Tuesday, March 31, 2009

And Now, For Something Completely Different: Chick Lit

My friend Ivan is philosophizing on the sale of baby birds, and meditating on the old days in Alabama:
I wonder every spring if 10 percent of the ducklings I see for sale in feed stores survive. chicks go on sale first but they are usually bought by people who want to raise some for the dinner table and know how to protect them. but the ducklings -- just days old -- are usually given to little kids who dont have them for long. ducklings need to be protected from rats, weasels, possums, skunks, racoons, snakes, turtles -- whatever roams at night or swims and slithers in the daytime.

Whenever I see the chicks sales start I'm reminded of a 1950's Saturday afternoon in Anniston, Alabama, when I was manning the newsroom in the hours between when we had put out the sat afternoon edition and the pm crew came in to get out a Sunday paper. I was typing away on something of small consequence when one of the Adams brothers came in looking puzzled. The Adams boys ran off brand gas stations and were the leaders of the Klan in Calhoun County. but they liked me because I had written a big article about the founding of the White citizens Council in Anniston -- which they also headed.

The Adams brother -- don't remember his name but he's the one later indicted for starting a bloody fight at a kids' baseball game over an ump's call and for being one of the leaders in the attack on Nat King Cole giving a concernt in Bham.

"The streets are full of @&*$!," he told me, in a perplexed, puzzled but also angry voice. "All the street are full of @&*$!."

This was Saturday afternoon on a warm spring day in the Deep South. not unusual for crowds of both white and black rural people to be in town shopping, mingling, seeing who they would see. I looked out the window. There were a lot of blacks on the street. but when I saw what many were carrying, I had the answer.

"This is free chicks day," I told Adams.

Free chicks day was the Saturday when local feed and other stores would give away a dozen day old or few days old chicks to anyone buying a sack of chick starter, the feed you start chicks on. T bigger the bag, the more chicks you got.

"Oh," Adams said. "I got nervous when I saw the streets was full of @&*$!.
Goess I shouldn't try to tell him that if you have to buy a sack of feed, the chicks aren't really free.

I Wouldn't Know, I Never Dumple

It is hard to have the desire for dumplings checked but harder still would it be to have one's betrothed transfer to her love to another.
--Natsume Soseki,Botchan 118 (Umeji Sasaki trans. 1922)

Too True, Too True

"There's a market for ugly."

Of Course This Mighta Been an April Fool Joke One Day Early

link.

Fn: Hm, how odd. I sent an earlier version of this post in an email to a couple of friends. To my stunned surprise, the entire email popped up as a blog post. Yes, I know it is possible to do this, but I have never tried it before; indeed I didn't even think I knew how.

Monday, March 30, 2009

Something for Every Taste

Thanks, Nancy (link).

Hell, No, I Don't Want It! You Take It!

Remember the dog who chases cars--what does he do when he catches one?
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.

Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.

So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.

“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.

City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it. ...
(link). I had a girlfriend once who was going through a nasty divorce. Every time he got particularly obstreperous, she'd threaten to go back to him.

Something Lost in Translation Here?

I see that Lech Walesa, the hero of the Polish fight for freedom, is threatening again to leave Poland, after a second book accused him of being a communist spy in his youth (link).

Again? Yes, apparently it happened before. In that case, (it says here), Walesa was "cleared by a special court" after "judges concluded that former security service agents had forged documents in his file in a bid to prevent him receiving the Nobel Peace prize in 1983." But listen to what he said this time in his own defense:

A historian must decide whether this serves Poland, and not just repeat unlikely nonsense.
Look, I am not an adept at the subtleties of the Polish tongue, but unless something hugely lost in translation, I'd say that that is about the most mealy-mouthed, evasive sidestep by a public leader since, oh maybe since Bill Clinton.

And his defenders don't do a lot better:
Some critics and Prime Minister Donald Tusk have voiced support for Mr Walesa, saying that the books are politically motivated.

"We need Lech Walesa in Poland as an important authority figure," said Mr Tusk, himself a former Solidarity activist.

The BBC's Adam Easton in Warsaw says the accusations are unlikely to do too much damage to Mr Walesa's reputation.

According to surveys, many Poles say even if he did err as a young man, he is still a hero for what he achieved in the fight for freedom and democracy in the 1980s, our correspondent says.

Or in a freer rendering: we don't care what he did back then, he's still big daddy to us now. Which, actually, is fine. But if they really want to run a first-class democracy, they ought to get used to the idea that the truth has his claims also. Not that they'd ever learn that from us, of course.

He Never Heard of Yuvutu?

British commentators are having a merry old time with their Home Secretary who submitted in her official swindle sheet expense voucher a claim for two of her husband's porn rentals.

But UB's Wichita bureau responds: that's all? All? This from the country of John Profumo, not to mention that seemingly endless series of badboys who wound up on the front page of the Sun back in the twilight of the Major administration? Seems like pretty tepid stuff.

Sunday, March 29, 2009

Exit the King, and Keep on Exiting

Another New York item: we caught a preview last week of the new Broadway mounting of Ionesco's Exit the King, and I generally endorse the drift of critical consensus that it is a pretty good show (cf. link, link). But with one big qualification, namely: it's really just one big idea--king doesn't want to die; hilarity ensues.

What saves it are two things. Well, one and a half. The "half" is the script: being totally unfamiliar with the original, I have no idea whether to credit the author or his translator/adapters, but the are quite a few good lines bits of stage business. The "one" is the cast, and in particular Geoffrey Rush, hithterto known to me only as the poor mug who gets his feet cooked by the loan shark in Shakespeare in Love. The Times calls him "a fire-trailing comet," and I won't try to top it. He struts and frets his hour upon the stage as if he wants to add a couple of chapters to the Kubler-Ross catalog of mortality. He gets mostly good support, too, but without him (and some good material), it could have been a lo-o-o-ng afternoon.

Which prompts an inquiry: could it be that this problem is general in modernist theatre or literature--one good idea, strung out to a length that is at least unreasonable, and sometimes impossible? Check the Wiki page on Will Self, for example: under "fiction" you'll find half a dozen or so summaries that read like zinger one-liners, but don't promise much content beyond. I'd say the same about most of Pirandello, asnd (dare one say it?) a good deal of Beckett.

Maybe I' m expecting too much, but I don't remember Shakespeare being this infertile. Or Dickens. Meantime, heaven bless Geoffrey Rush and his gaggle for providing so much diversion.

Too True, Too True

The young naked man approached her with this poodle, and she immediately realized something peculiar.
Link. Thanks, John.

Saturday, March 28, 2009

I'll Take Second-Tier French Impressionists for $200, Alex

I've been in the Metropolitan Museum of Art(in NYC) on three occasions in the past year, On two of these, I've run into my friend Steve. Steve, at least, lives in New York City. Maybe there is something in the fact that both times we were surveying the work of second-tier French Impressionists.

But as an exercise, the student is left to consider the question: what is the likelihood that Steve spends two thirds of his life at the Met?

For comparison, the student may wish to estimate the odds that Rosencrantz and Guildenstern get a coin-flip on 92 separate occasions to come up heads.

Or he may further wish to consider implications of the proposition that 20 percent of all people who ever lived are alive today. This means that only 80 percent of all people have died: we therefore have too little evidence to conclude that people are not immortal.

Hoo Boy

Link.

Wish They'd Said That about Me

My friend Nancy garners the review of your dreams for her book on Enron, etc.:
If they ever decide to throw the book at Madoff or any of the other financial criminals, this 1,200-page-plus tome is the one I'd heave.
Link, link.

Employment Datapoint of the Day

Way back in a simpler (or more primitive) time, I had to move my wife and myself from the east Cleveland suburbs to Louisville. The one-way truck rental rate was so high that it made sense for me to deadhead back to Cleveland--my one serious excursion with the truck-driving life, and quite enough, thank you. Now this.

Juan and Natalie, Together Again

Vinzenzo Bellini died at 33. Per Wiki, he actually completed 11 operas, though I don't think any more than half them can be counted as still in the canon. Giseppi Verdi made it to the age of 87; Wiki counts (only?) 28 finished operas, although that doesn't include a lot of multiple versions, reworkings, etc.

But here's the more interesting datum: Verdi didn't really hit his stride until #17—Rigoletto, produced when he was 36, i.e., three years after the age at which Bellini died. Question: what if Bellini had lived until 87, and Verdi had died at 33?

