Heaven!
When we took elder younger Munger to UNC, it looked like this....
Truck is packed....
Room is a mess (note huge stain on mattress; nice! We put rug down.
Room is a little better, coming together
Sad, sad momma.
Bizarre emo son communing with space aliens for afternoon plans
Best of all: Here is the view straight out of Kevin's window....Le Dome du Dean, Heaven on Earth for All Us Tarheelians
Pumpkin Carving, at the Munger Property
My son Brian and I like to go down to our Chatham County property, go a half mile out into the woods, and exercise our Constitutional rights. The ones that come right after the end of the 1st Amendment.
This year, we went for pumpkin carving. It being all fall and all.
You start out with the major work, on the outline of the Jack-o. For this, it is hard to beat the tool created by Mr. Kalashnikov.
Here is Brian "roughing in" the outline, with the 7.62x.39 mm round.....
Then, for the finer work, you'll need the up close and personal touch of the Taurus Judge. This beauty is chambered for either the long Colt .45 shell, or (in this case) the .410 2.5" shotgun shell. Note the huge gout of flame and smoke that comes out of the barrel of this wheel gun on the fourth shot (he loaded one long Colt round, just for kick.) Very satisfyin'.
The finished result? A pumpkin to make any kid proud. The rear of the pumpkin is not in very good shape, of course (we also fired some long Colt .45 hollow points to see if they would expand; they did), but from the front....a masterpiece of Jack-O art.
Friday, October 10, 2008
A braver man than I am
There are probably millions of them, but I am referring specifically to Casey Mulligan who is singing an aria as he strolls by the graveyard. Here is a bit of the second verse:
"It’s important to keep in mind, too, that the financial sector has had a long history of fluctuating without any correlated fluctuations in the rest of the economy. The stock market crashed in 1987 — in 1929 proportions — but there was no decade-long Depression that followed. Economic research has repeatedly demonstrated that financial-sector gyrations like these are hardly connected to non-financial sector performance. Studies have shown that economic growth cannot be forecast by the expected rates of return on government bonds, stocks or savings deposits.
It turns out that John McCain, who was widely mocked for saying that “the fundamentals of our economy are strong,” was actually right. We’re in a financial crisis, not an economic crisis. We’re not entering a second Great Depression.
How do we know? Well, the economy outside the financial sector is healthier than it seems.
Since World War II, the marginal product of capital, after taxes, has averaged 7 percent to 8 percent per year. (In other words, each dollar of capital invested in the economy earns, on average, 7 cents to 8 cents annually.) And what happened during 2007 and the first half of 2008, when the financial markets were already spooked by oil price spikes and housing price crashes? The marginal product was more than 10 percent per year, far above the historical average. The third-quarter earnings reports from some companies already suggest that America’s non-financial companies are still making plenty of money."
Que Dios te escuche!
Thursday, October 09, 2008
The Revenge of the Kettle
A story in the Miami Herald about Latin American reaction to the US bailouts:
"No one in Latin America has been making more hay of Bush's turnabout than Venezuela's President Hugo Chávez, a self-proclaimed socialist who is the U.S. government's biggest headache in the region."
'If the Venezuelan government, for example, approves a law to protect consumers, they say, `Take notice, Chávez is a tyrant!' '' Chávez said in one of his recent weekly television shows.
'Or they say, `Chávez is regulating prices. He is violating the laws of the marketplace.' How many times have they criticized me for nationalizing the phone company? They say, 'The state shouldn't get involved in that.' But now they don't criticize Bush for having nationalize . . . the biggest banks in the world. Comrade Bush, how are you?''
The audience laughed and Chávez continued.
``Comrade Bush is heading toward socialism.''
Amen, Hugo, but somehow I can't seem to get myself to laugh about it.
hat tip to Greg Weeks.
500 billion tickets to paradise
Well, some Asian markets are up, European markets are generally up, and the government is now signaling that they intend to inject new capital into banks directly (beyond or instead of buying troubled assets), which what I and many of my betters have been arguing is a more efficient way to help the system. However, we are far from out of the woods and, in finance terms, could use a white knight to save us.
How about China?
From the FT:
"The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance – buying US bonds – was indirect and unconditional. Not so in this case.
China’s loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.
China would impose two conditions. First, it would declare that the offer of money was conditional on the US government’s adopting a particular approach to rescuing the banks, namely to favour in the next round the use of government money to recapitalise the banks.
