Saturday, January 31, 2009


'Oh, daddy dear,what is a basket?'
Said a youthful and mischievous elf;
'All baskets, my boy, are children of joy,
In fact you're a basket yourself'.'

--Quote Unquote, BBC


Mainz, January 1813
My dear cousin, at last I write to you! Try to picture the physical condition of my brothers-in-arms and myself. We are appalling, revoltingly dirty, and we go down on our knees at the sight of a potato. When I endure such things by myself, I fall under the sway of their romantic quality, and can take an interest in them. But the presence of my brothers-in-arms makes my knees turn to water. On the whole, it was a destestable life, worse than what I suffered in Spaiin.

Farewell; write to me; a letter from France holds me in rapture for two days.
--That's Henri Beyle, aka Stendhal, to Félix Faure (not the Félix Faure who was later President of France). Beyle had just ridden back with the French Imperial Army from Moscow, after the cataclysmic defeat that effectively ended Napoleon's dreams of empire. Spain was, indeed, another nasty piece of business for the Napoleonic forces, but Beyle was never in Spain. Source: Stendhal, To the Happy Few: Selected Letters 153 (Norman Cameron ed., 1986).

100 Read-alouds

Chez Buce has achieved a milestone of sorts: we have now completed the read-aloud of 100 books. Number 100 was Marilynne Robinson's Gilead, which we picked up more or less on impulse after reading an endorsement from D.G. Myers (we'd read Housekeeping a couple of years ago).

We can't remember when exactly we started this project; must have been about 15 years ago. Only a few years in did we go back and start keeping a record; we were working from memory, so we may have missed something.

In the early years, we'd get hold of two copies and one would read aloud while the other followed along. But over the years, Mrs. B has taken up a fairly ambitious program of stretching exercises, so more and more it has been me reading while she stretches. No complaints here: I'm enchanted by the sound of my own voice, and even though we collaborate quite amiably on selections, I do as the actual reader get the last word.

The list is necessarily somewhat arbitrary. We diligently exclude stuff we started but didn't finish, like Bede's History, or the Niebelunglied (we made an exception for Proust, and a couple of Asian epics: they sneak in under the label of "selections"). Not quite cheating, we include Plato's Timaeus as a "book;" also Aristotle's Frogs. Among what's left, there are lots of multiples. We did all six Jane Austens; five each of Balzac and Evelyn Waugh; four each of Faulkner and Henry James; three each of Tolstoy, Dostoevski and Ivy Compton-Burnett. For balance, we tossed in Christopher Buckley's Thank You For Smoking.

Needless to say, I endorse this kind of program, although I must admit it takes a steady, systematic hunk of time that is thereby unavailable for anything else. I should think it would work for anybody, but does have a special virtue in our case. Under ordinary terms, we lead somewhat separate lives and the books give us a common fund of conversation (or is it gossip?).

Of course we do not intend to stop now. From Gilead, we've moved on the Marilynne Robinson's Home--first time that we've ever read the same author twice in a row, and another threefer. Anyway, here's a Google docof the list.

Friday, January 30, 2009

Dissolve the Monasteries

I've mentioned this in passing before, but maybe it needs to be spelled out.

England's great landed aristocrats in the Middle Ages--for convenience, "The Barons"--were, economically speaking, a pretty sorry lot. They spent most of their time trying to bring the king to book (think Magna Carta) or beating up on each other (think War of Roses) or generally grinding the peasants to a pulp.

When Henry VIII dissolved the monasteries in 1536-41, he was not making a direct attack on the secular nobility. He was, however, helping himself to the largest single assemblage of primo real estate in the realm. What happens next is inevitably complicated. But one way or another, the land wound up in the hands of private land-owners--but specifically not the barons (though sometimes maybe their younger brothers or surplus younger sons). These new landowners--call them "the genry"--faced a different set of problems and motivations. Although they had a kind of wealth, it wasn't so copious as to allow them to throw it around with prodigality. Instead, they had to learn to make a profit: to get to know their land, to work it, to make it productive, to make themselves wealhy, to trigger the successive upheavals in England tht climaxed in the Glorious Revolution of 1688.

In short, a stimulus program that worked. Memo to the President: dissolve the monasteries.

A Non-Rhetorical Question

Here's a question to which I honestly do not know the answer. The Republicans are obviously staking every penny of their political capital on a bit that the Obama "stimulus" will go sour, and the voters will swarm to the GOP in 2012. Is this:
  • A coherent, if high-risk, strategic gamble; or
  • Evidence that they are so isolated in self-pity that they can't see they are driving themselves in even deeper?
My own notion, subject to change without notice: the "stimulus" is not much of a "stimulus." But it will slosh a lot of money into the hands of a lot of people who will provide the infrastructure (heh!) for a reelection campaign in 2012.

Prognostication Update

Back from hanging out with a bunch of bankruptcy lawyers where I listened to a forecaster who left a couple of takeaway points:
  • Three industries likely to get a lion's share of bailout money: health care, government, environment. These are three industries where employment is already pretty high, i.e., where qualified employees are not hurting.
  • Some companies are doing just fine. Like who? Like somebody in every industry. In every industry, one-two-three industry leaders is/are doing okay, remain strong, and will be able to grow and consolidate a position in the current turmoil (does that include auto?).
  • Housing is back at a trend line that fits the data for 2004. Ignoring the last couple of years, and recognizing that it will take some time to digest the surplus inventory, we can move up from here.
  • Not all financial markets look dreadful. But markets for high-risk debt look really, really dreadful.
  • It's going to take time.
I'm always impressed that for a room with so many $2,000 suits, there seem to be (a) a lot of Democrats; and (b) a whole lot of pathologically conservative investors.

Thursday, January 29, 2009

Trendwatching: Free Universities

"Mehitabel," said Archy the Cockroach, "both of our professions are being ruined by amateurs." Professors enjoy a bit of schadenfreude at the spectacle of journalists (that would be you, Friedman!) watching their cushion of economic rents as it hisses away to nothing them. But now, look at this, folks--the Khan Academy:
The Khan Academy is a not-for-profit organization with the mission of providing a high quality education to anyone, anywhere.

We have 700+ videos on YouTube covering everything from basic arithmetic and algebra to differential equations, physics, and finance which have been recorded by Salman Khan. He has also developed a free, adaptive math program available here.

To keep abreast of new videos as we add them, subscribe to the Khan Academy channel on YouTube.
Translated, so far as I can tell, an entirely free-gratis set of 700-odd (sic) mini-lectures on heaven knows what. Well, to be fair: there is a certain propeller-head tendency here, with a lot of geeky math and finance--so far as I can tell, nothing on the sonnet.

I saw it a few weeks ago and wondered what the catch was. But I can't see a catch: this just seems to be a guy with a well-nourished cortex who just likes to tell the world what he knows. Or a the say at the J school, we want people to pay us for what he seems to be giving away for free.
For comparison, here's an "accounting" version of the same thing.

Where Is He Now?

Just quoting Letterman is brain-dead blogging but I thought this bit (on "whatever happened to George Bush?") is a keeper:
Within months of leaving the White House in January 2009, George and his wife Laura divorced. George moved to the outskirts of Portland, Oregon where he got work as assistant manager of a paving company. By the end of the year, he married the company receptionist, Bethany, and they have two children, Ethan and Charlotte. George is now co-owner of the paving company, and in his spare time he enjoys watching NASCAR and participating in chili cook-offs. He says he liked being President, but he wouldn't trade his new life for anything.
The visuals helped.

Wednesday, January 28, 2009

Markets in Everything

Intern brokerage.

Your Go-To Guys for Stimulus-Watching (And Some Bullet Points)

Or at least mine, would be this crowd here. Meanwhile, here are a bunch of things I know, I think:
  • We will never again in my lifetime be as rich as we (thought we) were for these past ten years. I could have said the same thing with truth were I the age I am now in 1929.
  • "The multiplier"--how much bang for the stimulus buck?--is an empirical question on which the data are almost certain to be soggy or equivocal. This is an inescapable truth that neither side seems willing to address candidly. My own untutored guess is that there is (a) some; and (b) we don't know how much--and would not know how much even if we had perfect foresight as to exacly how much we will spend, and on what.
  • Projects that are good for infrastructure may not be good stimulus, and projects that are good stimulus may not be good for infrastructure.
  • The vast majority of voters (and Congresspeople) don't get that last distinction. They think if it looks looks like a pet project of theirs (aka "infrastructure"), then it must be good stimulus. The more I see of the current proposals, the more they look to me like pet projects and the less they look like stimulus.
  • Conservatives aren't willing to admit that some stimulus projects work. World War II was a stimulus that works. Henry VIII's confiscation of the monastaries (i.e., and redistribution to eager beaver entrepreneurial gentry) was a stimulus that worked. Indeed, breaking up great estates and distributing land to the peasants is probably often a stimulus that works.
  • Liberals aren't willing to admit that a lot of putative stimulus takes money out of other productive uses or drives up inflation.
  • Politicians love "projects" not merely because they like to please constituents but because they like things they can put their name on.
  • When push comes to shove, your chances of being reelected are probably better if you slosh a lot of money for lousy "stimulus' than you are if you forebear to do anything because you can't find a good stimulus.
  • A hard headed skinflint like Warren Buffett, who understands everything I have said here, is nonetheless for a hefty "stimulus" because he believes the appearance of doing something can sometimes work better than not doing anything at all. And he is correct.
The amount that we end up spending will be vastly greater than anybody acknowledges today.