Okay, it's pointless. But it does help to reflect on the possibilities of a career so cruelly cut off so early. For the plain truth is that Bellini can be a disappointment: one of the most listenable composers ever, yet at the same time, one of the slackest. Whatever else you can say about Bellini operas, they lack sinews and a rib cage—in a word, drama, precisely the quality that makes Verdi so distinctive.

I mulled this point over in mind last Tuesday night at the Met—more precisely in the Director's Circle, that's two flights up--as I listened to Natalie Dessay and Juan Diego Flórez in La Sonnambula. That's our customary location and I will always remember my first visit in 1996 I heard Carol Vaness and Susanne Mentzer sing “Soave Sia Il Vento” in Cosi Fan Tutti (and here it is!).

Cosi was a magical moment. But here's the thing: watching La Sonnambula was the first time I've ever wished I were watching the movie-theater performance in HD. This isn't any kind of general rule: I don't intend to abandon the live performance, and some of the Hds have been just way too gimmicky. But for Bellini, a few of the in-your-face doodads would have been a help.

A second invidious comparison: Flórez and Dessay did a fine job here, but it was hard not to compare this presentation with their last Met outing, in Fille du Regiment a year ago (link). They may be singing just as well this time, but you couldn't quite tell because there isn't nearly as much to do

Fn: Looks like I will get my chance to see if it is better in HD, next Wednesday night. Now, if I can rejigger my schedule...

But What Does This Have to do with Me?

The Slate ladies are all over self-absorption this week:
  • Emily Yoffe tries to find a good word to say about narcissism (link).
  • Prudie delivers a bitch slap (link).
  • But Emily Bazelon offers some unironic compassion for the 20somethings (link).

Friday, March 27, 2009

A Few Pips from the Big Apple

Spring Break always comes too late at the Law School: the students are brain dead by this time, and so am I. We took the occasion to decamp for a quick jolt of New York City culture. We're now back, suitably refreshed. I want to jot down a few thoughts in due course, but meanwhile here is some loose change:
  • Dignified lady parading a matched set of Scotch Terriers, wearing, a matched set of plaid snuggies. Did she gives the dogs the snuggies for their birthday?
  • Some guy, on why he only buys single-ride Metro tickets: a multi-ride ticket “takes up too much space in your wallet."
  • One change at United Airlines check-in as a result of charging for baggage: slower service. Now, in addition to processing all the bags, they have to process the credit card transactions.
  • Does this sentence make any sense: Drinks are not permitted to be carried back to seats.
  • The signature plaque at the Philharmonic: Avery Fisher—Wise, Elegant, Gentle, Caring. On my music hall, I just want “scholar and saint.”

  • [Oh, and the “fritelle” on the dessert menu at Union Square Cafe are in truth a bunch of donut holes.]

Thursday, March 19, 2009

Traveling Again

Off traveling again. Maybe light posting until Monday March 30. See you then.

Mundell’s Goats

Nobelist Robert Mundell has put together a great slide show on the current uproar in which he identifies the five goats (slide 60):

  • Ranieri

  • Clinton

  • Greenspan

  • Bernanke

  • Paulson

If you don't know who Ranieri is, go here. Mundell dings Ranieri for having "lost connection between original borrowers and lenders" which seems dead on to me: the reason we can't do workouts is that nobody knows who owns this stuff.

He blames Clinton for repealing Glass-Steagall which is a fair cop, although I'd say others are more culpable (I'm looking at you, little Phil Gramm). He also blames Clinton for "strengthening the 1977 Community Reinvestment Act," and I don't think we have enough data on that one yet. Way I see it, most of the problem loans came from lenders not covered by CRA, and lots of CRA borrowers have continued to perform well. But we need to know more.

The rap on Bernanke is not quite what you might guess: mainly that he let the dollar soar in 2008 which (per Mundell) triggered the credit crunch (so also PaulsOn).

BTW on close scrutiny, I see his five goats are really six: he also has a slide for Maurice "Hank" Greenberg, who gave us AIG.

H/T: Dani Rodrik. Not sure my link to Mundell will work; if not, follow the link from Rodrik's page.

Wednesday, March 18, 2009

Nebbish?

More than one reader has asked if the little guy in my profile is a Nebbish--one of those winsome curiosities created by the late Herb Gardner: as cartoons, later a comic strip, here as dolls (evidently a doll version came first (link)).

The answer is, I think, "no." I pinched it off the (apparently home made) inter office memo stationery at a law firm where I worked in the 70s and early 80s. While it does indeed bear a resemblance to the famous Gardner creations, I think I can spot some telling differences. For one, as I recall Nebbishes always had their eyes closed; here, the eyes are pointy and piercing.

But funny you should ask. As it happens, I knew Herb Gardner, and I was an observer (entirely accidental) at the incubation of the Nebbishes. Herb used to doodle them in his notebook as he sat next to me in Louis Filler's American History class at Antioch College in --oh, perhaps 1955. They had what may have been their first publication in an Antioch College literary magazine. Only later did they get exposure in ash trays, cocktail napkins and suchlike. The NYT reports that there were 750,000 copies of the cartoon ''Next week we've got to get organized," but I think the number must have been 100 million. We at Antioch took it as our class motto.

I don't wish to mislead here: Herb was BMOC at Antioch in those days and I was pretty much of a zero (I eventually flamed out and fled). As a brush with greatness, I suppose this about equals the time that Adlai Stevenson stepped on my toe.

Hoisted from the Comments: Seemed Like a Good Idea at the Time

I think Bailout Blogger might be onto something here:
BailoutBlogger has left a new comment on your post "Two Quick Cents' Worth on the Bonuses":
It's 3/08. Things are starting to look really bad at AIG FP. Is entering into a bizarrely risk-insensitive comp arrangement never before seen in a trading organization a pure cash-shovel to insiders before the end comes or a desperate but good-faith attempt to stem departures and save the organization? That's the factual issue that is fought out by smart lawyers in the courtroom of my dreams.
If I read this right, he's saying: might have seemed like a good idea at the time: ex ante as distinct from ex post, as the law professors love to say. Seems to me a tenable position might even be right but I wouldn't want to be the one assigned it to an angry mob armed with pitchforks and rotten vegetables.

THIS IS AN EX PARROT!

Mr. Praline: 'E's not pinin'! 'E's passed on! This parrot is no more! He has ceased to be! 'E's expired and gone to meet 'is maker! 'E's a stiff! Bereft of life, 'e rests in peace! If you hadn't nailed 'im to the perch 'e'd be pushing up the daisies! 'Is metabolic processes are now 'istory! 'E's off the twig! 'E's kicked the bucket, 'e's shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisibile! (link).

THIS IS AN EX PARROT!

Two Quick Cents' Worth on the Bonuses

Vagrant thought: much is made of the fact that the AIG payments and their ilk, called "bonuses"
are nothing of the sort--they are just a form of compensation, alluring to the risk-averse skills investor who wants his money come hell or high water.

The question arises: why would anyone develop such a goofy compensation scheme? I suspect the obvious answer is that it is a fraud on the investing public: we pretend we are giving pay for performance whereas in fact we are doing nothing of the sort.

For a non-exclusive secondary answer, I suggest this: it's psychic income. All these macho poseurs (I'll bet the list is north of 97 percent men) like to think that they are Crocodile Dundee, whereas in fact they are just green eyeshade types, sleepy heads instead of killers. By calling it a "bonus," we pretend they are real risk-takers and they can get the same kind of high your eight-year-old gets when he puts on his Superman cape. Translated: to get them to take real risks, we'd have to pay them even more.

Sleepy Heads and Killers

Yes, this about gets it:
“There’s two kinds of brains you need to run a good business. Sometimes you need “Sleepy Heads.” You know, the ones who pick up the money from the crews; the ones who make sure everyone got ammo; the ones who just do their job, don’t cause no trouble. Then you need bona fide Killers. The Killers like watching you bleed to death while they are eating a plate of ham and collard greens. You understand?”

“What does that have to do with the financial situation?!” I asked, exasperated.

“See, by the time there’s a crisis, the Sleepy Heads are already gone. They’re the ones who keep the books, so they know where the money is, and they know when trouble starts. So they usually get out first. But at this point, in most of these companies, all you got left is the Killers. They’re the ones who like hanging around, who ain’t got no home life, who just love the blood, and the guts, who love the pain!”

