Sunday, March 07, 2010

Underground hotel: Not Much of a View, but Quiet

Null Stern (Zero Star) Hotel.

In a bunker.

You Think Joe Stiglitz is Funny? NYT is funny, too!

The New York Times, apparently now the "Pay Lady of News," is busy whoring out to the "don't worry, be happy!" crowd.

Check this article....

The concern, of course, is that one day rates will inevitably go up, which means interest payments will too. According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a very long time, which in turn means that our debts — however big — can be managed.

Indeed, though eliminating deficits might seem wise, it could actually be fatal to future prosperity. China is spending hundreds of billions of dollars on infrastructure, while America can hardly repair its bridges. The U.S. has to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end — provided Washington shows it can effectively channel that money.
(See the best business deals of 2009.)

Like home mortgages, much of the debt never has to be paid down. Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public. Because of the unique role of the dollar as the global reserve currency, the debt the government owes itself can simply be rolled over endlessly. Only the interest payments are a must. As long as the dollar remains central to the global system — and there is little chance of that changing in the next decade — the U.S. will have the latitude to borrow more than most other countries.

Worrying about debt is like gaining too much weight and worrying about the size of your clothing.

Okay...first, it's NOT "like gaining too much weight and worrying about the size of your clothing." The US debt is like gaining too much weight and saying it's okay to gain more weight.

Second, if you want to make that bizarre analogy work, you would have to say, "Eating 5,000 calories a day would be okay if you are training for a marathon. But if you are sitting around watching curling, eating 5,000 calories a day is disastrous."

I accept, as Angus did before, that debt might be okay if we were investing it. But we are not. We are using debt to fund pet projects that have no purpose other than re-electing Senators, or paying to put more people on the public employment roles so they will reliably vote Democrat.

Third, the dude actually says, "According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places." That's not a school of thought, that's accounting physics. Further, if either the Eurozone or Chinese get their act together, our complacency ("sure we suck, but they suck worse! Eat that pie!") will be hammered.

Yes, I realize that the author is in fact some shill, not the NYT ed page itself. Still, this is pretty funny. Almost as funny as Joe Stiglitz.

(Nod to Kesav)
Bondage dungeon in Devon.

One guy showed up during the search. He was questioned. But he claimed, "But I have an appointment!" Perhaps he thought all the burly men in police uniforms were a new wrinkle in the show?

And check this list of contraband:

The sex dungeon was then found in a converted room filled with "hundreds" of items including whips, gas masks, wooden bats, handcuffs, clothes pegs and shackles.

Police also discovered bondage chairs with straps, straight jackets, sex toys, gimp masks, S&M outfits, shackles, cattle prods and car batteries used to power the toys.

Um, that's "straitjacket," please, unless you are some illiterate product of the failed British school system.

(Nod to Tommy the Brit.)

Joe Stiglitz is a funny dude

He says we shouldn't worry about the deficit because of all the valuable assets we are acquiring by spending the money!

Here, check it out:

"Most economists also agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial sector hawks who are raising alarms about government spending. After all, even deficit hawks acknowledge that we should be focusing not on today’s deficit, but on the long-term national debt. Spending, especially on investments in education, technology, and infrastructure, can actually lead to lower long-term deficits."

Sweet fancy Moses! Shall we count our valuable investments? The wars in Iraq and Afghanistan? Entitlement spending? Farm subsidies? Putting billions into acquiring failing companies?

Hey Joe! We are not running over a trillion dollar deficit because the Federal government is making big investments in education and technology. 

And by all means, let's focus on the national debt and not on the current deficit. Didn't it just double under the last President and isn't it slated to almost double again under the current one?

My, what amazing valuable assets we must have built up with that spending binge. 

Now he does go on to discuss how the business cycle affects the deficit and to opine that it is too soon in the recovery to consider spending cuts or tax increases for short term deficit reduction, which is perhaps a defensible point of view.  

But why oh why oh why do so many excellent economists turn off their brains when they address the public?


My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!