Uh, Say Again? (Rush Limbaugh Department)

Did he mean this?

Well, I guess it could mean:
  • Gingrey apologizes to Limbaugh for what Gingrey said about Limbaugh.
  • Gingrey apologizes to God Limbaugh's presence on the planet.
The reader is invited to make his own guess.

HT: Thanks, John.

Remebering Ed Gramlich

Rescued from the bin: jaded as I am from the Wall Street Journal's blather about how the whole housing mess is all the fault of Jimmy Carter and those other evil Democrats who seduced honest and responsible bankers out of the paths of righteousness, it is refereshing to run across this item from the same Wall Street Journal in 2007, chronicling the career of the late Ed Gramlich:
Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to [Fed Chairman Alan] Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

"I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

"He was opposed to it, so I didn't really pursue it," says Mr. Gramlich, a Democrat who was one of seven Fed governors.

Greenspan's Response

Mr. Greenspan, in an interview, says he doesn't recall a specific discussion of the idea but confirmed his opposition to it.

There is "a very large number of small institutions, some on the margin of scrupulousness and very hard to detect when they are doing something wrong," says Mr. Greenspan, who retired in February last year. "For us to go in and audit how they act on their mortgage applications would have been a huge effort, and it's not clear to me we would have found anything that would have been worthwhile without undermining the desired availability of subprime credits."

Mr. Greenspan adds that borrowers might get a false sense of security from a lender that advertised itself as Fed-inspected. . . .

On June 29 [2007], the Urban Institute will release a book by Mr. Gramlich, "Subprime Mortgages: America's Latest Boom and Bust." [Link--Buce] It argues, among other points, that all lenders affiliated with banks and thrifts could "be brought under the same supervisory conventions as their parents seemingly without major culture shock." It wouldn't be a huge undertaking by policy makers, and it would lead to more uniform, stringent practices.
[Edward Gramlich]

Mr. Gramlich, who is being treated for cancer, says, "There are certain things that unsupervised lenders do that a Fed supervisor would not let you get away with," such as not escrowing taxes and insurance, not verifying an applicant's stated income, or assessing the borrower's ability to repay based on an introductory "teaser" rate. But he said the proposal's reach would have been limited by the fact that many lenders would still have no federal supervision. . . .

[T] Fed generally leaves regulation of nationally chartered banks to the Office of the Comptroller of the Currency; of securities-dealer units to the Securities and Exchange Commission; and of consumer-finance companies to the states.

However, state regulation is generally considered inconsistent and usually less rigorous than federal oversight. Moreover, 18 states offer some form of exemption from state regulation to bank holding company units, according to the Conference of State Banking Supervisors.

The Fed periodically examines the finance-company units to ensure that they pose no threat to the "safety and soundness" of their deposit-taking affiliates and to assess their controls for things like money laundering. In special situations, it does scrutinize their practices for compliance with consumer-protection laws. In 2004, it fined Citigroup $70 million for alleged abuses by its CitiFinancial unit.

But Mr. Gramlich fretted that extending those standards to holding-company units would create an unlevel playing field unless stand-alone lenders were subjected to the same thing.

Jim Strother, general counsel for Wells Fargo & Co., said oversight of bank holding company units isn't "where the need is," noting the Fed does examine Wells Fargo Financial, a major subprime mortgage lender. "The gap is for companies that aren't in the banking system at all."
Ed Gramlich died of Lukemia on September 5, 2007. The WSJ piece is by Greg Ip, formerly the Journal's Fed-watcher, and one of the best.

Tuesday, January 27, 2009

Opera: Gluck's Orfeo

There is something intractably odd about the Orpheus and Eurydice story. At one level, it is nasty a piece of business as anything in Grimm's fairy tales--bewildered guy gets his dearest wish, conditioned on some dopey rule that makes no sense to him or anybody else; he mucks it up and loses dearest dream forever.

At another, it has an almost universal appeal. Is there any person alive who has not wakened from a dream to feel some ecstatic vision vanishing irretrievably behind him?

And it's all about music, the universality and pervasive power thereof. No wonder that opera composers (so they say) liked to tell it and dtell it. Monteverdi was in there at the get-go with L'Orfeo, favola in musica. One hundred and fifty-four years later, Gluck weighed in with Orfeo ed Euridice aka Orphée et Eurydice, an item that must be one of the most intensely compelling items in the entire operatic canon.

On the Met's latest rendition of the Gluck masterpiece (last week's HD), Mr. and Mrs. Buce deliver a divided verdict: I thought it was one of the most engaging items I'd ever heard and could cheerfuly have rewound the tape and watched a second time on the spot. Mrs. B thought it kitschy and overdone. She's right, it was kitschy and overdone, but I'd cheerfully settle back and watch it a second time on the spot.

The deal-closer is the music itself--not so much a fullscale opera as an extended conversation between Orfeo and orchestra, with incidental support from the chorus, a bunch of dancers and, oh yes, the beloved Eurydice herself. As Orfeo, Stephanie Blythe is a force of nature--in company with, if not quite as extraordinary as, the great Joan Sutherland herself. Blythe did the whole 91 minutes without ever seeming to break a sweat: no trouble at all believing that she also does Wagner. Whether it was she who brought out the best in James Levine's orchestra--or whether it was the other way around--either way, the two turned the performance into a sustained musical conversation.

The kitsch started with the chorus--100 different people, dressed in 100 different costumes, as if to represent all of history in the shade. When I first heard of it, I thought it was a lousy idea: I figured on some kind of cosmic runway show. In the event, it was more restrained that that; it was rather more like watching the crowds at the Dorothy Chandler Center on Oscar night: ooh, look, isn't that Frederick Douglass? And here comes Genghis Khan--yo Gen, love the hat! In any event, I thought (though Mrs.B did not) that they treated it all with commendable restraint.

And the chorus: it's Mark Morris. He had them dressed as if they were study hall at the High School of Music and Art. They took rather a bit of time and threw themselves around the stage in a most un-18th-Century manner. It was wildly anachronistic, but who cares? No, strike that, I know who cares. I guess in the end it all comes down to a question of what sort of item you conceive Orfeo to be: is it a genteel and elegant garden entertainment? Or a twilight farewell to the gaudy excesses of 1o7th Century Venice? If you tend to the former view, than there was plenty to give offfense (except the music, do remember the music!). If you tend to the latter view, there was nothing here to bother you a bit.
Running time 1 hour 31 minutes / no intermission

Mark Morris’s acclaimed production returns. This complete vision for Gluck, with choreography by Morris and costumes by Isaac Mizrahi, features the artistry of Stephanie Blythe in the male title role. The alluring Danielle de Niese is Orfeo’s adored wife, Euridice, who inspires the hero to face the underworld for her sake. Music Director James Levine conducts.

Conductor: James Levine; Production: Mark Morris; Stephanie Blythe, Danielle de Niese

Back When Five Was a Big Deal

Let me see: Marie, Annette, Cecile, Yvonne and ....




No, I think not.

[Hint: wrong number of syllables.]

A Couple of Mutts

We take great pride in the patchwork ancestry of our new leader. We are right to do so, but he's not unique. Look at what Wiki says about French President Nicolas Sarkozy:
Nicolas Sarkozy is the son of an aristocratic Hungarian immigrant father, Pál Sárközy de Nagy-Bócsa (Hungarian: nagybócsai Sárközy Pál; some sources spell it Nagy-Bócsay Sárközy Pál; ... and a mother of French Catholic and Greek-Sephardic Jewish descent, Andrée Mallah. His Greek-born grandfather, Benico Mallah (former Aaron Mallah), was a physician from Thessaloniki. Benico, who left for France to become a doctor, was the son of Mordechai Mallah, one of the eight sons of Aaron Mallah, founder of the Rabbinical School of Thessaloniki.