“Again,” I interrupted, “what does that have to do–”

“Never lose your killers. Never let them go, because you’ll need them when things gets better. You can always get the Sleepy Heads back. They’re hiding under a rock anyway. But the Killers! Those folks are hard to find, so you got to give up the money. Pay the ones at the top, the one’s who like to smell blood. Let the Sleepy Heads go, but keep the Killers.”
In law practice, we call these guys "rainmakers." There's more, but this was the best part (link).

Rush and AIG

Leftbloggers are full of outrage at He Who Must Be Obeyed for coming to the defense of the AIG bonuses. My attitude is one more of bafflement--what the heck does The Big Guy think he can accomplish by aligning himself with a gang of knaves whose popularity right now is about the same as that of Fritzi the daughter-raper?

I know: if I'm so smart why ain't I rich? Rush cries all the way to the bank, and there is little evidence that he would profit from advice from me. But I do remember this: back in the Bush I years, Rush went all squiggly giggly over a president who let him sleep in the Lincoln bedroom. It was power of a sort, but it's worthwhile to remember that it also inflicted the worse curse the classs clown can fear: it made him boring. Slander, mockery, scabrous personal abuse--that's politics in the emerald city. But comforting the comfortable wins you nothing but a big yawn.

Update: Anna Gelpern, who does not have a talk show, makes a sophisticated version for the case against abrogation.

Tuesday, March 17, 2009

Bernie's Law

Do what you love and the money will follow.

Oh yuk yuk, or just oh yuk.

Market Returns: Fun Fact of the Day

Market datapoint of the day: used to be said that if you stayed fully invested in the stock market—reinvesting all dividends, then over the long pull you could expect an annual yield of about 9 percent. So figure 30 years: (1.09)^30=13.268. Peg that number at the peak of the Dow, October 9, 2007. But the market has fallen by half since then. So, figure 13.268/2=6.634. Take the mean annual return from that new lower rate: 6.634^(1/31.5)-1= 6.19 percent (31.5 because we are 1.5 years past the peak).

But we have to account for inflation. Go to the Bureau of Labor Statistics Consumer Price Index data. Take the latest number: 211.143, for January, 2009. Divide by 58.5 the number for January, 1977. You get 3.61. Compute 3.61^(1/32)-1 and you get an average annual inflation rate of 4.09 percent.

Now divide 1.0619 by 1.0409. You get 1.02016. So, a 2 percent average annual return for being fully invested over 30+ years.

Oh, and I forgot about taxes…

[For comparison, the implied (real) return from 30 years to the top of the market is about 4.7 percent. Which actually sounds a bit high to me. But then there’s taxes...]

And did I mention (yes I did, but I’ll repeat it)—invest $1,000 with Bernie Madoff. Collect 10 percent ($100) each year for 20 years. Then discover you cannot recover your capital. You still have an implied annual return of 7.75 percent (nominal pretax). Doesn’t make you happy though, does it?

Monday, March 16, 2009

Best Finance Post of the Weekend

Is from Steve Randy Waldman. Don't ask me to summarize, just go read it, and the comments.

Be Careful What You Wish For...

We idled away a bit of Portland time with a few rounds of "ask for, hope for settle for," cf. link. My friend David suggests it would make a great name for a law firm, "Good morning, Askfor, Hopefor, Settlefor, how may I direct your call?"

David also offers a more accessible trimmed-down version, merging with "whom do you want to play you in the movie?" David revises to "whom do you want, and who do you fear?" David's own suggestion: want John Cusack, fear David Spade. For myself, I guess I'd have to say: want Gene Hackman, fear Ben Gazzara. Hm, is Bob Hoskins available?

Unhappy Portland?

A couple of notes after a quick (and pleasant) weekend visit to Portland:
  • The unhappiest American city: so says Business Week. Can this be right? Bollocks, say my hosts, but they have a reason: evidently Portland is the mother church of cheap/free and readily accessible mental health care. Who said that the doctor's definition of a healthy patient is one whose case hasn't been worked up yet?
  • Theater: I took in a production of Oscar Wilde's Importance of Being Earnest on the Portland Center Stage at NW 11th and Counch (link). It was agreeable enough in itself but what stuck in my mind is that these people--the audience, I mean--are clean. Not pathologically clean, but pleasantly so--reasonably scrubbed and trimmed and manicured, with mostly wrinkle-free slacks and jackets.
I found this surprising. I don't think of Portlanders as depressive, but I do think of them as scruffy. Evidently I have been spending my time in the wrong part of town (southeast, between Hawthorne and Reed College). It's a funky and relaxed environment, but with no shortage of grunge.

My friend Virginia clarifies: the theatre is in the Pearl District which is to begin with mostly upscale. And since customers don't have to walk far from their condos to the box office, they don't get quite so beaten down as they would if they really had to cope with Portland's perennial grey damp.

Today's Treasure: The Gintis Reviews

I've just wasted far more time than I like to think of with the find of the day: Amazon book reviews by Herb Gintis (link). There are 180 by current count, which puts him at #721 in the Amazon "new reviewer" rankings, but don't let that distract you: I know there are a lot of people in the rankings higher or lower who aren't as interesting or readable as he. With or without his regular collaborator (Sam Bowles), Gintis must rank as the most interesting "radical" economist working today, although he's far too original and venturesome to fit into any "radical" template that you could possibly imagine (he has kind words for Thomas Sowell, and he seems contemptuous of Paul Krugman). He took his first degrees in math: he does not seem to fear quantum physics. He seems to be mainly interested these days in some form of "behavioral economics," perhaps together with matters concerning the hard-wiring of "moral" behavior.

Gintis appears to have entered the fray on March 6, 2000, discussing a book on rape. His first reviews were mostly brief, some only a couple of sketchy paragraphs. But he seems to have found his footing: very soon he moved expanded into full-length essays. They're a pleasure; they're free, and they're at your fingertips right here.

AIG to Us: Give Us the Dough or the Economy Gets It

Kedrosky links to what he characterizes (aptly) as "the AIG blackmail note"--nine pages of reasons why we just gotta be their bitch (link). There's a grain of corn in this dunghill, but it beggars all imagination to consider how much of it is almost totally spurious.

They open with a little Mrs.-Thistlebottom lecture "inter-linkages and interdependencies...which could potentially bankrupt or bring down the entire system or market" (Oh, thank you, professor! Now I understand!) They go on to parade a seemingly endless list of horribles that will befall us if they do not get their way. They do make some perfunctory efforts to say that they could peel off some of the viable assets (HEY THAT'S MY WIFE'S PENSION FUND!). But they make it clear that the whole enterprise is fraught with perils that we (or at least, those of us without eight-figure bonuses) cannot possibly expect to comprehend.

There are a few odd and I suspect inadvertent concessions to reality along the way--like when they refer to their "business model" as "a sprawl"--did they clear that one with public relations? and they declare that it has "many inherent risks that are correlated with one another"--as if not noticing that it was they who created such a shambolic juggernaut to begin with ("I've got it, chief! Let's build a business with many inherent risks that are correlated with one another!) And they acknowledge, right there on page two, that it all began with "an over-reliance on US residential-backed mortgage securities" (Bingo!)

They also say that "In the fall of 2008, the Federal Reserve and the Department of Treasury determined that the systemic risk of a failure of AIG was so great that they should provide support by injecting liquidity and equity capital into AIG." You know, I wonder. Okay, I grant that the government did take an equity stake in AIG. But I think a more accurate sentence would have read: "In the fall of 2008, the people in power decided that it had to do everything it could to salvage the wreckage of this ill-conceived folly, but minimal disturbance to the interests of powerful stakeholders whose wrath they did not wish to incur."

The phrase "running dogs of the capitalist system" comes to mind. Boy if we don't have a 100-percent bonus tax by Friday, I'm going to join the guys who are heating up the tar pots.

Thursday, March 12, 2009

Traveling

Off traveling for a couple of days. Maybe post, maybe not. Back Monday.

Academics and Journalists

These folks are making an honest effort to sort out the issues that cause friction between academics and journalists. I've been both an academic and a journalist, so let me add a tidbit: specifically, there is all the difference in the world between two different types of journalist jobs. One is the guy (guilty, your honor) who calls up up on deadline and just wants you to utter a memorable sentence--and may have the sentence prepacked to slip into your mouth.