(Second) China would stipulate that monies be devoted to cushioning the impact on vulnerable homeowners, so that they would not be forced into forgoing the American dream of home ownership. Chinese conditionality on this front would achieve an outcome that several economists on the left and right have argued for on grounds of fairness, and also to address the fundamental problem in the housing market.
For China, this offer of help would have three virtues. First, it would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates, which led to lax global liquidity conditions. Second, its economic interest would be served because successful US efforts at rescuing its financial sector could help avert an economic downturn, protecting China’s exports, its growth engine. Perhaps most important, it would seal China’s status as a responsible superpower willing to deploy its economic resources for the sake of protecting the world economy."
I have edited the FT post to remove the dripping sarcasm of the author, one Arvind Subramanian. Hey, we've already started on the first condition and I'm sure our political class would have no problem running with the second condition!
Wednesday, October 08, 2008
The crisis came out smokin', but Bernanke ain't jokin'
It just might shock ya and amaze ya???
Well (with apologies to M. Ali) I don't know about the last bit, but Ben certainly has been doing everything he can (and more?) to take on the financial crisis. The Fed has pumped hundreds of billions of dollars into the market, started directly lending to firms, and now, in coordination with the Bank of England and the ECB, has cut the Fed Funds rate from 2% to 1.5%. There's not much more he can do beyond selling apples outside the Fed building, is there?
Meanwhile Paulson has named an ex-Goldman Sachs guy to run the mighty official bailout.
With the bailout plan seemingly DOA (it's passage seemed, if anything, to trigger the market selloff), Ben is pretty much the guy for fixing things around here.
One other thing, when did Bush resign as President? Did I miss that somehow?
Tuesday, October 07, 2008
This is NOT the best of all possible worlds
When I was a lad, I was taken to church a fair amount. Didn't have much choice in the matter. But holy crap people, this here just isn't right.
Every 10 years or so a bunch of Nepalese sadists pick a baby (from 2-4 years old) girl to be a "living goddess". Among the trials the successful candidate must endure is spending:
"a night alone in a room among the heads of ritually slaughtered goats and buffaloes without showing fear".
Congratulations little toddler, you survived. Now here's your prize:
"Having passed all the tests, the child will stay in almost complete isolation at the temple, and will be allowed to return to her family only at the onset of menstruation when a new goddess will be named to replace her."
Plus it turns out that this is a "gift" that just keeps on giving:
"Nepalese folklore holds that men who marry a former kumari will die young, and so many girls remain unmarried and face a life of hardship."
In all seriousness, what the hell is wrong with these people??
Where have you gone Connie Mack?
I don't really follow baseball that much. Way back in grad school we used to go to Cardinal games in St. Louis during the summer where bleacher seats were a couple bucks and the Cards were dominant and that was fun. This year, just for the soap opera-ness of it all, I'd like to see a Dodgers - Red Sox series with Manny hitting around 10 dingers to win it.
One thing I do know about baseball though is that managers are dumb. Take Terry Francona last night. His starter pitches 7 stellar shutout innings but he takes him out to start the 8th to bring in a guy that is just not as good (but is left-handed). This guy (Okajima?) gives up a 2 out walk and then in comes a skinny guy with weird socks who gives up another walk, a wild pitch, and then a 2 out game tying single. This kid had pitched 3 1/3 innings in this series and given up 4 hits and 2 walks up to this point.
Lucky for the Sox that the Angels manager helped bail them out with a "suicide squeeze" play later in the game. Hey Mike Scioscia, why do you think they call it what they call it?
People, what exactly is the externality / market failure that lets baseball managers be so very very bad?
As promised, from beyond the grave, special guest blogger Dear Abby!
I don't know what to do. Mungowitz says he loves me, but he never writes, he never calls, he never sends me flowers. I am typing my fingers to the bone, but he doesn't seem to appreciate me.
"Bewildered, Bewildered you have no complaint. You are what you are and you ain't what you ain't. So listen up mister and listen up good. Stop wishing for bad luck and knocking on wood."
Signed, Dear Abby
Monday, October 06, 2008
Guest Blogger: Larry King
You know who would make a good president? Ben Roethlisberger. Is it just me or is Barack Obama putting on weight? I think Hank Paulson is doing a bang up job at Treasury, just look how the stock market is responding to the passage of his plan! The Oklahoma City Thunder is a franchise name for the ages. Isn't it impressive how everyone in the Congress is working together to solve our problems?
Mungowitz, you better get busy or tomorrow's guest blogger will be Dear Abby!!!