Pál Sárközy was born in 1928 in Budapest into a family belonging to the lower nobility of Hungary. The family possessed lands and a small castle in the village of Alattyán, near Szolnok, 92 km (57 miles) east of Budapest. Pál Sárközy's father and grandfather held elective offices in the town of Szolnok. Although the Sárközy de Nagy-Bócsa (nagybócsai Sárközy) family was Protestant, Pál Sárközy's mother, Katalin Tóth de Csáford (Hungarian: csáfordi Tóth Katalin), grandmother of Nicolas Sarkozy, was from a Catholic aristocratic family.

So, a couple of mutts. Expanding on this topic, Ignoto asks: what is the difference betweeen a mutt and a mongrel?

Very good question. My guess would be that "mutt" is far the more acceptable term: almost a term of endearment; one can use it on oneself, as a form of comic self deprecation. "Mongrel" inspires dark fantasies of miscegenation and similar ugly stuff.* There never was a comic strip called "Mongrel and Jeff." Maybe I can file this one next to "Cad and Bounder."
*Idling in the campus bookstore just now, I see a copy of Clarence E. Walker, Mongrel Nation: The America Begotten by Thomas Jefferson and Sally Hemings. Sounds like a snarl word to me.

Obama Administration, Day #7

Prominent lefty blogger:

I suppose President Obama deserves credit for trying.

Okay, beyond the snark: the writer is addressing what he calls the "good faith effort" to win support for the stimulus package. I am of at least one and a half minds about this. I certainly do not want to go back to the days of Karl Rove and 50.01 percent--not good government and in the end, not even very good politics. I believe in talking to your worst enemies (or at least listening, amazing what you might learn). But I've got the uneasy sense that Obama thinks he might accomplish something with all this earnest goodwill. That's an idea that is best approached with far more skepticism than hope. Why, it's almost as if he was talking to an Arab TV network.

Idle question, did any ally of FDR's greet the seventh day of his administration with "I suppose he deserves credit for trying"--?

Monday, January 26, 2009

Appreciation: Burton Malkiel

For longer than I can remember,* I've been recommending Burton Malkiel's A Random Walk Down Wall Street, to students interested in finance--particularly to students who are so misguided as not to enroll for my very own law school basic finance class. I just lately noticed that it is now in its Ninth edition; I don't suppose I have read it since, maybe number four, so I figured I'd better give it a look-see to find out whether it still held up.

Verdict: with qualification, yes. It's accessible and witty and jam-packed with common sense. Whatever its shortcomings, I still can't think of a better way to ease newbies into investing.

It does show some signs of age: my intuition is that the "chartist/technical" school investing is not nearly as powerful as it was a few years ago. Malkiel's demolition of technicians is a pleasure to watch and enjoy, just like a 28-car pile up at the stock car track. But at this point, it might be using a cannon to kill a pea. On the other hand, Malkiel clearly keeps up: he's got a good, brisk summary of some of the high-saliency findings from the new behavioral finance, although he doesn't seem to approach it with the same phyrronism that he has applied to almost every other vogue in financial analysis.

Perhaps sadly also, he doesn't seem to have caught up with "alpha" or "chasing alpha," but I strongly suspect he would approach this topic with the same withering contempt he visited on "the tronics" and "the nifty-fifty" and "the dot-coms" and all the other hubba hubba manias that have put us through so many cycles of boom and bust. And I think he might have done more to point out how far we have moved away from "classical" finance theory (MPT, CAPM, the whole nine yards)--yet how utterly lacking we are in any plausible doctrine to replace it.

My real qualification is one that is hardly his fault: he wrote before the current uproar. I do wonder what he might say about an 8,000 Dow and 10 percent unemployment and credit paralysis. My first thought is--oh, he'd have to revise. But on second thought, maybe not. One of the fascinating things about Malkiel all the way through is that for such a nihilist, he's such an optimist. Malkiel's world is cluttered with booby traps: gimmicks, frauds and self-delusions. Yet his vice remains: go ahead and invest anyway. Don't expect a quick fix; don't be fooled; don't think you can outwit the forces of evil. Diversify your portfolio; flirt with the fundamentalists; be prepared to hang in for the long run and don't panic.

But whether I got him right or not, I can only hope he's working on a tenth. And my recommendation to students still stands.

*I thought I had first read it in law school. But I took my only law school finance course in 1969, and Malkiel's first edition didn't come out until 1973. So much for meomory.

McCain is Right on the Economy

Link. There. I thought I'd never hear myself say that. And, okay, he is not very right--but even a little right is a stretch.

I mean--okay, forget all that stuff about "making tax cuts permanent;" the Republican mantra is that we never have to pay for anything, ever, and that does not deserve to be taken seriously.

But payroll taxes--isn't he right that if we really want to get money back into the economy quickly, then a payroll tax about the fastest way to do it? I mean, short of firing off a cannon full of dollar bills?

Flip side: yes, yes, I know the Republicans are engaged in a lot of inspired silliness about wasteful spending. But at tne end of the day, we are going to find that a whole lot of the "stimulus" spending has nothing to do with "stimulus" at all (can you say "Washington Mall"?).

I'ts beginning to sink in on me that each side of this equation can screw things up in its own way: Republicans, by cutting the wrong taxes, Democrats, by pushing the wrong spending. Either way, it is looking more and more like a little economic ice age, and it may last for quite a while.

Afterthought: Does John Boehner think he is going to make points by attacking the public funding of condoms? Isn't there a good chance that that will turn out to be the one universally popular in the whole package?

Sunday, January 25, 2009

Heh (Inauguration department)

Andy Hamilton on the BBC says that Elizabeth Alexander, the inauguration poet, took advantage of the fact that she was standing behind bullet-proof glass.

Barack Shows His Color

Here's something I've been waiting for from Barack Obama: flashes of irritation. I mean--he's always mister cool, mister warm smile, mister million miles away, a fascinating study in the kind of emotional remoteness you need to develop in order to survive as a Kansan-Hawaiian-Indonesian-Kenyan college boy, law student, etc. The kind of guy that would wear his white shirt with the sleeeves rolled down and buttoned while roller-painting a wall.

But last week we learned that he showed a little color in the press room when the gaggle tried to get serious about what he thought was just a ceremonial occasion. And this morning, we learn that he snapped at his own beloved sidekick for cracking his knuckles too loudly (the sidekick--that would be Rahm Emmanuel--apparently snapped right back).

As the president's therapist and meditation counselor, I would say: it's about time: nobody can maintain Obama's icy emotional discipline for long without sending his blood pressure into the nosebleed zone. As a heartless bleachers-seat politics watcher, I say: hoo haw, some entertainment at last. Hey, fight, fight! As a manager of the presidential image, I'd say I'm not sure. A few breaks in composure are probably inevitable from the Leader of the Free World. But a little of this goes a long way with the voters: snap just once at the wrong guy (or child, or kitten) and watch your poll numbers hurtle down faster than you can say "pardon me."

Update: Oh, and Joe Biden. Of course. But I think we see the emergence of an impressive pattern here. In all three cases (Biden, Emanuel, the (collective) press) we have creatures who are by nature impertinent, loquacious, and unhousebroken. Obama is none of these three. Yet he has made the choice, eyes open, to associate himself with this kind of riffraff these people. Well, I guess you could say athe "choice" of the press was somewhat constrained: if you go into politics, you are stuck with it. But in the case of Biden and Emanuel--two of the people closest at his side as he embarks on this great adventure--I think you'd have to say that he took them warts and all, well knowing how they would act; I wonder if he knew also how he would respond?

Let Me Rephrase That ...

Filipino receives first US anti-child labor award
--Michael Quinion, World Wide Words

Quinion also has "Shoes 3 for $20," which brings to mind the Snopes in Faulkner's Yoknapatawpha County who steals a carload of left shoes.

I'll Bet...

Zsa Zsa 'loses $7m in US fraud'

By Peter Bowes
BBC News, Los Angeles

Zsa Zsa Gabor in 1986

Veteran actress Zsa Zsa Gabor is said to have lost at least $7m (£5m) as a result of investments with the accused US businessman Bernard Madoff.

Ms Gabor, who is 92 next month, is said not to be taking the damage to her nest egg well (emphasis added).


...but the Bernie fact of the day is the one surfaced in the long New York Times profile:
He was, for instance, an avid collector of vintage watches and took time each morning to match his wedding ring — he owned at least two — to the platinum or gold watch band he was wearing that day.
Two wedding rings? I don't think I know anybody with two wedding rings. Well, I mean, not from the current marriage.