"For centuries, historians, political theorists, anthropologists, and the public at large have tended to think about empires in such cyclical and gradual terms... Yet it is possible that this whole conceptual framework is, in fact, flawed... Great powers and empires are, I would suggest, complex systems, made up of a very large number of interacting components ... somewhere between order and disorder -- on 'the edge of chaos'...A very small trigger can set off a 'phase transition' from a benign equilibrium to a crisis...Not long after such crises happen, historians arrive on the scene. They are the scholars who specialize in the study of 'fat tail' events -- the low-frequency, high-impact moments that inhabit the tails of probability distributions, such as wars, revolutions, financial crashes, and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in The Black Swan as 'the narrative fallacy': the construction of psychologically satisfying stories on the principle of post hoc, ergo propter hoc...Perhaps the most famous story of imperial decline is that of ancient Rome...But what if fourth-century Rome was simply functioning normally as a complex adaptive system, with political strife, barbarian migration, and imperial rivalry all just integral features of late antiquity? Through this lens, Rome's fall was sudden and dramatic -- just as one would expect when such a system goes critical...What is most striking about this history is the speed of the Roman Empire's collapse. In just five decades, the population of Rome itself fell by three-quarters.

Archaeological evidence from the late fifth century -- inferior housing, more primitive pottery, fewer coins, smaller cattle -- shows that the benign influence of Rome diminished rapidly in the rest of western Europe...Other great empires have suffered comparably swift collapses...Ming China was the world's most sophisticated civilization by almost any measure...The transition from Confucian equipoise to anarchy took little more than a decade. In much the same way, the Bourbon monarchy in France passed from triumph to terror with astonishing rapidity...The sun set on the British Empire almost as suddenly...the United Kingdom's age of hegemony was effectively over less than a dozen years after its victories over Germany and Japan. The most recent and familiar example of precipitous decline is, of course, the collapse of the Soviet Union...In imperial crises, it is not the material underpinnings of power that really matter but expectations about future power."

[Niall Ferguson, Foreign Affars, ATSRTWT] [LA Times excerpt]

(Nod to Kevin L, who ill NEVER fall)

Icelanders: "No way, We won't pay!" Hey, We Don't WE Get to Vote on the Bailout?

So a bunch of goofballs in Europe put their money in a phony bank in Iceland, and lost a lot of Euros.

Then the European "We passed a law against risk" doofuses, (okay, the Brits and the Dutch)
decided that making citizens take responsibility for being goofballs is just too harsh, and used taxes raised at gunpoint from non-goofball citizens to pay off the goofballs.

Not surprisingly, the non-goofballs were miffed about this. Though I think in Britain and Nederlands there are laws against independent thought.... still, some people said, "why?"

So, the European government thugs decided to use extortion: Iceland, you can't play in our EU sandbox until you tax YOUR citizens to pay back OUR non-goofballs for having bailed out OUR goofballs who should never have invested in YOUR fake bank in the first place.

The Iceland government agreed, of course. It's not their money. The money belongs to the citizens of Iceland, who already took a giant hit because (as far as I can tell) every citizen of Iceland is a giant goofball in his/her own right.

But losing money because YOU are a goofball makes sense. Having to pay other people because THEY are goofballs....I don't see that. The Telfarssons and Helgotsdottirs of Iceland appear to agree, voting "NO" quite emphatically.

On the plus side, at least Icelanders get to VOTE on their dumb bailout. In the US, we are even worse: we don't have votes, just back room deals and payoffs to Democratic senators.

(Nod to Anonyman)

Hang up your cell phone, and drive a Toyota

People are going nuts over how dangerous Toyotas are.

And I suppose that it would be a bad experience to have your accelerator stuck. ("If your accelerator gets stuck for more than four hours, seek medical attention...")

But as Prof. Fischbeck points out, it is FAR (FAAAAAR) more dangerous to go for a walk, or to speak ("Hey, gurl! Watchoodoin'? Nothing, I'm jes drivin'...")

Saturday, March 06, 2010

Congress tries a hostile takeover of Obama Motors!

So the Obama administration takes over GM, hammering bondholders, handing over huge chunks of taxpayer money and more or less calling the shots in GMs restructuring.