The other and very different character who will call and talk for one-two-three hours at a time as they really try to make sense out of something. You can lose patience when you've got bluebooks to grade and kids to feed, but we ought to regard these guys as the journalists of our dreams with the time, the patience and the resources to do their job right.

There have never been many. Used to find some of them at the Los Angeles Times. Wonder where those guys work now?

For All You Do-It-Yourselfers

A raccoon butt shelf.

Something I Didn't Know About Triple A

I see that GE has at last lost its triple A. What I didn't know is that triple A basically is m(strike that, "was") the triple A bond market as a whole.

Economics: Who's Using Whom?

My friend Ignota was gearing up to teach a course on law as it affects the dispossessed. She put together a formidable coursebook, with lots of snippets from ecnomists. I teased her about how the economists were taking over the world.

"No, no," she said, "it is the world that is taking over them."

I hadn't thought of it that way before, but I think that she is onto something. I remembered out conversation this week when I read Castles, Battles & Bombs, billed as teaching us "How Economics Explains Military HIstory." It's a rewarding read, full of thought-provoking insights on the place of the military in a world of limited resources. But I don't think it is the book the authors thought they were writing. In particular, I'm not sure it is really about "economics.

Take what may be the most readable chapter: an account of intelligence and counter-intelligence in the Virginia campaigns of the civil war. It's great fun, bringing together a wonderful bunch of illustrative insights, several of which I'd never heard before. The authors present it under the rubric of "asymmetric information," which certainly gives it an "economic" flavor. But there is nothing in here that is any different in kind from what you find in John Keegan's excellent Intelligence in War or, I suspect any other standard discussion of military intelligence.

Similarly, a chapter on the strategic bombing of Germany bears the label of "Diminishing Marginal Returns." I get the drift: the question is whether the bombing was worth the effort, and whether more bombing was worth more effort. It's another rewarding read, including (ironically?) a lot of seemingly sophisticated discussion of military-strategy issues that don't seem "economic" in any recognizaable sense at all. The nominal topic--was bombing worth it?--is important, but it has been addressed at agonizing length elsewhere and I doubt that the authors can claim to have added much that is new.

Perhaps a more explicitly "economic" account emerges in the chapter on the condottieri who made so much of a nuisance of themselves on the Italian peninsula in the Renaissance. Here the authors do seem to have found a useful organizing theme. And perhaps an economist is specially sensitive to recognizing or understanding a world without strong government, mostly governed by deals. But there really isn't much of anything by way of special insight in their analysis of individual contracts.

Maybe the most telling of all is their account of the Force de Frappe--the French struggle to make itself a nuclear power. Once again, it is a worthwhile read: an informed narrative of the politics of the French nuclear initiative and its long, slow demise. But if ever there was a political figure who did not fit well into an economic model, it would be Charles De Gaulle, the very prototype of a cultural nationalist. As any good economist would have to recognize, there really is no economic reason for an independent France, separate from Germany and half a dozen smaller countries on the European landmass. The reasons are rooted in language and related cultural characteristics that go back into the mists of time and remain virtually invulnerable to economic analysis. The authors come close to conceding as much: about the only thing "economic" they can think to say about the Force de Frappe was that it cost money, and France had to make choices. Not a lot for such an effort.

I suppose it is a bit heavy to lay so much blame on the authors of this book, for all they are doing is following an impulse that appears to be prevalent among economists today. Was it not Gary Becker, truly an elder of the tribe, who declared that economics now should be regarded as not just a science of commodities, but rather a general inquiry into human behavior.

Well, maybe. In a way, I can't blame them. Economists have to find something to win them degrees and professional advancement. And as Merton Miller (I think) said in this context: all the low-hanging fruit has been picked. So we are left with the task of (a) attaching queer or unexpected interpretations to familiar human events; (b) tirelessly searching the data for odd ounter-examples; or (c) claiming the turf for an economics that risks becoming content free.

So maybe Ignota was right. Or maybe we have what Piaget saw when he considered the relationship of psychology and mathematics: that someday, psychology will indeed merge with mathematics--but neither mathematics nor psychology will look the same after that happens.

--Jurgen Brauer & Hubert Van Tuyll, Castles, Battles & Bombs (2008)

Wednesday, March 11, 2009

Julia and the Five Stages

Julia Roberts is a superstar, but her box-office reign might be over.

(link). Recall the Mary Astor rule:
  • Who is Julia Roberts?
  • Get me Julia Roberts!
  • Get me someone like Julia Roberts!
  • Get me a younger Julia Roberts!
  • Who is Julia Roberts?
Update: The Slate ladies are not impressed.

Adam Smith and the Curse of Fame

Mark Thoma showcases a useful Amatrya Sen piece on the caricaturing of Adam Smith. It isn't--our shouldn''t be--exactly news, but it is gratifying to see it so well and so influentially set forth. I admit it took me a long time in life to see Smith in context and some detail, and to recognize that he was a far more interesting figure than the cartoon--even longer to grasp the extent to which he was truly a revolutionary (proposition, we really can't imagine what the conception of public life must have been before Adam Smith).

But it sparks a more general reflection on the number and variety of thinkers who are more or less travestied in the nonspecialist mind. Not all of them, of course: I don't suppose anyone goes around lamenting that "the masses so misunderstand Saul Kripke." But Nietzsche--surely as much mishandled as Adam Smith. And, I would add, Hegel. In both cases, you have the fatal (if largely undeserved) taint of Naziism. I'd say that Hegel had the added misfortune to inspire the ire of Bertrand Russell, a superb expositor with a non-trivial following among those who never read philosophy of any other kind.

But the real problem for all of them arises in the realm of "save me from my friends." Maybe the worst crime you can attribute to any of those named is their apparent capacity to inspire so much vulgar silliness in others. This fact alone is enough to distinguish the likes of Smith, Nietzsche, Hegel, from others who may be misunderstood, but who don't have that much of a popular fan club to begin with. Schopenhauer, for example: a lot of people know that he is "a pessimist," which is actually true enough. They also think seem to asume that he is a terrible writer which is wildly untrue, but it doesn't take on the character of a cultic error. Most people who have never read Machiavelli get him wrong. Those who do read him find that he is a fascinating, if somewhat mysterious, figure--but not many on either side are going around wearing their Machiavellian heart on their sleeve.

There must be lots of others. I've done only the one-page treatment of a dissertation here. I'm sure I'll think of more myself before the day is out. For the moment, let me excerpt one semi-cryptic comment from Thomas' post: "Kind of a 'Jesus was a Jew' moment for free marketeers." Un, do I get that? Not sure that I do, but in any case--yes, him too.

Tuesday, March 10, 2009

A Cheap Shot At Individualism

Mark Kelman (following Hilzoy, following Gene Weingarten at the WaPo) offers thought-provoking ruminations on the baked-baby-in-the-back-of-the-car problem. A key point: the people who do leave their children to die in the heat seem not to be moral monsters, so much as decent people who make a horrible mistake. But then he goes off the rails:
American individualism, the great-granchild of the Puritan conscience, encourages us to make that sort of mistake. Individualism as a moral principle is helpful in getting people to take responsibility for their own actions. But individualism as an explanatory framework is harmful insofar as it leads us to try to fix the wrong problems.
Wait a minute, whoa there, big guy. Point me to an "individualist" (or anyone else, for that matter) who says "we want you to be more individualistic so as to increase the likelihood that you will accidentally kill your children. I suppose if he had given the matter another 10 seconds' thought, he might have reworded the sentence so as to say "the culture of individualism facilitates this kind of mistake. This proposition, whether true or not, is at least not loony.

As to whether, in addition to being not-loony, it is also true: I'd say that is a tougher call. I assume he's thinking that "individualist" would, as an entailment of his individualism, oppose the installation of $40 warning devices to reduce the likelihood of fatal error. I don't see why this is so: I would think that any self-respecting "individualist" would recognize that the primary focus of our concern here is not the parent who makes the mistake but the poor kid slowly and miserably dying in the back seat. Protecting an innocent victim from somebody else's error doesn't seem to me to raise an issue of individualism at all.