Saturday, January 24, 2009

Really, Really Old?

Ever notice how many of the legends in the investing game are really, really old? I mentioned the other day that Peter L. Bernstein, the great chronicler of finance theory, had turned 90. But he doesn't have much on some of the giants in his own chronicle. Harry "diversification" Markowitz, who got the ball rolling in 1952, was born in 1927 (so, 81 next August). William ("CAPM") Sharpe is a relative kid, but he was born in 1934. An even more influential writer would be Burton (Random Walks, 9th Edition) Malkiel, 1931. And the feisty ex-editor of Barrons, Alan Abelson, was born in 1925. In the world of hands-on investing, we could start with Warren Buffett (1930), and a kid next to his partner Charlie Munger (1924). Among public figures, you'd have to name Mr. anti-inflation Paul Volcker (1927), keeping company with Mr. fiscal conservative, Pete Peterson (1926). As a kind of cross-over, there is market plunger and card sharp Ed Thorpe (1932).

What explains this --clean living? I suppose people like Buffett have to live a long time to prove that they are really good. But Markowitz and Sharpe are still dining out on work they did in their 20s. I suppose clean living may have something to do with it. Many have remarked on how the private lives of Buffett and Volcker are almost comically dull. But how explain Thorpe, who spent a good deal of his youth at the blackjack table.

Anyway, what's important to me is that I can survey this crowd with the same enjoyment I feel in the lobby of the Metropolitan Opera: at 72, I feel like a veritable stripling.

Where's The Bookstore?

Update: FALSE ALARM IT'S RIGHT BACK WHERE IT SHOULD BE. Now, for a little updating...

That's odd; at least as of a moment ago, the "Amazon Bookstore" I had created and posted at left, seems to have disappeared and been replaced by a generic bookstore ad. An accident, or are they phasing it out? I admit I hadn't added any inventory in the last several months, but you would think they might have told me...

Friday, January 23, 2009

A Fragment on Torture

Hlzoy and Glenn Greenwald and others are doing a superb job of staying on the issue of possible prosecution for those who left their fingerprints on the late administration's policy of torture.  I won't presume to track all they are saying, but I will offer one thought: if we are going forward with prosecutions, let's make sure we will focus on something other than the mugs on the front line.   Let's make a general rule: heads near the top of the totem pole must roll, or no heads may roll at all.

The relevant example is Abu Ghraib.  If Wiki has it right, one general (a woman) got her library card suspended busted to colonel. A couple of colonels drew some brisk slaps on their wrists. But for the brass, that was the end of it.

Meanwhile, seven grunts went to the stony lonesome. Let's stipulate that these are adults we are talking about, old enough to be responsible for their own conduct. Let's stipulate also that they are a pretty sorry lot: in particular, Charles Graner, who seems to have been a kind ring-leader, appears to be a specially unpleasant piece of business (though apparently it did not prevent him from impregnating one of his colleagues and marrying another; women like bad-news guys).

Let's stipulate all of this but let's remember also: there is an issue of leadership reponsibility here.  Granted that the defendants were all adults, still they were by every account unsophisiticated, gullible and lacking in any kind of foundation that you might expect them to need to make right decisions.  The Army  knew that, or had every reason to.  The Army took them, and the Army took on the responsibility to make sure they did not misbehave.  And the civilians who are responsible for the Army fall into the same bin.

It is commonly said that criminals are mostly pretty dumb.  I have said so myself, but I want to revise the point: dumb criminals are dumb, and wind up going to jail, often for conduct that was engineered by others.   Smart sociopaths learn to avoid the vulgarity of mere crime; learn to work in the white space around the letter of the law, and to let others do their dirty work while they stay back with the brandy and cigars (recall that nobody can document Hitler ever saying "go kill all the Jews."  Of course that is exactly what he wanted, but he knew how to make it happen without ever leaving a pheremone behind).

Smart sociopaths are, correspondingly, desperately difficult to convict.  So be it.  But let's make a deal with ourselves: if it is clear that we cannot get somewhere near the top of the chain of command, let's let it go.  Let's promise ourselves not to try to delude our conscience by hanging out to dry some of the mules who ought to have known better, but who did not know better, while letting the chariot drivers whirl away.

Truer Than They Know?

One of the websites I like least to deal with is Fidelity Investments--don't ask for details, I'll just be a bore; but trust me that they do not have their act together.

Just tonight I got an email from the poor guy who has to deal with me saying he was sorry that their service did not meet my execrations.

Sic. I'm thinking, I'm thinking.

Oh. That.

President Obama listened to Republican gripes about his stimulus package during a meeting with congressional leaders Friday morning - but he also left no doubt about who's in charge of these negotiations. "I won," Obama noted matter-of-factly, according to sources familiar with the conversation.
Link. Well, now that that's clear... But I've said before, I think that part of what's going on in Washington is that nobody much fears him, and that a little more fear might be wholesome. I suppose it is hard to blame Republicans for forgetting that they don't own the shop any more. I guess it is inevitable that they are going to poke and test to find out whether they can roll him. Results are certainly not in yet; maybe they can roll him. "I won" is not a policy, or even a strategy. But it is a nice start.

Sign of the Times

Not sure I've seen anything quite like this for a while: driving out of the Safeway parking lot, I pass a guy with a signboard--no, actually a brown paper shopping bag, with hand lettering. He looks housebroken: 40ish, poncho (it's raining), hat. The sign says:
Please Help.
Engine burned out.
Got to get to...
...but the rain had washed away the rest.

Oy. Hope he gets to sleep someplace warm tonight. And no, I did not stop to help.

Update: Apoligies; the earlier misspelling was mine, not his.

Best. Poetry. Review. Ever

“I like this poem because it is all denotation and no connotation; because it has only one level of meaning; because it is not ironic, paradoxical, complex, or subtle; and because the meter is monotonously regular.”
For details, go here (link).

A Good Ol' Boy?

CNN is on behind me and I'm hearing the gaggle with the new Obama press secretary, Robert Gibbs. All I can think is the boy has a southern drawl--a little bit like, say, Roy Blount Jr. (the gracious and charming essayist/comedian, not the lizardly politician). Or maybe a brutally toned-down Jeff Foxworthy. Two things I'm wonderin':
  • Gibbs seems to have come by his drawl honestly: apparently is an Alabama boy who went to school in North Carolina. I remember his predecessor, Scott McClellan of Austin, Texas, and I don't remember a drawl on him. Okay, maybe the slightest, but hardly enough to notice. Is it something about Texas over Alabama? About the plugged in Keeton clan, of which McClellan is a part? That Austin is not a part of Texas? Or did he train himself out of it, like some Britons practice to talk posh?
  • More important, will it help? Blount and Foxworthy are charmers. Is there something about the awshucks good-ol'boy persona that inspires confidence, as in "hey, you can trust me"--? My guess: maybe a little, but not much. Might help him in a pinch, but won't save him over the long pull. Much more helpful, I suspect, might be the fact that he was, as I learn, a soccer goalie.

LiveBlogging the Kindle Again

My Kindle greeted me this morning with a message of congratulations on being an early adopter. My heart sank. The last thing I want to be is an early adopter of anything--high prices, exponential inconvenience. Indeed, that's why I waited a year. But an early adopter I am and I know (or at least I hope) the inconveniences I am experiencing are not those that will be suffered by those who come later. Here are a few notes:
  • It's terrified of water. No, I am terrified of water in proximity to the kindle. I am a clumsy ox: I daily spilll coffee, fruit juice, fizzy water, and would cheerfully spill house paint or battery acid if I had the chance. I trashed one laptop last year with a glass of champagne (it was old). I think Kindle is still a bit on the pricey side, and I'd be pretty glum if I had to buy a new one before I had amortized the old. I don't leave it on the bedside table with a water glass. I'm skittish about taking it out next to coffee. I wouldn't even think of taking it in the shower--oh wait, I don't do that with paper books either.
  • Keeping track of what's important can be a nuisance. Note-taking is clumsy and inconvenient. "Clipping" is clumsy and inconvenient. Worst, I can think of any way tdo export these notes: if they want a serious academic audience, they are just going to have to figure out some way to team up with Evernote, or Zotero, or somesuch. Oh, and by the way, how do you cite it? You don't get page numbers; you get line numbers, which vary as a function of the selected type size. I assume there is a committee at work on this one somewhere.
  • Oh, and footnotes. They promised footnotes. Right now, my Kindle book is Peter L. Bernstein, Capital Ideas Evolving. It has two sets of footnotes: "asterisks" and numbers. Kindle does give links to the asterisks but not to the numbers. I suspect this may just be an operational error (the kind of thing you live with if you are an early adopter?). But if they intend to make it a practice, that's another reason why it will be useless for scholarly work.
Bottom line: I still like it, pretty much. I seem to be using it a lot. It's convenient on the exercycle and in bed. It pops easily into the backpack, although I must be careful to keep it where it won't get rained on, and I'm still carrying a backup book for places where I can't use it. But as the fella says, times change and we must change anon. Or was it anon who said that? More later.