GM decides to reduce the number of models it offers and close down a bunch of marginal dealerships (2000 or so).

Local dealerships support local congress people, and apparently many of these marginal dealerships want to stay in business with GM even though GM doesn't want to be in business with them.

Congress then passes a law requiring an appeals process for dealers who want to keep the family together.  

1100 dealers appealed!

GM has now decided to re-instate 600 or so of them on the grounds that it's less costly to put up with unprofitable dealerships than it is to fight Congress about closing them.

Meanwhile, the Obama management team for GM opposes the legislation and appeals process because (obviously) it is going to make it that much harder for GM to get a chance at someday being profitable.

So the executive branch tosses billions to bail out GM and the UAW and Congress then mandates that some of that money flow (indirectly) to unprofitable dealerships as well.


I feel like Casey Stengel wondering "can't anybody here play this game"?

Friday, March 05, 2010

She Wanted to Be "Ready" For the Visit

As authorities nationwide warn motorists of the dangers of driving while texting, Florida Keys law enforcement officers add a new caution: Don't try to shave your privates, either.

Florida Highway Patrol troopers say a two-vehicle crash Tuesday at Mile Marker 21 on Cudjoe Key was caused by a 37-year-old woman driver who was shaving her bikini area while her ex-husband took the wheel from the passenger seat.

"She said she was meeting her boyfriend in Key West and wanted to be ready for the visit," Trooper Gary Dunick said.

The whole story is worth reading
. My home state....

There are many things I like about the story. But the best parts, for my money, are that she was getting her ex-husband to drive from the passenger seat. While she sat in the driver's seat (why?), shaving her tingly bits. To be "ready" for her boyfriend. With a suspended license. In an illegal car.

(Nod to LS)

Good news for people who love bad news

Yes, the economy lost more jobs last month, and yes the unemployment rate is still 9.7%, but in some sense this is what qualifies as "good news" these days. Job losses were predicted to be higher and the unemployment rate was predicted to rise, so this qualifies as a "better than expected" jobs report.

I continue to think that the economy is turning the corner and that we are more likely to get a faster than predicted recovery than we are to get a double dip recession.

I also think that the biggest threat to a robust recovery is not a lack of further government action, but rather the threat of further government action in the form of higher taxes on corporations and entrepreneurs. 

Must be the capitalism!

African Poverty is Falling...Much Faster than You Think!

Xavier Sala-i-Martin & Maxim Pinkovskiy
NBER Working Paper, February 2010

Abstract: The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.

(Nod to Kevin L)

Thursday, March 04, 2010

Not Funny

Striking a little too close to home....

How Will The End Of Print Journalism Affect Old Loons Who Hoard Newspapers?

No Way to Go

Man electrocuted urinating on live 2400V power line.

That's "no way to go."

Owie owie owie.

(Nod to Angry Alex)

Marking down the mark up

Potentially very cool new NBER working paper by Cúrdia and Reiss (ungated version here) argues that once you allow the exogenous shocks in DSGE models to be correlated, fluctuations in the mark up become less important in explaining business cycles.  

Here, let them tell it:

The dynamic stochastic general equilibrium (DSGE) models that are used to study business cycles typically assume that exogenous disturbances are independent autoregressions of order one. This paper relaxes this tight and arbitrary restriction, by allowing for disturbances that have a rich contemporaneous and dynamic correlation structure. Our first contribution is a new Bayesian econometric method that uses conjugate conditionals to make the estimation of DSGE models with correlated disturbances feasible and quick. Our second contribution is a re-examination of U.S. business cycles. We find that allowing for correlated disturbances resolves some conflicts between estimates from DSGE models and those from vector autoregressions, and that a key missing ingredient in the models is countercyclical fiscal policy. According to our estimates, government spending and technology disturbances play a larger role in the business cycle than previously ascribed, while changes in markups are less important.

Well done sirs. Kudos!

Mankiw's Theorem

Greg M asserts, without proof, the following claim:

Feckless > Counterproductive

I think that he is right, though. The proof is left as an exercise for the reader.