Self-styled individualists often do oppose supposed "Nanny state" initiatives to protect us from our own folly or stupidity, though I am not certain that this posture is an indispensiable component of an individualist view. People who do oppose these initiatives often suggest that these mandatory protective devices often do much more to enhance than to reduce the risk of the evil they seek to prevent, in that they serve to impair (not individualism per se but) a sense of individual responsibility. Again, they may or may not be more or less right. It's a contentious and I think not an easy question. But it's at least as respectable a proposition as the one that Kelman did not (but meant to?) experess.

Obama the Pragmatist

The ever-clearheaded Charlie Cook makes better than I can a point I have been trying to make for a while (link): Obama is a pragmataist, not a liberal (nor a populist, nor even a centrist) who is likely to have major headaches from Democrats alongside those he gets from Republicans. "Take, for example, his economic policy team," says Cook--"nary a Robert Reich in the bunch." Ooh, that's gotta hurt, but I must say that for Reich I might have substituted Joseph Stiglitz. Stiglitz seems to me to be a pretty bright guy--Reich, more or less of a shadow of Paul Krugman.

[There's a round of the old "ask for...hope for...settle for" game--Ask for Paul Krugman, hope for Joe Stiglitz, settle for Robert Reich.]

I do wonder how long Tim Geithner will last though. But then again, I didn't think this guy would last, either.

Markets for Anything: Ethanol

I think the Wichita bureau did indeed make this up, but I will repeat it anyway:
I think there is a market here for our ethanol. If I recall correctly (i.e. if my powerful memory isn’t making this up), someone loaded a tanker of ethanol with a bit of food color and scent and shipped it to Russia as aftershave; upon arrival, it was redistilled to get rid of the color and scent and sold as vodka.
Oh har de har. For more on the Russian vodka market, go here.

Monday, March 09, 2009

Will Scheme for Food

I will try to suppress my natural instinct for schadenfreude at the spectacle of an unemployed David Addington. The more noteworthy part is that guys like Addington and Alberto Gonzales apparently cannot find jobs. With Gonzales I suppose you could write it off to sheer blithering incompetence but I don't think anybody ever doubted that Addington was really smart in an evil sort of way. Gonzo suggests it's a tough job-market thing, but could it be a nonprofit fundraising crisis sort of thing? I should think that Hover, AEI, Heritage, have opened their hearts to underutilizaed assets far more toxic than Addington. And after all those years of snooping, wouldn't he have enough dirt on somebody to open a door?

Must-Reads

While I grade midterms:
  • Yves Smith decomposes Alan Blinder (and provides a much better-than-avaerage account of "nationalization" in the bargain).

Reflexivity

Chez Buce is enjoying a readaloud of Raymond Chandler's The Big Sleep. I defer comment until we finish, except for the brief observation that it is coffee-through-the-nostrils funny, and intentionally so. And this:
His voice was the elaborately casual voice of the tough guy in pictures. Pictures have made them all like that.
Ah, a favorite theme of mine: art imitates life imitates art. I remember being in Canterbury Cathedral a few years back for a Christmas music service. There was a canon (I guess) who looked for all the world like he stepped right out of Mawsterpiece Theatre. I had to wonder: was MT imitating the canon? Or did the canon get his job because he looked the part?

We've all heard about how mobsters study CD's of The Godfather or The Sopranos to get the right effect. I guess the only thing new is the insight that it's not new: evidently Chandler understood it in 1939.

Sunday, March 08, 2009

A Simpler Time?

Kudos to Frank Wilson for showcasing Edwin Muir, an old Underbelly favorite. Wilson triggered my memory of "The Difficult Land," where, inter alia, Muir says:

And once in a lifetime men from over the border,
In early summer, the season of fresh campaigns,
Come trampling down the corn, and kill our cattle.
These things we know and by good luck or guidance
Either frustrate or, if we must, endure.
Muir's poems appear to be out of print, at least in the U.S. (but here is a UK link)--he survives (along with his wife) as a translator from the German, mainly of Kafka. There is this web collection of the poetry--a respectable sampling but none of my favorites. And make an effort to seek out his extraordinary autobiography, a neglected classic.

But as to the poem. I hadn't read it in a couple of years My current thought: only once in a lifetime? Lucky man.

Live Free and Face the Wrath of the Historic Commission

Ha! I suspected as much! One of my old New Hampshire friends, commenting on cellar holes, reports:
God forbid that anyone here in [this lovely, high-income New Hampshire town] remove a stone from one of the many stone walls. One fellow put up a multi million dollar home, and he got so much grief because he opened up a slot in the stone wall for his driveway. WOW, the Historic Commission made an exception., after a long battle. We also have a big thing here about cutting down trees along some of the very narrow dirt roads, that are a hazard, and especially this past winter when he had an ice storm and the trees were hanging down over the roadway.
To repeat, ha! This is New Hampshire we are talking about, home of Live Free or Die, the state where no one over the age of consent has to wear a seatbelt, and every motorcyclist has a constitutional right to splay his brains (if he can find them) on a public highway. But apparently if you try to get the icicles out of driving range, it's all "touch not a single bough."

It's a hobbyhorse of mine: there really aren't any libertarians. Some may come closer than others, but for every one, we can find one or a hundred issues on which they are perfectly willing to slam their tastes down someone else's throat.

I can hear the protests now. But the stone wall is different, they will say, because this is one place where your tastes affect me. Well, of course they affect me. There wasn't a Mrs. Grundy born who couldn't make that argument, and with a perfectly straight face, about anything that got her blood up. Or they'll say: but this time it is money, you are damaging my property values. Well, since when did vulgar, venal property values trump something so sacred as our God-given right to cut a gap for a driveway?

There is a deep-seated paradox here, built into the fabric of our perception of anarchism. Nobody wants Hobbes' anarchism, "solitary, poor, nasty, brutish and short." What we want is a chance to impose values so self-evidently (to us) right that we don't even know they are being imposed.

So, enjoy your stone walls, New Hampshirites: best way I can tell, it was my ancestors who by great sweat and effort rolled them into place, and is nice to know that somebody wants to preserve them. But don't give me that dog twaddle about "liberty." You're as tightly wound a society as any I know.

McCarthy: Can He Happen Again?

A final (I hope) thought about Joe McCarthy. I've had a bit of amiable off line chat about how he compares with the drug abuser with the boil on his butt. It's an entertaining question, the moreso because the answer is unknowable. I'd say the current incarnation is on the whole smarter and more talented: it is amazing how little, on close scrutiny McCarthy had to offer. The big guy is (if you don't mind mean) actually funny. I don't recall McCarthy ever getting so much as a chuckle.

Which naturally pushes on to the next question: Is the big guy another Mussolini? I'd say no again. As I argued earlier, Mussolini's success is perhaps better understood as Italy's failure: a green, raw, untried polity, a straw house to anyone who could huff and puff.

And for all our troubles, we are a much more stable, durable and resilient today. So even if the big guywanted to, etc. But my own guess he doesn't particularly want to: he realizes that it is a whole lot more fun and less work to stand outside yawping and throwing fecal matter than it might be to bear any serious responsibility. Moreover, assuming he cares, my guess is he has access to a lot more bodacious nookie than he would in the prison called the White House. Remember what happened to that other big guy...

Two Quick Points About Slumdog Millionaire

  • It's good. Very, very good. But I can't add a lot to standard reviews so I won't try.
  • But one thing I suppose nobody else is likely to dwell on. I have never (on film) seen an alpha male treat his lady with such proprietary contempt as you get from Mahesh Manjrekar playing the thuggish Javed. No, wait, I have seen it once before: in the other great Bombay movie, Salaam Bombay. Coincidence? Maybe. I'm certainly not saying there is anything specially Indian in proprietary contempt: I am sure it happens the world over. Maybe it's something in Indian movie making.
Update--Well, That Too: "...manages to be at once garish, extremely violent, gaggingly photogenic, too loud, sentimental and exploitative." Malcolm Ross on the "Letters" page of the London Review of Books, 26 February 2009.

Saturday, March 07, 2009

Sophie Gets Philosophical ...

...about being spayed:


If it were me I(!), it would take a lot more than a plastic collar.

Brad's Comments

Josh Wright and Steve Horowitz (and commentators) are bent out of shape with Brad DeLong for deleting (or editing) comments. I suspect they've got a point; I've been deleted a few times over the years. Couple of times I figured it was a judgment call, and Brad was probably right. Couple of times, it seemed to me more like outright thought control but I figured it was his blog and not a big deal.