Slate and the Missing Moldovan

Brian Phillips at Slate has a cute piece up this morning on Masal Bugduv, "Moldova's finest," who happens to be, well, you know, imaginary (link). Phillips makes a heroic attempt to suggest there's some deeper meaning here although I'd say it is much more in the way of just enviably clever writing. But he set me to thinking--fake ballplayer lost in the underbrush of the not-quite-first-tier league tables. Where have I heard that before?

Well, actually, I suspect lots of places: this is probably an easy scam to perpetrate, and the lesson is straightforward: fans take themselves way too seriously, while there is really way more in the way of sports info than any of us can, or wishes to, assimilate.

And in particular it brings to mind the late, great, A.J. Liebling who gleefully recounted how, in his days as a neophyte sports-tracker at the New York Times, he created a wholly imaginary placeholder to flesh out the box scores and such. New Yorker writer David Remnick recalls:
Some nights, according to Liebling, [his creaation] officiated games throughout the city. Liebling claimed that when this crime was discovered his boss fired him for being irresponsible. He told the story repeatedly, and with relish, and it may even have been true.
I have always loved that story, not least because I was once a baby sports-tracker and I doubt there is any of that ilk who hasn't fudged the roster at least once. I also remember fragments of a story about a "Chinese all-American halfback," which I had thought also involved Liebling but Google doesn't recognize it.

Phillips also discloses that "Masal Bugduv" apparently isn't even Moldovan, which is par for the course. My impulse was to assume that there's something here saucy or at least impertinent. I couldn't dope it out; I even tried spelling it backwards, recalling "Llareggub," the cozy Welsh village in Dylan Thomas' "Under Milk Wood," but no dice (go on, try it)." It turns out that there is something saucy or impertinent, but its Irish. Should have guessed.

Oh, and one final note. Did I mention that Liebling's imaginary box score personality was "Ignoto," Italian for "unknown?" Faithful readers of Underbelly will reccognize that Ignoto is alive and well and contributes regularly at this venue.

*Don't you wish you had written:

"...bikini pictures of [soccer] players' girlfriends (who seem to roam the earth together in a giant conjugal yacht, like the Beatles in Yellow Submarine)."

"...the old scout's adage says, even the most talented young striker will struggle if he has no corporeal being."

Thursday, January 22, 2009

Roberts the Mutilator

Language guru Steve Pinker entertains himself and us at Justice Roberts' expense with his comments on the swearing-in snafu, and how the Constitution just isn't good enough for our chief justice (link).  But what got  me was this bit:
In his legal opinions, Chief Justice Roberts has altered quotations to conform to his notions of grammaticality, as when he excised the “ain’t” from Bob Dylan’s line “When you ain’t got nothing, you got nothing to lose."
No joke? Doesn't this guy know the first thing about conscientious collection of data? Do we infer that he would do the same thing wifh confessions? With the B of A balance sheet (now, that's a thought, actually).  With, um, you know, the First Amendment?

I am tempted to, but will not, write this off as some sort of conservative thing. Quite the contrary: Circuit Judge Danny Boggs down in Louisville used to give clerkship applicants a "general knowledge" quiz--I suspect to demonstrate how learned Danny Boggs was, but let that pass (maybe he still gives the quiz, I just haven't seen one lately). Anyway, Boggs (who, I think it is fair to say, is as right-wing as Roberts) liked to include a "copy edidting" question in his quiz. And as part of the copy editing exercise, he'd spring a quotation from somebody else, the quotation including a crude grammatical error. I assume that if you "corrected" the quoted error, you were out. So Roberts may be able to rewrite the Constitution, but it sounds like he wouldn't be able to clerk for Danny Boggs.

Happy Birthday, Peter!

If I read my Wiki right, today is the 90th birthday of Peter L. Bernstein, author of the capital Capital Ideas, Against the Gods, and a whole slew of other books about finance. Enjoy, Peter, you are a resource!

Out Pickin' Up White Trash?

Just in from Fox:
Mo. neo-Nazis join `Adopt-A-Highway' trash cleanup

H/T for both headlines: Wichita bureau.

Young Folks Nowadays: Franklin Delano Who?

This is a few days old but not stale, I think: passing a TV monitor, I could swear I heard a CNN reporter say:
...since the inauguration of Franklin D. Roosevelt in--um. Um. Um. 1937!
Faithful readers of Underbelly will know that this is embarrassingly wrong (and if you don't know the correct date, I'm not going to tell you). One more reminder that the past is a foreign country to the kiddies. And as Mrs. Buce points out, there must be two CNN types in ignorance here: one, the talking head, and the other, the little voice in her earpiece whose job is to keep the talking head looking smart.

Update: A friend points out that the reporter may have been speaking of the first person to be inaugurated on January 20, instead of March 4. Could be, except that destroys the whole point of my story, not so?

Wednesday, January 21, 2009


Here's a sign from the student union (I paraphrase, from memory):  wanted, practice subjects to get paid to have their teeth cleaned at the college of dental assistanship science.  Must have pretty good teeth and (wait for it)--

Must not have had a cleaning for at least five years.

Two points:

  • How can you have good teeth if you haven't had a cleaning for five years?  And
  • Eeuw.

Salmon on Blodget on How Not to Fix the Times

I must say I enjoyed Felix Salmon's ungentle fisking of Henry Blodget re how to save the New York Times even though I am not persuaded by--nor can I follow--every bit of it. But hey, this is still a blog entry, and they don't have to make 100 percent sense now do they? I certainly endorse the idea that you can't treat the newsroom as a theatre for Taylorite efficiency studies. It takes me back to my time in the city room: at some point, some thimble-head sent in a time-and-motion guy whose job was to ask three minutes what the reporters were doing right now: evidently they thought the solution to the problem was to get us to type faster. But a larger issue that they missed, and that Blodget missed, is that a newspaper city room profits from a certain amount of ludic horseplay: it keeps people motivated and alert, and it serves as a great forum for the transmission of ideas (I assume that something like the same philosophy is at work in the loosey goosey management style said to reign at Google). Indeed, if there is a problem with city rooms right now it may be that the new technology has cut down on just the sort of interaction that made the old-fashioned city room thrive.

Still, I think Felix dances around the core economic problem: newspaper readers never paid for content, they paid for paper and ink and delivery; advertisers paid for content. And until somebody figures out how to bring them back into the game (or finds a substitute) the downward spiral will continue.

A final poiint: Felix likes his physical newspaper at the breakfast table, and on the train. News: the New York Times and the Financial Times were offering promotional freebies just this morning-at Kindle, for download. The FT, by he way, is priced actually higher on Kindle than the lowest available street price: evidently they are figuring that somebody (globetrotters?) will be wooed by the allure of instant-anywhere.

[For people who get their fingers greasy at the table, Kindle also offers an "automatic page turner option." I leave it to the reader to decide whether this a design feature or a ludicrous misadventure--haven't used it myself, and doubt that I will.]

Update: has a nice wrapup on the general blogosphere debate.

What the Colonel Said

I'm quoting the Colonel again:
A couple of friends of Israel or perhaps actual Israelis have written to ask why I dislike their favorite country so much. They don't get it. Old Timers here can tell them that I HATE NATIONALISM. All nationalism, everywhere. Mark Twain despised organized religion and monarchy. He once wrote that mankind would only be free when "the last priest is hanged in the guts of the last king." Romantic nationalism was a new phenomenon in his day and so he did not have the opportunity to add nationalism to his list of anathemas. Patriotism is another matter. I hope that I am a patriot. Read the preface to Elie Khaddouri's "Nationalism" to understand the difference. Nationalism is mere tribal loyalty and hatred of what are seen as competitor tribes. Often the tribal self-image is a pastiche of fable and propaganda. Zionism and pan-Arab nationalism are two sides of the same debased coinage of human folly.

In Gaza we have the folly of Zionist nationalism matched against the equal folly of a form of politicized Islam that embraces Palestinian nationalism.