(Nod to the Bishop)

Wednesday, March 03, 2010

Another Earthquake in Chile

Huge Aftershocks in Chile

Tsunami warnings....

The secret to true happiness

Mungowitz's shocking secret revealed!

People, legal newsline has broken this story wide open. I just can't believe it, but there it is in black and white.

When Mungo and I were in grad school together, I was always tagging along behind him as he worked the system, made friends, charmed the professors, and pretty much got whatever he wanted (I was basically a spiky simmering ball of resentment and sarcasm the whole time).

But apparently I actually did A LOT BETTER than he at Wash U, as the story makes clear:

"Munger earned his master's degree in economics at Washington University in St. Louis and worked as a staff economist at the Federal Trade Commission. A Libertarian who received 3 percent of the 2008 vote for governor, Munger is also the head of the political science department at Duke."

I was somehow under the impression that both of us got our PhDs from good old don't wash me, Wash U.

Mungo, you got some 'splainin' to do!

ps. maybe Avanash K. Dixit retroactively revoked your doctorate?


Tuesday, March 02, 2010

Barney Frank and Andrew Cuomo.... Great Americans

Article in LegalNewsLine

I doubt I'll be getting any xmas cards from Barney or Andy.

Texas Gov Campaign

(Nod to Chateau)

Immanentize the Eschaton? No, But Days Are Shorter

The end of days?

No, but days are shorter now.

The Grand Game, Handgun Edition

This editorial is remarkably confused, even for the New York Times, which is way out front on muddling.

As far as I can tell, the structure of the "argument" is this:

1. DC v. Heller was wrongly decided, and 2nd Amendment should not apply to states or cities. Only the federal government, and DC, are prevented by banning guns outright.

2. All of the Bill of Rights should apply to states and cities.

3. There is a Constitutional right for some people to be able to prevent other people from exercising Constitutional rights. In particular, the last sentence says: "There is another right, however, that should not get lost: the right of people, through their elected representatives, to adopt carefully drawn laws that protect them against other people’s guns."

Now, #2 directly contradicts #1. And #3...WTF? There ARE laws, against assault with a gun, murder with a gun, robbery with a gun, that sort of thing. No one is saying that we should get rid of laws that punish misuse of guns.

For those so impressed with laws, let me ask this: Why don't those laws "protect us against other people's guns?" Doesn't that mean that the police CANNOT PROTECT US! If the police can't protect us, then shouldn't we be able to protect ourselves, in our own homes, with legally purchased firearms? And wasn't just that the basis of the Heller decision in the first place? I'm SO confused.

The NYTimes has discovered a new constitutional principle: "selective incorpodumbassicity." This means that the stupidity of some voters is incorporated, using a fabricated interpretation of the 14th Amendment, to rewrite the 2nd Amendment so that legitimate gun ownership, by responsible law-abiding citizens, is treated exactly the same way as if you robbed a bank.

Please discuss, in comments.

(Nod to The Chelsea)

Getaway Car

Another big police chase on I-40 this morning in Raleigh.

The guy was sure he could escape the cops. I'm guessing that drugs were involved, since.... well, look at the car:The PERFECT getaway car! No one will ever notice me in this baby. It's like camouflage.... if you were driving through a giant herd of flamingos.

Nancy Pelosi, meet Robin Hanson!

"Nice to meet you madam Speaker. By the way, have you seen this?"

"Please take it easy Madam Speaker, if your head explodes, you will be a poor candidate for cryogenic preservation."

Radio from yesterday

If you want to hear part of one of the radio interviews from yesterday, go here and click on the blue "listen" link. (It appears you need Silverlight, so Tom Howe will likely refuse...damned Microsoft!)

Monday, March 01, 2010

A Piece of Terrifying History

The venue where I gave my talk today in Wheeling (thanks, Erik R! You are the BEST!) turns out to have been home to an actual famous speech, almost exactly 60 years ago.

The text of the speech, given by Senator "Tailgunner Joe" McCarthy, can be found here. In that speech, the Senator claimed to have a list of 57 proven Communists in the US State Department, waving some blank papers as if that were the "list." That was Feb 9, 1950.