But Josh and Steve and I are not the only ones I've heard make this point. And just in general--well, put it this way: DeLong's is a great blog. it almost always in the top ten in my aggregator Trendline (right now it is third place in number, first in content). Unfailingly interesting, challenging and thought-provoking.

But let's face it, Brad is a rigid guy. His ferocious attacks on those with whom he disagrees are legend. But also self-defeating. I mean, discretion, baby! It is one thing to expose the bankrupt pretentions of the Washington Post Ombudsperson. And beating up on George Will is always the Lord's work. But to come out with guns blazing against every ink-stained mediocrity who has a bad day--after a while, it takes on the unmistakable aroma of the Boy Who Cried Wolf.

So, Brad, baby! This is an intervention! This is a friend speaking! Lighten up! You've got a perfect right (perhaps an obligation) to delete the vicious, the vulgar and the hollow. But interesting people who disagree with you: look, just stop it! You'll enhance your street cred and make an already-riveting weblog even more indispensable than it already is.

Nobody Paid Me to Say This: Dropbox

I'm in love with Dropbox. It's the cutest computer doohickey I have come across since I don't know when.

I work on (at least) two computers: desktop office and peripatetic laptop. I'm always having to cart stuff back and forth. I used to haul around boxes of 5.25 disks, then itty bitty disks. Then I would mail stuff back and forth, and then my little necklace USB key.

You can guess all the downsides: I'd lose them, I'd leave them in the wrong place, I'd load up inconsistent versions, blah blah.

Dropbox comes as near to protecting me against myself as anything I can find. You download Dropbox to both computers. You load it up with the files you're working on. Then Dropbox updaes automatically every time you boot up. There's a free version that gives you two gigs. For pay, you get up to 50G. I can't imagine needing the pay version: to keeep my life simple, I want not to be working on too many files at the same time.

I see it is still in Beta. If there is a catch, I haven't found it yet.

Oh: and don't confuse Dropbox with Mydropbox. That latter is an plagiarism policing program. Looks fine, but it's got nothing to do with my life.

BTW I also just lately discovered Evernote. That one is cool, too, although perhaps not quite as dazzling. Evernote did allow me to phase out Google Notebook--which, I gather, Google is going to phase out, too.

One more plug: I learn about this cool stuff from Lifehacker. Their "general living" stuff is pretty hokey, but their computer tips are mostly pretty cool (I do wish they would tell me what to do with the unstable WiFi on this &*^%! Sony Vaio, though!).

Place Your Bets, Folks

Iceland?

Or Detroit?

Link.

But At Least Her Name Is Christian

New evidence of what I've suspected before--that, except for purposes of rhetoric, Sarah Palin is not particularly committed to the Christian conservative agenda (link).

So, What Do You Call 'Unlucky'?
(Oh. Right, Got It)

If it’s lucky, MySpace is the new Yahoo.

A 'Government Put' on Bank Debt:
Sorry, I Still Don't Get It

The very smart guys at Baseline Scenario say:
Once investors figure out that bank debt is not safe, they will refuse to lend to any banks, and we are back in September all over again.
Review the bidding: this is "regular debt" we are talking about, not guaranteed deposits. These are creditors who loaned against a limited liability entity, with the foreknowledge that their claim was limited to the value of the assets. Or was this their foreknowledge--could be rather that they loaned, thinking, "not to worry, we've got a 'government put'--if anything goes wrong, the taxpayers will just bail us out."

Did they in fact? In the first place, I don't think they did. In the second place, I would like to think they were fools if they did.

In either event, why should it affect new lenders? Even if the old lenders were somehow misled, the new lenders would come in knowing that they had no such guarantee--and price the product accordingly. Is that a problem?

Or is it the policy of the sovereign that (bank?) debt never bears downside risk?

Friday, March 06, 2009

Nelson Weirdness

From time to time I like to get out my microscope and check the content of my readership list. Sometimes it is instructive but mostly just mistifying. For example, over the last couple of days, at least half of my hits of been people seeking the picture of Nelson Muntz that I ripped off from the Simpsons a few days ago (link). Why Nelson? And why me?

Ike and McCarthy: Did the President Drop the Ball?

Afterthought on McCarthy: I've long heard--and, I guess, believed--the assertion that Ike was to easy on Joe: that through cowardice or laziness (or perhaps because he secretly approved), he did not move as quickly or effectually as he could have.

I recognize that our 1950s view of Ike as a golfing doofus was deeply flawed. New scholarship (most notably the work of Fred Greenstein) has made it clear that the doofus posture was largely an act, and that Ike was deeply involved in every important issue--and that he was far cleverer and subtler than we thought.

What more have I learned now from reading David M. Oshinsky's comprehensive biography of the Senator? Couple of things. One, it seems beyond dispute that Ike detested the Senator: that he saw him as a vulgarian lowlife who had no legitimate place in public life. He did, apparently, have a gnawing sense of satisfaction at the way McCarthy was embarrassing the Democrats. But it was far subordinate to a domnant sense of loathing.

So why didn't he act more assertively? Did he fear McCarthy? Oshinsky doesn't show any evidence of fear, and hey, the guy who defeated Hitler does not show any high level of cowardice. Apparently Ike was stymied for a long time as to how to deal with McCarthy. In particular, he was haunted by the example of Truman, who hads personally taken on McCarthy, to Truman's cost and McCarthy's benefit. Ike didn't want to be thrown into that briar patch.

When he did see an opening, he seems to have done whatever he felt he could to make it happen. In particular, he was delighted with the Army-McCarthy hearings: he foresaw that they would be the ruination of the Senator and he was exactly right.

So Oshinsky paints a more charitable picture of the President in this instance than the one I entertained in my youth. He's largely convincing. Yet one can't escape the notion that it might have been otherwise. I think Ike's case has to be laid in part to a failure of imagination, or a lack of political skill. It is hard to believe that a Lyndon Johnson, or a Bill Clinton--or a Richard Nixon--would have allowed himself to stay boxed in for so long.

There's also the particular case of George C. Marshall. McCarthy's attack on this architect of our victory is one of the most inexcusable episodes in a mean and ugly career. The matter came to a point during the 1952 campaign. Ike had a chance to speak out. Ike said nothing. A charitable reading is that you do what you have to do in politics; Ike's first job was to get elected, and speaking out might well have cost him votes.

Still, if anybody counts as an unsullied great American, I'd say Marshall has to count. More than that, he was Ike's mentor: without Marshall Ike might have retired to obscurity as a colonel. Whatever else we remember about Ike, we'll have to remember him as the guy who did not speak up for Marshall when he could have?

New Hampshire Cellarholes

My mother had a recurrent fear that I would fall down an abandoned well.

This was not irrational: the time was the 1940s; we lived in rural New Hampshire, a country thick with abandoned farms. Most of the structures had been reduced to mere cellarholes, filled with attractive nuisances of a sort that can easily snare a 10-year-old. The wells themselves were often lightly boarded over with a readily removable rock on top of the boards. We kids knew they were a menace and I always kept my distance. But there they were, a somber reminder (as it seemed to me then) of somebody's disappointment and failure.

A bit later when I came to be curious about the history of these old places, I developed the notion (never systematically informed) that most of the abandonment was recent, perhaps in the Great Depression, certainly since the beginning of the (20th) Century. I pictured despairing toilers giving up on the stinginess of short growing seasons and rocky soil. Now here is Betty Flanders Thomson with a more textured account--rather, a surprisingly different story:
Contrary to what many people believe, there is nothing inherently wrong with the ferility of New England's soil--what there is of it. The highest yield of corn per acre produced in the country until recently was produced in Connecticut. ... [T]here were rivers and lakes that washed some of the soil out from among the rocks and assembled it into some usable masses here and there. But relatively few of these patches are large enough to do more than provide turning space for a small horse-drawn hayrake.

It was the competition from cheap land, level and clear enough to allow the use of large farm machinery, that put the pinch on New England agriculture. When canals and then railroads came along and provided low-cost transportation for bulk freight from the West, the bottom fell out of the old farm economy. As a result, hordes of Yankees gave up and went off to populate the new lands; and it is not always as easy as one might think to tell an old-stock Ohioan or Iowan from an old-stock Vermonter.