Adults would find a workable compromise in order to make an end of the craziness of white phosphorus shellings of schools filled with refugee civilians followed by scenes of defiance that will inevitably lead to the murder of more children. Clearly, there is a scarcity of adults in the Holy Land.
Afterthought: In a conversation a while back I quoted (what I thought was) Samuel Johnson saying that "patriotism is the last refuge of the scoundrel." My interlocutor interrupted: no, no it is public patriotism.

Um--I'm pretty sure I'm right: Johnson did not include the qualifier. But he might well have, and perhaps he would, if challenged. For more on Johnson on patriotism, go here.

Yeh, Yeh

I'm in a snarky mood today. So naturally I will want to pass on this email inviting me to a free-pizza lunch to discuss campus pilfering. It's called:


That's from the Campus police, or as we know and love them, the Department of Public Safety Prevention.

This Just In! NYT Reports that George Washington was Black!

And a slave-holding black, to boot:
They embraced a candidate with less experience than Jack Kennedy had in 1960 and elected the first black president since George Washington, a slave-holder, took the oath of office.
That's from David Sanger, The Inheritance: The World Obama Confronts, being hyped this morning on the Amazon Kindle page as "an urgent intelligence briefing." Whether it is worth more than an Obama commemorative plate remains to be seen, but I may not stay to find out.

It does recall, though, the late California Governor Edmund G. ("Pat") Brown, surveying flood damage and declaring, "this is the worst disaster since my election."

[And somehow I am reminded of the lady who said that the happiest moment of her life was "when I woke up and found my husband standing by the bed with his discharge in his hand," but that's another matter altogether.

Tuesday, January 20, 2009


My friend Nancy passes on a good-natured dumb joke which, in the grand tradition of academic criticism, I will now undertake to make tedious and boring. Anyway, it's the one about the old guy who comes home about three hours late for dinner. His wife asks: where have you been?
--I had an accident.
--Oy, did you go to a doctor?
--I went to the doctor.
--Nu, vos zogt der doktor?
--Der doktor zogt az ich hob a flucky.

A flucky.

--Nu, what do you do for a flucky?
--I don't know. I forgot to ask.

A flucky. Oy gevalt. She runs to the neighbors'

--What do you do for a flucky?
--In the old country, when someone had a flucky, we always applied cold. Ice cold is the best thing for a flucky.
--What are you talking about? Cold is absolutely the worst thing you could do for a flucky! We always applied heat, that's the only thing to do for a flucky.

Cold, heat, oy! Now she is upset.  She decides to call on the doctor herself.

--Doctor, please tell me, what's wrong with my husband?
--I told him...nothing's wrong.

  [wait for it]

--He got off lucky!
Hey, I never said it was a good joke. But. But forget they oys and the gevalts and the counterfeit Yiddish. Is this not the most situation-specific joke you can possibly imagine? I mean, I can just hear (although I was never did hear) some guy in a Yiddish theatre on Second Avenue in, say, 1912, belting it out to an ecstatic house full of newbies on the edge of a new language and a new culture. You've got the awe and timidity  in the presence of medical knowledge; the the wry nostalgia, the instinct for self-protection. You can hear the know-it-all neighbors; the distraction and impatience of the doctor and perhaps best, the attention and assertiveness of the wife. I'll say he got a flucky.  And so do we.  Thanks, Nancy.

Obama Pudding


Slim Gets Fat

So now Carlos Slim has a deal to put money into the New York Times (or maybe he doesn't--this thing looks awfully complicated). Not quite preferred, but a note with warrants with is close enough for government work. The note is a zero with a rate of 14 percent; Brad DeLong is gobsmacked and forecasts an early (or at any rate, a medium-term) bankruptcy.

He's right to be impressed but recall (a) "bankruptcy" need not mean "going out of business;" it may be a "sale to the creditors" where the going concern chugs along at a lower speed (kinda like the world economy, huh?); and (b) Slim must figure he is getting something out of the deal--if nothing more than the option to be the owner of the brand.

$250 now for $400 later, bleah. But if you pencil it out at three years and seven months, that works out just about right. ($400/1.14^(3+7/12)=$250.

Monday, January 19, 2009

I Never Promised You a Rose Garden

Hilzoy and Atrios are mulling over the paucity of pardons in the twilight of the Bush years, and in particular of his failure to pardon people from that great smorgasbord of malefactors who have served under him.

Without particularly disputing anything they say, I'd offer another insight: Bush has shown himself pretty much indifferent to the fortunes of other people period. Set aside the question of Bush team wrongdoing: there are any number of poor schmucks out there who did something ubambiguously wrong back there one day, but who got between the upper and nether millstone of a judicial system that was really more strenuous than needful. Seems to me that the system expects, indeed requires perhaps just a bit of executive discretion in precisely cases of this sort. Wouldn't have piggied my wiggy at all if Bush had done a bit more of that before he left. I suppose the upside is we've got one more reason to remember why we didn't think much of him anyway.

Clarification: And no, this time I am not talking about Michael Milken.

Krugman Leaves Me Puzzled

Paul Krugman plays a bit of inside baseball with other economists today, but of particular interest because of one baffling passage.  He's talking about the diverse views on the current crisis from conservative economists (link):
You’ve got John Taylor arguing for permanent tax cuts as a response to temporary shocks, apparently oblivious to the logical problems. You’ve got John Cochrane going all Andrew-Mellon-liquidationist on us. You’ve got Eugene Fama reinventing the long-discredited Treasury View. You’ve got Gary Becker apparently unaware that monetary policy has hit the zero lower bound.
Krugman brands these all as "non-serious arguments," which I assume means that the run of "conservative" opinion on the topic. So, why baffling? The baffling part is that nowhere on this list--nor any place else in the piece, so far as I can tell, does Krugman address what seems to me the most sensitive and perplexing issue on the agenda. That is: the multiplier--how much bang for the buck?  And what does it take to get it, and how do we know?  

There seems to me a fair amount of heat but remarkably little light in current discussions of the question.  Conservatives--this may be definitional--seem to operate on the principle that "the multiplier is one"--that every dollar emitting form the Keynesian pump is cancelled by the loss of a dollar via taxes or inflation.  A canonical formulation would be this blog entry,  which has received a fair amount of attention, not to say derision (including a bit here).  Fama's "Treasury View" piece can, I suppose, be read as kind of a variant on the "multiplier is one" argument; cf. link; link.  Krugman himself has acknowledged the issue (e.g., link).  But is remarkable how much good, general, direct analysis of the topic seems to be available out there.

The problems seem to be two, one conceptual, the other empirical.  The conceptual problem is that there seems to be nothing close to general agreement among macro theorists over how, precisely, to define the multiplier--witness the Fama/DeLong debate cited above.  The empirical difficulty seems to be that there each side seeems to be able to hoik up something in the way of numbers to support the case.

So here's an assignment for all the big brains on the econo-web: I'd love to see more of this--detached, critical, intellectually honest of the problem of the multiplier, both in concept and in practice.  And hurry up about it--that bailout money is going fast.

Samuelson on Schumpeter

Peter Bernstein quotes Paul Samuelson recalling Joseph Schumpeter:
Schumpeter taught me there are no franchises.  You are king for a day. ... Schumpeter used to say the top-dollar rooms in capitalism's grand hotel are always occupied, but  not by the same occupants."
Is Schumpeter correct, I wonder?  Two answers:
  • It's what you want your kid to believe.  Kid, nobody owes you anything.  Every day you dive a 10,000 foot tower into a pail of sand.  You didn't ask to be born, but then neither did I.  Deal with it.
  • There have been dukes of Norfolk consecutively since 1483.
Source:Peter L. Bernstein, Capital Ideas,line 601ff on my Kindle.

Obama and the Clean White Shirt

Outsourced to the Wichita Bureau again: did you notice that Obama at the service project, painting?  And that he is wearing a long-sleeved white shirt?  To paint?    He doesn't own a paint shirt?  

I think it's a shrewd call, and telling: the fact is that Obama, for all his outreach, is emotionally pretty remote.  We may see him civil, humble, courteous and suchlike, but never down and dirty (basketball may be an exception, but even there he seems to operate with a kind of contained cool).

Wichita again: "If he's going to make a point of painting, he needs to find his old Harvard sweatshirt, wash it sixty times, poke a few holes in it and wear that.

Chug. Chug. Bleah.

The Wichita Bureau, who moonlights as an ethanol skeptic, is probably enjoying a moment of schadenfreude here (link):
Biodiesel fuel woes close Bloomington schools
By LORA PABST, Star Tribune
All schools in the Bloomington School District will be closed today after state-required biodiesel fuel clogged in school buses Thursday morning and left dozens of students stranded in frigid weather, the district said late Thursday.