I feel...weird. I was there, on that podium. And from the sounds of the heating unit, it is original also.

(UPDATE: In this article from the Wheeling Intelligencer, it seems that the speech was given at the Hotel McLure, down the street, though MacCarthy did work on the speech at the Fort Henry Club. This book says that, too, on p. 182....)

Sam Presti apparently knows more about basketball than I do

I know, I know it's hard to believe. But I think it's true.

Presti picked Russell Westbrook very high in the draft and projected him to be a point guard. Throughout Russ's rookie season, I would occasionally gripe about his (a) taking too many shots and (b) not taking care of the ball.

But wow, look at him now. He should be the Western Conference player of the month for February.

Over 11 games, he has averaged 18.8 points on 46% shooting, 6.6 rebounds, 10 assists and only 2.3 turnovers while playing about 36 minutes.

That is big time point guarding my friends.

Refugees Flee Tyranny of German Consensus

Interesting story in Times.... German family was granted amnesty in the US to escape state schools.


Among European countries, Germany is nearly alone in requiring, and enforcing, attendance of children at an officially recognized school. The school can be private or religious, but it must be a school. Exceptions can be made for health reasons but not for principled objections.

But the Romeikes, who are devout Christians, said they wanted their children to learn in a different environment. Mr. Romeike (pronounced ro-MY-kuh), 38, a soft-spoken piano teacher whose young children greet strangers at the front door with a startlingly grown-up politeness, said the unruly behavior of students that was allowed by many teachers had kept his children from learning. The stories in German readers, in which devils, witches and disobedient children are often portrayed as heroes, set bad examples, he said.

“I don’t expect the school to teach about the Bible,” he said, but “part of education should be character-building.”

In Germany, he said, home-schoolers are seen as “fundamentalist religious nuts who don’t want their children to get to know what is going on in the world, who want to protect them from everything.”

“In fact,” he said, sitting on his sofa as his three older children wrote in workbooks at the dining table, “I want my children to learn the truth and to learn about what’s going on in the world so that they can deal with it.”

The reasoning behind the German law, cited by officials and in court cases, is to foster social integration, ensure exposure to people from different backgrounds and prevent what some call “parallel societies.”

“We have had this legal basis ever since the state was founded,” said Thomas Hilsenbeck, a spokesman for the Ministry for Culture, Youth and Sport in the Romeikes’ state, Baden-Württemberg. “This is broadly accepted among the general public.”

The family has been here for some time, having left Germany in 2008. But it was not until Jan. 26 that a federal immigration judge in Memphis granted them political asylum, ruling that they had a reasonable fear of persecution for their beliefs if they returned.

In a harshly worded decision, the judge, Lawrence O. Burman, denounced the German policy, calling it “utterly repellent to everything we believe as Americans,” and expressed shock at the heavy fines and other penalties the government has levied on home-schooling parents, including taking custody of their children.

The soulless, sheep-like docility of Germans is remarkable. I heard that "broadly accepted among the general public" explanation over and over again, in a very condescending tone. Look, suppose we were talking about slavery, or genocide. The fact that is "broadly accepted" among those who favor tyranny is irrelevant. The fact that one of the tyrants would even say it is remarkable.

Now, I am NOT comparing public schools to slavery or genocide. My point is that "broadly accepted" is irrelevant to "right thing to do." Broadly accepted can't be the standard, in a civilized nation, of the set of the things citizens can be forced to do at gunpoint.

The YYM spent some time at German schools, and saw both chaos and teacher indifference up close. Sure, those things happen in the US also, quite possibly worse. But why would have to send your child there to be bored and corrupted by state-sponsored indoctrination?

Here's my question: will we need a new "German Wall," to prevent freedom-loving Germans from trying to flee the "tyranny of broadly accepted," and escape to the US?

(Nod to Anonyman)

UPDATE: One of KPC's smart and attractive readers, in comments, toward the Volokh Conspiracy's excoriation of the judge. And rightly so. While I agree that the decision of the judge is a bit silly, so are our immigration laws. Stupid law requires silly judges. And stupid law comes first, and is causal.