Defection from the hills received a further push from the expansion of water-powered industries, and this in turn was enormously stimulated by the Civil War. People who did not go west moved down into the mmushrooming factory towns nearer home. While the farmer's daughters went to work in the mills, his sons were off to fight in the war. ... [L]arge numbers of young men never returned to the hill farms.

By the 1870's farms were being abandoned wholesale ... . Deserted farmhouses became increasingly conspicuous in the landscape, and soon it was apparent to even the least observant that a great change was taking place in rural New England. ... When a family decided to leave, there were few takers for the farm. Many simply moved out and, after a last lingering look at the old home, shut the door and went away, leaving the place to the forces of nature.

With no one on hand to repair a leaky roof or replace the first broken window, it took only a few years for an abandoned farm house to fall into decay. ... A man from southwestern New Hampshire once said that when he was a child in 1865, he knew of nine old cellar holes within a mile of his country school. In the same area in 1887 he counted twenty-three of them.

--Betty Flanders Thomson, The Changing Face of New England 24-6 (1977)
Ah. Oh. Well, two things. One, apparently my chronology was off by more than a generation--apparentely farm decay persists a lot longer than I thought it did. And two, the story sounds much more cheerful and optimistic--not so much pushed off the farm as drawn into a new frontier. I suppose one reason for my negative view of things is that I saw the ones who stayed home who, in the nature of things, were probably the pessimists ("They'll never make it! It'll never work! They'll be back!") Or even worse, I saw the ones who did not make it and did come back, with all the sadness and disappointment that may imply. Now that I think of it, I've seen a paper trail that I can draw a link to Laura Ingalls Wilder, the chronicler of pioneer life, from the ancestry of both my New England grandparents. But I had to grow up, and move away, and buy the book, before I ever heard her story of what happened after they left.

But the wheel turns. My father lived in New England all his life. About 1970, he saw a bear in the back of his three-acre lot. It was the first he had ever seen in the wild. I suspect you could have bought the whole town back then for the price it would cost you to buy just the three-acre lot today.

Final note: Thomson's book is a treasure, but so far as I can tell, it is out of print (the only Amazon links are in Canada and Japan). It richly deserves to be brought back into print. NYRB Classics, are you listening?

The Real Lolita?

As lit stories go, I'd say this one is pretty remarkable. A student in Texas turns up what appears top be the "reality" behind Nabokov's Lolita (link).

The Next Prime Minister?

I count Britain's David Cameron among the fairly large cohort of politicians with whom I would not want to be stuck in an elevator, but I have the unsettling sense that he is indeed a man on the move:
Cameron has spent the last three years busily fixing his broken party, introducing new purpose, new policies, and even a new logo -- a green oak tree. Mixing traditional conservative issues like low taxes and small government with newer policy platforms focused on the environment and poverty, Cameron has revitalized the British center-right. His path has not always been straightforward ... [b]ut today opinion polls once again strongly suggest Cameron will become the country's prime minister at the next election, due at some point before mid-2010.
(Link). In fairness, I think you'd have to say that it's not so much that Cameron looks so good as that Gordon Brown looks so awful. Too bad about Brown, if ever there was a case of "be careful what you wish for..."

Thursday, March 05, 2009

Nationalization Again, and Again

Others have made this point but nobody seems to have put it across so I'll just have to do it myself (sigh).

We can and should "nationalize" the banks, but it need not scare us if we do it right. There is a right way, and a wrong way.

The wrong way: Mexico took over the banks and kept them for 20 years and made a royal mess of everything. Compare Italy: Mussolini nationalized some industries inthe 1920s and the Italian government still has them, where they serve as nothing but a milch cow for politicians, and a drain on GDP.

The right way: the way we do it all the time. The regulators swoop in on a Friday night. They spend a long weekend piling up the greasy pizza boxes while they try to get a fix on what is what. And they sell the asssets, free and clear of the liabilities--probably to a (former) competitor, who is happy to have access to all those customer accounts. Monday morning they reopen and nobody notices the new sign on the door.

This happens all the time with bank regulators. It is mandated by statute for stockbrokers under the Bankruptcy Code. It is nothing like a state-run cartel.

I said "free and clear." That means the buyer does not have to worry about the liabilities of the seller. We--the government, us, the taxpayers--sort that out later. Maybe some are guaranteed. Maybe some enjoy a de facto guarantee. Maybe others--the bondholders, the shareholders--just take it in the socks.

But that is how markets are supposed to work. If there are not enough assets to go around, then the shareholders get wiped out. And if there isn't enough to pay the creditors than they, too, do not get paid. But the assets are secured, and the system is put in shape to get rolling again.

There, everything clear this time? Good, now get with it.

Malagasy Adventure

Kid (grandson of a friend) is off on a great adventure (link). I will be watching, and cheering him on.

The Economics of Doubt

Well, I went to the famous-all-over-town DeLong-Boldrin stimulus debate at UC Davis last night (Pugilistics on the Putah? Nolo in Yolo? --wait, that doesn't make any sense at all). I must say I thought it a disappointment: I don't think either of these guys was at his best in this forum. Indeed, DeLong has posted followup stuff at his weblog this morning that is on the whole better than the main event (see e.g. link, link; cf. link).

But perhaps the most interesting touch was a couple of remarks from other economists in the followup sesion. Let's face it, one of the biggest problems with economists even for those of us outsiders who are actually sympathizers (that would be me) is their insufferable smugness: their off-the-rack assurance that they've got an answer to everything and the rest of us dolts should just shut up and listen.

I've got a bit of first-hand exposure: I've been teaching finance to law students for near onto 20 years now, during which time the presiding narrative has been one of almost uninterrupted triumph. Markowitz: big bang! Modigliani-Miller: blinding insight! Black-Scholes: oh brave new world! On and on and on.

Attentive observers, when they aren't absorbed in the comparative pricing of cat food, may have noticed that some bits of this model recently have seemed just a tad out of kilter: granting that we are in a train wreck, aren't these guys that were blowing the whistle and manning the signals?

It's one thing for the rest of us to notice the evident intellectual bankruptcy that seems to radiate from the wreckage of all this grand theory. It is quite another to expect any such self-awareness from the practitioners.

But I wonder if I didn't hear just a teensy bit of hesitancy from one or more of the participants in last night's commotion. Someebody even mentioned the Butler screed, now meming through the profession, which can read as saying that all macro is bunk. Someone--it may have been DeLong himself, my notes are fragmentary--said that macro theorists deserve an okay score for the history of the recent past, but that financial economists look pretty bad.

Well, whoda thunk it? I mean--sure, it's obvious to any detached observer that grand econ theory has a lot to answer for. Might be interesting to watch as economists try to figure that out for themselves.

Update: Lots more here.

Is GM a GC?

I see the auditors have raised "substantial doubts" as to whether GM can continue as a "going concern" (link). That should hardly surprise anyone who understands that two GM shares will cost you less than a latte. I would assume that GM stock is already trading as an out-of-the-money call option, with liabilities in excess of assets.

But I want to go under the hood of the "going concern" model I take it as plausible/likely that GM cannot service its current debt at its current income. But consider a favorite classroom example: LittleCo with liabilities of $100. Its assets are worth $80 as a going concern or $60 in liquidation.

The point is that the creditors may have an incentive to preserve the going-concern value even if it is not enough to service all their debt, and even if all old equity owners will be wiped out. So, just cancel old securities and issue new equity to old debt. Happens in bankruptcy all the time.

I could be wrong, of course: could be that GM is operating-insolvent, losing money on every deal even before debt service. In that case, Liq>GC, and the best thing to do is to put a bullet through the poor beast. This happens: I think it is a fair description of the old Penn Central company, an absolute loser as a railroad (without government subsidy) but a highly profitable real estate holding entity. But I doubt that this is the case with GM.

Who Called it "The Democrat Party?"

Swifty asks: who first called it "The Democrat Party?" He suggests maybe Joe Martin, Republican Speaker of the House But apparently it's earlier:
... Newt Gingrich did a lot to encourage the use of “Democrat Party” as a not-so-subtle form of denigration, but the practice began well before he arrived on the scene. During the Truman-Dewey presidential election campaign in 1946, for example, B. Carroll Reece, who was then chairman of the Republican National Committee, used the adjective “Democrat” as a weapon. (Truman, in turn, suggested calling the GOP the Publican Party, a reference to the tax collectors of the New Testament.)