Rick Kaufman, the district's spokesman, said elements in the biodiesel fuel that turn into a gel-like substance at temperatures below 10 degrees clogged about a dozen district buses Thursday morning. Some buses weren't able to operate at all and others experienced problems while picking up students, he said.

"We had students at bus stops longer than we think is acceptable, and that's too dangerous in these types of temperatures," Kaufman said. ...
From a quick skim of the comments, I'd say there are a lot of jubilant anti-greens reading the Strib.

Sunday, January 18, 2009


The Wall Street Journal reports that Mexicon zillionaire Carlos Slim is dickering for a piece of the New York Times in exchange for preferred stock.

Hello, preferred stock? Isn't that so, um, maybe 1935? So regulated-public-utility? So antique?

I know that people have bandied around the idea of "preferred stock" as a strategy for government intervention in the banking crisis. But that would be a way to jump the ideological blinders about government ownership of banks. Other than that, the standard mantra is preferred stock doesn't make any sense because the tax treatment is all wrong. And that investors don't like it because the contracts are all tailor-made and thus hard to value.

But one thing about preferred, like so many other hybrid securities: it's a tempting alternative for the debtor who can't get liveable loan terms, and doesn't want (desperately hopes not) to give up control. Could it be that we are in a new era of preferred, as anemic companies lurch desperately forward under the burden of sagging income and bloating debt?

The Trouble With Kissinger: He Doesn't Understand Power

Have long thought that one(!) problem with Richard Nixon was that he didn't understand economics--not just that he was "too liberal;" rather, he just wasn't interested, economics didn't make any sense to him and he didn't care. That explains an abomination like Nixon wage-price controls. And also, perhaps more important, why he threw away the Bretton Woods system, basically inviting the Europeans to reach for the lead on world economic issues ("Richard Nixon: Father of the Euro"?).

Now, idling through Kenneth B. Pyle's Japan Rising, my attention is called to an added irony: if Nixon did not understand economics, he had good company. That is: neither did his ally, enabler, co-conspirator Henry Kissinger, Mr. Power himself. As Pye explains, Kissinger never got Japan. And the reason is that Japan was about commerce--economics,-- and Kissinger did not understand that commerce was power.
The reason for [Kissinger's] obliviousness [to the rise of Japan] was that Japanese postwar foreign policy was characterized by economic realism, and Kissinger had little interest in economics as a source of power. National Security Council staff members under Kissinger observed that he had a "profound lack of knowledge and interest in economics" and that discussing economic issues with him was akin to discussing military strategy with the pope. He perceived Japanese diplomats as "not conceptual" in their thinking, lacking long-term vision, and making decisions only by consensus. "The Japanese do no yet think in strategic terms," he told Deng Xiaoping in 1974. "They think in commercial terms." The implication was that pursuing economic advantge was not a means of strategic pursuit of power.

--Kenneth B. Pyle, Japan Rising 15 (2007)
Let's set aside the question of whether the pope understands military strategy. An added irony here is that Kissinger was talking to the one man who understood better than any other that the way forward for China was to set aside ideology and concentrate on, yes, economics

Saturday, January 17, 2009

Wups, Here's Another...

Financial acumen, John Kenneth Galbraith said, is a rising market and a short memory:
Florida Fund Manager Missing; Clients Say Money Gone

Jan. 17 (Bloomberg) -- Arthur Nadel, a hedge-fund manager in Sarasota, Florida, has disappeared and clients are concerned they may have lost hundreds of millions of dollars, according to law enforcement officials.

Nadel, 76, is president of Scoop Management Inc., which oversees funds including Valhalla Investment Partners LP. He was reported missing three days ago after he called his stepson, Geoff Quisenberry, and told him to go to his house where he had left a note, Lieutenant Chuck Lesaltato of the Sarasota County Sheriff’s Office said yesterday in a telephone interview.

Nadel’s wife, Peg, and Quisenberry, were “concerned about his welfare,” Lesaltato said. Nadel had sounded “distraught,” Lesaltato said, citing the note. Nadel’s partner, Neil Moody, said today he believes Nadel is alive and has spoken to his wife since then.

Scoop may have managed as much as $350 million, although “that may be high because performance results were exaggerated,” Moody said in an interview. He said he contracted with Nadel to manage three funds on his behalf, while Nadel alone had three others and did the trading for all six. Moody said he didn’t know anything was wrong until Nadel was reported missing Jan. 14.

Suicide Note

Moody called his broker “and the amount did not jibe with what Mr. Nadel said we had.” As much as $12 million of the Moody family’s money may be lost and how much remains is not known. “It looks very bleak,” Moody said. ...
Link. Of course, nothing compares to the (self-confessed) prince of thieves but it is still no fun if you are a customer. I'm betting he is not the last.

What Was I Thinking?

It occurs to me that there is a Supertanker-sized hole in my discussion over the past few days of Schwarznegger and Obama and their respective legislatures (link, link).

First, I responded with studied irony to the idea that Obama seems to be having trouble coming out of the box with the legislators in his own party.

Then in a heartbeat, I turned around and said that Schwarzenegger could have dented California's budget problem if he had moved aggressively at the beginning of his term when his popularity was still high.

Hu-lo. Aren't they the same? And if we live in an age when an Obama has trouble, wouldn't a Schwarzenegger have had trouble, too? Answer: very likely. What we may be seeing here is evidence of a governing system so out of whack that nobody can do anything. My only out, I suppose, is to fall back on the fear factor: to declare that Schwarznegger might have been able to scare the socks off his legislators even though Obama may not. That's my bet shot, and I'm inclined to doubt it. Looks like I was wrong the first time.

Friday, January 16, 2009

WSJ Tracks Underbelly!

It's always unsettling to be shadowed, and particularly unsettled by the Wall Street Journal Opinion page. But Kimberley Strassel seems to have been reading Underbelly; she's picked up the meme that Obama's most formidable headache may turn out to be the Democrats (cf. link and link).

I said before that the reason may be that they don't fear him. But there is a piece of melancholy good news here: it may be tht they don't fear anything enough to knuckle under and do whatever he says. This would suggest that whatever their mindsest, they aren't as stark staring petrified as just about everybody seems to have been at the inaugurtion of Franklin D. Roosevelt. Could it be that Congresspeople actually know something worth knowing? Could it be that things are really not as bad as they seem?

The Gubernator in the Evening

Debra J.Saunders, the San Francisco Chronicle "conservative" (if that is the name for it) columnist, hits a twopher for today, re California's Governor Arnold Schwarzenegger and its refractory legislature (or is it the other way around?). First (echoing Bruce Bartlett?) she argues that the Republicans can't continue to answer every question with "tax cuts! Gawwwwk, tax cuts!" "The Democrats are right," she says. "A $42 billion, 18-month shortfall is not going to be fixed with cuts alone--not when the annual general fund is $103 billion." She quotes a Republican legislator who says: "The brand of what it means to be Republican is now in jeopardy of meaning nothing." Saunders responds, "So ... the brand has come to mean: more spending without paying for it."

Point two: Saunders is not especially sympathetic with the Democrats in the legislature, but she is not about to let the governor off the hook and here I think she is onto somethiing important. "If Schwarzeneggrer had cut spending when Democrats feared him, the budget hole would be smaller. If he had raised taxers earlier, the increases would be less painful. ... Now that Schwarzenegger is govserning like an adult, he is all alone." I think she is bang on here: seems to me that Arnold basically blew off his first two (four?) years in office; my guess is that he didn't want to spend all that time away from Malibu and couldn't believe it was really that hard.

Minnesota had a similar problem with Jesse Ventura. He, too, basically wasted a good opportunity. In Ventura's case, once he realized what he was up against, he just went back to his day job (my guess is that he also needed the money; Arnold probably doesn't). Give Arnold credit for trying, but sign on with Debra that it is too little and too late.


Calculated Risk (is he branching out from just mortgages?) has an update on layoffs. Eeuw, scary.

Revealed Preference Thought Experiment of the Day

From someone with the nom de blog "Mellowjohn," otherwise unknown to me, in the comments at Political Animal:
Grover Norquist thinks all taxes are akin to torture.

I, for one, would be happy to let Grover Norquist go without ever having to pay Federal taxes ever again -- as long as he agrees to be publicly waterboarded every April 15.
Isn't this just a variant of "claimings-race" taxation--you tell the tax collector the value of your real estate--he either taxes at that value, or buys at that value. Hey, worked for Tony Soprano ... .