Sunday, October 05, 2008
On the bright side, at least he's not plagiarizing
In the midst of financial crisis frenzy, I missed this awesome story. Joe Biden said on TV that
"When the stock market crashed, Franklin D. Roosevelt got on the television and didn't just talk about the, you know, the princes of greed. He said, 'Look, here's what happened.'"
Of course, the market crashed in 1929, and FDR took office in January of 1933 and there wasn't any such thing as television then.
Maybe Joe can start claiming that he invented television.
Saturday, October 04, 2008
Clear as Mudd
People are panicking and not getting their stories straight. Take Daniel H. Mudd, former CEO of Fannie Mae (I am not making this name up) for example. Here's his quote:
“Almost no one expected what was coming. It’s not fair to blame us for not predicting the unthinkable.“— Daniel H. Mudd, former chief executive, Fannie Mae.
and here's a paragraph from the NY Times story where the above quote was the lead:
"So Mr. Mudd made a fateful choice. Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives."
Here's another good one also from the above article:
"When the mortgage giant Fannie Mae recruited Daniel H. Mudd, he told a friend he wanted to work for an altruistic business."
and later in the same article:
"Mr. Mudd collected more than $10 million in his first four years at Fannie."
Why do I feel like J. Fred Muggs would have probably done a better job??
The best paragraphs I read this morning
or: Bill Easterly knocks it out of the park.
"Development economics still bears the scars of the Depression. A prominent World Bank Growth Commission concluded in May that "fast, sustained growth does not happen spontaneously. It requires a long-term commitment by a country's political leaders," and "each country has specific characteristics and historical experiences that must be reflected" in the leaders' "growth strategy." Some at the U.N. still recommend the discredited Big Push strategy of state-planned investment.
How much poverty has endured because individual entrepreneurs were shunned in favor of the likes of the $5 billion state-owned Ajaokuta Steel Mill in Nigeria, which never produced a bar of steel? Or because African governments spend their time preparing World Bank-required national Poverty Reduction Strategy Reports instead of freeing space for innovators?
We will never know. But we do know that the free market has a long-run track record of creating prosperity -- even with the occasional crash. The Depression's deceptive intellectual legacy is that development flows from all-knowing states rather than creative individuals. Here's hoping that the backlash to today's crash will not spawn another round of bad economics for the poor."
Can I get a Amen?
My faith in Congress is renewed
As a semi-professional cynic, I was happy, but stunned to see the House rise up and vote down the Paulson plan. Could it really be that they were looking out for the country?
However, we now know that they didn't defeat the Paulson plan the first time because it was bad, they defeated it because it was not bad enough! All it took was another 400+ pages of text and $150 billion of pork for pretty much the same bailout to sail through.
Tax breaks for producing wooden arrows? Really? That should start short term business lending flowing, no?
Anyway, I just want to thank the US Congress for not requiring me to change any of my deeply held views about it.
Friday, October 03, 2008
bailout views, and blues
Is it better to take the wrong medicine than to take nothing at all?
When Mrs. Angus and I have to give pills to Mr. Pluto, we wrap them in cream cheese and toss them up in the air. He leaps up and grabs them and down the hatch they go. Our political elites must have been watching as the Hank n' Ben rescue plan, rejected once by the House has now been wrapped in $150 billion of lard and tossed back out for the House to swallow.
As many distinguished economists have pointed out, this plan (eloquently described by John Cochrane as the mother of all bailouts) simply does not address the core problems (lack of capital in some banks and lack of short term lending) in any kind of direct or efficient way. In my view, it aims to address bank capital problems indirectly by bailing out investors.
I think the crisis is real and something will have to be done. I also think in some sense the whole process of this legislation's (non) progress has contributed mightily to the uncertainty and downswing in the markets. Passing the bill might at least remove that source of uncertainty and maybe even raise confidence a bit. It also seems clear that, to Hank n' Ben, this is the only option. None of the other approaches suggested for re-capitalization appear to be on the table.
The above paragraph notwithstanding, I am still against the bill and hope it does not pass. I think the piecemeal approach we've used so far can continue to work for long enough that a more sensible re-capitalization scheme can be implemented. I do understand though Krugman's point that time is running out and maybe we need to do this plan to buy enough time to get a better plan (as bizarre and expensive as that sounds).
Thursday, October 02, 2008
Retail politics comes to Chez Angus
Last night around 5:00 our doorbell rings. I go to answer and low and behold it's Wallace Collins at the door wearing a Wallace Collins shirt and carrying Wallace Collins campaign materials.