[Okay, okay, worked until it didn't but you know what I mean].

Indian License Plates

The Wichita Bureau tells me something I didn't know before: a number of Indian tribes issue their own license plates--in Oklahoma, at least, and I gather elsewhere as well.

It's not apparent in the samples linked above, but Cherokee (at least) uses a syllabary alphabet that doesn't look the least like English. Does this complicate the reading of Cherokee license plates by outsiders?* Wichita mentions also UCC filings--can you do that in Cherokee? And is confusion part of the purpose? Recall the use of Indian code talkers to hornswoggle the enemy in World War II.
*And what do they call us, anyway? Gringos? Gadji? Goyim? Auslanders?

What Is This About?

And why are these guys using my picture?

Current Reading: Finance

Getting ready to teach a finance class to law students, again after an eight months' break, I figured I ought to do some mainstream reading to see what kind of notions were in the showcase. On the eve of the new semester, I squeezed in four (well, three plus--I'm still not quite finished with the last one). All worth my time, in instructively different ways.

The best of the lot is surely Charles Barnard, The Two Trillion Dollar Meltdown. It's hard to imagine a more helpful account of what has gone haywire in the financial system over the past few years, including an accessible under-the-hood account of some of the more momentous banking innovations. I look forward to stealing from this guy a lot, or at any rate paraphrasing a lot of what he has to say, and perhaps the worse for the paraphrase.

I'd say almost as much for Paul Krugman, The Return of Depression Economics. Krugman is kind of a cult villain in moonbat land, but even those who don't like his politics or his combatative style will have to admit he is (a) state-of-the art technician in macro theory; and (b) a top-notch explainer of abstruse concepts. You can see why Princeton students would want to pay 30 (40? 50?) thou a year to sit at his feet and listen (to what the rest of us can get for 20 bucks, or free). The book is hampered by the fact that it was first written ad an account of the Asian meltdown of the late 90s, then reengineered, rather hastily I must say, for the current uproar. There is a connection, of course, and history is part of the point here. But if he'd written from scratch, he wouldn't be quite so top-heavy with the collapse of the bhat. Also, I can't imagine how the publisher let him get away with that title. While it does, in a sense, accurately represent the contents, I suspect that the kind of reader he's looking for will simply not recognize that this book is for him (her).

Niall Ferguson's The Ascent of Money, I wrote about earlier. I got snide with him for getting confused about bankruptcy but then I conceded that the book was, overall, quite an excellent general over view of a long and complicated history. Still true, although after reading Morris and Krugman, you're reminded of just how broad-brush his presentation is--and must be, considering how broad the task he has set for himself. I oonfess that after having read the book, I couldn't bear to watch the PBS special: the sonorous anecdotes and the jump-cut video was new when I first saw Alistair Cooke's America nearly 40 years ago, but by now the formula is getting kind of stale.

Raghuram G. Rajan and Luigi Zingales Saving Capitalism from Capitalists, is a somewhat more complicated matter. As I say, I'm not quite finished with it, but I think I get the drift: if this were a Victorian political tract, it would be entitled Incumbency: An Account of the Evil Thereof, with Proposals for a Remedy. Their point is intelligible enough: crony capitalism is not capitalism; incumbents dig in and protect themselves against (further) competition. Freeing us from the dead hand of incumbency can make life better for all, and in particular, can give opportunities to the otherwise dispossessed. This is an important, if often overlooked, home truth. I'd say it is fairly generally accepted among economists* --perhaps particularly by economists writing about development, like Dani Rodrik or William Baumol. Indeed, it probably helps to explain the disconnect between self-conceived "liberal" economists (Krugman is a sufficient example) and the voting public on issues like free trade.

RZ hew consistently to their theme and they offer a collation of helpful instances of the evils of incumbency. They make passing reference to their recipe for reform: secure property rights; transparency (which would include mandated disclosure and quality accounting standards). They are also insistent on a point that is a hobbyhorse of mine: a market is a cultural artifact--markets don't just fall from the sky they can be tweaked and formed for good or evil, and we can't expect good results just by leaving them alone.

So far, so good. But unless they are planning a boffo final chapter, they don't seem as systematic as I would like. They cover a lot of ground at a brisk pace. I complained earlier that they really stewed the pooch on the details of bankruptcy and I while I haven't spotted that kind of slipup elsewhere, I must say it does make me wonder about how good they really are at other issues I know less about. So, well worth the effort, and I do expect to finish it, perhaps this afternoon. But to be used with caution.

Oh, and one other that I almost forgot: Kenneth Pomeranz and Steven Topik, The World that Trade Made. Perhaps the reason I forgot it is that it is not a book so much as a collection of anecdotes--a kind of readers' digest of snippets from the economic history of the (post-Medieval) modern era. Apparently these were written piecemeal for some sort of trade journal. There are no footnotes (although they do add a helpful bibliography). But the stories, one by one, are well told and mostly instructive. Amazon reviewers say that this would be a great prep book for the AP history exam. All I can say is that history must be a lot more interesting than it was when I went to high school.

Takeaway point: there really is an awful lot of good, intelligent, nontechnical writing out there. I'd love to kick back and just read a dozen more (isn't that what being a professor is supposed to be about?). But as the philosopher says, stuff happens. I know that 14 weeks from now, I will look back on a semester of either success or failure and wonder--what the heck happened to all my time?
*Maybe it is the definition of an economist. Cf. Adam Smith:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is im-possible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and jus-tice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Bartlett on What the Republicans Should Do Next

I never know quite what to do with Bruce Bartlett. As a former adviser to Jack Kemp, he has his thumbprints all over one of the silliest initiatives in modern public finance : the supply-side revolution which held (in its extremest form) that you can make big tax cuts without losing a penny--not a penny!--in public revenue. In fairness, I'd have to concede that Bartlett himself never ventured quite so far into moonbat land as some of his allies. He remains one of the most adventurous and (mostly) intellectually honest figures on the "conservative" (if you can call it that) side of public revenue discussions.

He's back this week (in Forbes), arguing that it's time for conservatives to put the past behind:
The original [supply-side] idea was to cut marginal tax rates--the tax on each additional dollar earned--in order to revive the supply side of the economy by stimulating work, saving, investment and entrepreneurship. Now that argument is generally accepted. I am not aware of any reputable economists on the left who want to raise the top rate back to 70%, or even 50%. The most that they talk about is going back to the 40% top rate that existed under Bill Clinton. Contrary to what some Republicans think, this will not destroy the economy; it did pretty well after Clinton raised the top rate in 1993, despite Republican claims of doom.

Republicans also have to accept that there is a limit to tax-rate reduction. Cutting the top rate from 70% to 50%, as Reagan did in 1981, provided a huge increase in the after-tax rate of return. Some taxpayers went from keeping 30 cents on a dollar of interest or dividend income to keeping 50 cents--a 66% increase. But dropping the top rate from 40% to 35%, as George W. Bush did, only increased the after-tax return by 8.3%.

That's not nothing. But one can hardly expect the same kind of economic gain from reducing the top rate a little from an already low level as one would get from reducing a very high rate a lot. Nor can we expect a small increase in the top rate from a historically low level to have disastrous effects. Yet some Republicans continually make extravagant claims for small tax cuts and predict disaster from small increases when there is no evidence to support either proposition.

Instead of defending the Bush tax cuts, most of which expire next year under laws that Republicans wrote, I think it would be better for them to abandon Bush's tax policies altogether. The evidence is pretty clear that they did little good for the economy. Therefore, getting rid of them will do little harm.

Going forward, I think Republicans should try to be the party of investment, because Democrats are basically the party of consumption. While there is certainly a case to be made for raising consumption in the short run, the fact is that many of the consumption-oriented policies being proposed by Democrats in Congress would be proposed even if the economy was booming. There is never a time when Democrats aren't in favor of more health and education spending, aid to state and local governments, and so on--just as there is never a time when Republicans aren't for tax cuts.

"Investment" for present purposes, apparently means support for privatization and revival of the Investment Tax Credit. Somewhat surprisingly, "education" in this model turns out to be "consumption" not investment (I assume this is a swipe at English majors?).

A side issue: supporting privatization, Bartlett says as if beyond controversy tdhat "Amtrak and the Post Office don't work very well." Really? I use the post office a lot these days: brisk, efficient, and the price is right. And Amtrak--back in 2006, I did a Wash/NYC commute for a few months on Acela, and I loved Amtrak. Thank you, taxpayers, for making my life so much easier, but at least you can take consolation from the fact that you have at least one happy camper.