WC: "Hello, I'm Wallace Collins" (sticking out his hand for a shaking).
Me: (shaking said hand vigorously) "Yes sir, you sure are".
WC: (getting together a package of stuff from me) "I am running for re-....."
Me (interupting) "I should tell you sir that I am not a registered voter"
WC: "Would you like to become one right now?"
Me: "No sir, it's not by accident or laziness or anything, I just don't vote."
Me: "Look at it this way, I definitely won't be voting against you".
WC: (very pleased with this spin) Well, OK then, have a good day.
Me: "Good luck with your campaign sir".
(ps. if you haven't clicked on the link in the first line of this post, let me assure you it's well worth doing so)
Proof that we need the bailout
People, I've been ranting against the Hank n' Ben bailout, cheering on the House for rejecting it, advocating a continuation of the case by case piecemeal approach.
I was wrong.
This morning new data has come to light and I've had to change my position to "Please save us Hank n' Ben!!"
A date with Maria Sharapova was auctioned off and the winning bid was $10,000. I am not making this up. We have a serious crisis situation people, right here right now. It's panic time.
Does this remind anyone else of a great episode of Arrested Development, or is it just me?
Wednesday, October 01, 2008
Student: Win, Teacher: Fail
In no way is #2 a Fail for the test taker. I would give full credit for noob as the opposite of pro, but deduct heavily for live as the opposite of death, ding for spelling on #3 and indecisiveness on #5. Maybe homeschooling is not such a bad idea after all.
Tuesday, September 30, 2008
Here are three articles that haven't gotten a lot of play that I think are well worth reading.
This is the most scholarly, it's by Ed Leamer (hat tip to Mark Perry).
This is a great rant.
This one explains that we need a financial Isiah Thomas to overpay for bad assets (note that it contains some non-family friendly pictures but is *awesome*).
Great moments in human stupidity
Every now and again a quote so awesome enters the world that, whether real or apocryphal, it goes down in history. For example:
"Everything that can be invented has been invented" --
Charles Duell in 1899 explaining why he should be out of a job as Patent Commissioner
"Governments don't go Bankrupt" --
Citicorp chair Walter Wriston showing the brainpower that led to the 1982 Latin American debt crisis
And now, direct from the current financial meltdown KPC is proud to present J.J. Cassano, the man who brought down AIG (circa summer of 2007):
“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.”
A few hundred billion maybe, but one? No way!
Monday, September 29, 2008
Pelosi predicted the defeat of Paulson
Really, and it's on the interwebs. Check it out. Right about at the 1:55 mark she starts winding up and then says the days of bailouts are over!! I am not making this up.
Labels: an appreciation
Down Goes Paulson!
Wow. The House defeated the bailout 205 yea, 228 nay. I got my wish, except that it wasn't really the Dems so much that defeated the bill, but rather incumbents up for re-election who were listening to their constitutents:
"We're all worried about losing our jobs," , R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' "
Now I just have to hope getting my wish doesn't bite me in the butt too badly.
Wha' happened to Wachovia?
Well obviously they got bought by Citigroup with a little help from that great hedge fund, the American Taxpayer. But why the collapse? Well in 2006 Wachovia bought Golden West Financial Corporation who's specialty was mortgages where you didn't have to make all the payments. I am not making this up. From the above linked story:
"Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. It paid roughly $25 billion for Golden West at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments."
Lordy pie. Now me and Mrs. Angus own us some AIG, some Wachovia, and Lord knows what else without even lifting a finger. I sure hope some of Wachovia's senior management is kept on the job. They are aces.
Is this a great country or what?
Sunday, September 28, 2008
World's greatest sausage factory strikes again
It looks like the bailout is going through this time after Congress has ground up the Paulson plan and added their own secret herbs and spices. ummmmmmmmm, tasty. Here's some details from the AP wire story:
"A breakthrough came when Democrats agreed to incorporate a GOP demand — letting the government insure some bad home loans rather than buy them — designed to limit the amount of federal money used in the rescue.
Executives whose companies benefit from the rescue could not get "golden parachutes" and would see their pay packages limited.
The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
"Nobody got everything they wanted," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. He predicted it would pass, though not by a large majority."
Cavaliers step in a big pile of Dooky
Wow. OU will be #1 and the Big 12 will probably have 3 teams in the top 5 in the next polls and Michigan beat a top 10 opponent but the big, big story in college football is that the Duke Blue Devils beat UVA snapping a 25 game conference losing streak and running their record to 3-1.