So the use of the term “Democrat Party” is quite an old trick. In fact, researchers have found references from as far back as 1855, though at that time the term may have been inoffensive and not intended to show disrespect. The linguist Geoffrey Nunberg has cited negative references from the early 20th century, but he says the practice didn’t become “a Republican tic” until mid-century.
Source: Grammarphobia, though without any citation to sources.

Wednesday, March 04, 2009

The Never-ending Senate Race

As the great Coleman-Franken slugfest goes into its 156th round, it occurs to me to wonder if either side is studying what might be the most comparable precedent--the dustup between Republican Louis C. Wyman and Democrat John A. Durkin in New Hampshire back in 1964. Wiki refreshes our memory:
The initial returns showed [Wyman] defeating [Durkin] by 355 votes on election night.However, Durkin demanded a recount, which resulted in Durkin winning by ten votes. Governor Meldrim Thomson then certified Durkin as the winner. However, Wyman demanded another recount in which he prevailed by two votes. [The retiring incumbent resigned; the governor appointed Wyman to the seat; Durkin took an appeal directly to the Senate.] ...

After seven months of wrangling which included six unsuccessful Democratic attempts to seat Durkin, Wyman, having never been seated, proposed that he and Durkin run again in a special election. Durkin agreed, and the Senate declared the seat officially vacant Durkin won [the special election] handily, defeating Wyman by 29,000 votes--ending what is still the closest Senate election since the people gained the right to directly elect Senators with the passage of the 17th Amendment in 1913.
The result did save New Hampshire from the services of a flaming right-winger. Durkin for his part was defeated four years later (by Warren Rudman) and left little trace behind. I suppose there is a moral around here somewhere, although I can't say I know what it is.

New Age Classnotes


Here's something I learned today: my student illustrate their classnotes. So, if they are reading Pierson v. Post, they slap in a picture of a fox. Makes all the sense in the world.

(Attached picture appears to come from Fox v. Maus, which is a different matter altogether.)

Markets in Everything: Barbie

The Wichita Bureau found this, don't ask me why.

When You Go Fishing, You Go Where the Fish Are

Go to the website Scamvictims.com and the first thing you see is a warning that malefactors have been using the site name as a vehicle for, well, scams. This would be on the principle that one gullible enough to be taken before would be a likely prospect for a second act? I should think perhaps the reverse would hold: he who touches a hot stove once will never thereafter touch a cold stove. Or is it simply fool me once, shame on you, fool me twice, shame on me.

It's a Thought

Law.com, the perky upstart provider of law info, in an email hyping its services, mocks the British barrister's wig:
Did you know a wig can run $4,000 and that most barristers wear the same one for life? Eewwwww! Why not Groucho glasses, a funny nose and a thong?

Tuesday, March 03, 2009

Watch What I Say, Not What I Do

John Dickerson speaks the unspeakable in explaining why Obama doesn't stop Congress from spending like drunken sailors--he can't:
In another universe—say, the one Obama inhabited rhetorically last week—the pork contained in the bill might have been eliminated and turned into "savings." Obama's budget writers have done backbends to create savings, and cutting these earmarks would have been a way to take the high ground and resort to fewer gimmicks. And Obama, who has repeatedly called on us all to do hard things, might have taken on this hard task as a way of leading by example. Or, having run on changing Washington, the president might have decided to make changes to a bill that represents a lot of what he ran against.
Quantcast

Of course in that universe we'd also get Fridays off, books would be published on merit and the stock market would rise if we asked nicely. The reason Obama isn't going to veto the spending bill is that, despite his popularity, he is not a magician, as Chief of Staff Rahm Emanuel described so colorfully in discussing the stimulus bill with the New Yorker's Ryan Lizza. Undoing the bill's many pet projects would create a bloodbath, angering both Republicans and Democrats over what is, relative to his other requests, a small amount of savings ($16 billion if you remove the earmarks from the bill). Obama's efforts to prop up the deteriorating economy and transform energy and health-care policy will require a lot of political capital; he'd be crazy to squander it this early. So despite what Obama aides say, this supine posture is not about the past but about the future.

It would be great if Obama or his aides would say that out loud. Then they would be treating us all like adults, as Obama promised to. But that would also create political headaches: it's hard for a president who uses the language of moral absolutes to embrace relativity. Also, as a political matter, the public trusts the president to get them out of this fix, and according to polls, it doesn't trust his critics—so he's not likely to pay a penalty for not vetoing this spending bill.

McCarthy and Others

Rooting round for distraction from the tasks on the agenda, and always a sucker for stuff about the years of my lost youth, I was happy to divert myself with David M. Oshinsky's A Conspiracy So Immense: The World of Joe McCarthy (2005).

The takeaway point: it was so short. No, not McCarthy himself, but the age of McCarthy, his time on the world stage. It lasted from February 9,1950, the day of the notorious "Wheeling Speech" until December 2, 1954, the day of the Senate censure vote. That's a little under five years, bracketing the Korean War and about coterminous with The Complete Peanuts 1950-1954 Box Set--little more than a third as long as the nightmare of Adolph Hitler, well less than the time between now and Mission Accomplished in Iraq.

And at the end, there wasn't all that much to show for it. As many have said, as Oshinksy says, he never uncovered a Communist--perhaps never even a "security risk," for however elastic that term may be, it seems likely that every single person whom McCarthy outed either (a) was already identified; or (b) would have been identified in due course. He ruined a few lives, of course and disrupted countless others, but hey you know what they say about eggs and omelettes. Beyond that, it is remarkable how little he left behind. Others--notably Richard Nixon, who scored with Alger Hiss, and even more the mostly forgotten, vastly underrated, Pat McCarren--made a far more lasting impact on our lives.

The other amazing fact is that he really didn’t have any particular talents at all, except perhaps an eye for weakness, a knack for spotting easy targets that other people might not have noticed as easy (the old judge he knocked off in his first race in Wisconsin; Senator Robert LaFollette Jr.; Senator Millard Tydings; Robert Stevens of the Army). Except for that, he really was what Herblock pretended to caricature: a coarse and vulgar bully.

Comparing him with other public menaces is enough to put him in perspective. He's been called an "American Hitler," but this trivializers Hitler: McCarthy had nothing like Hitler's manic, obsessive vision. Comparing with Mussolini is trickier: granted that Mussolini brought down a government, still it is important to remember that Mussolini's Italy was harldy a state at all--only half a century old, and the Pope always telling them that evading the taxes of the secular authorities was not a sin. It's tempting to speculate that if Mussolini had met any serious resistance, he would have caved, too.

Yes, resistance. Granted, reading about the GOP in the 50s is enough to remind you that (aside form McCarthy), they had quite an ample supply of fools, bullies and paranoid nutcakes. I think they may also have had a larger stock of civic-minded gentlemen, though this is harder to say (Arthur Watkins and Margaret Chase Smith probably count; anonymous characters like Norris Cotton; probably Ralph Flanders though he may be a closer case). In any evengt, those who passed as gentlemen at last did what they were supposed to do.

Except that in a sense you could say that McCarthy was the ultimate author of his own misfortune. He never had an agenda, beyond beating up on the vulnerable. By the time of the censure vote he had already begun to drink himself to death. It was only a matter of time before he finished the job.

Where is the Housing Problem?
(And the Passage of the Californicator)

Carpe Diem, who has an unfailing eye for the counter-fact, points to an excellent chart showing how the mortgage meltdown is concentrated in four states (link). He's absolutely right, although I suspect there is more to it than you'd guess from these numbers alone. Indeed on his own data, we can see that the housing market is down everywhere--just as not as much other places as in the four disaster areas. Second while mortgages per se are not a general basket case, I suspect the data would show that construction employment--an insecure occupation in the best of times--has taken a dive almost everywhere. And while mortgages in general may not be a huge problem most places, I suspect there are segments of the market in which the problem is quite general. For example, I wouldn't be surprised to find out that vacation homes and time shares are in disaster mode almost everywhere. And non-residential: from what I hear, there is a world of pain in non-residential, and it's not just in the fearful four.

Finally, here's a curious tidbit from Housing Bubble about a secondary non-effect of the concentrated residential meltdown: the absence of the Californicator. This single datapoint recalls that some markets were bouyed up by the exodus of Californians fleeing their own meltdown for more hospitable venues like Oregon, Utah and (here) Colorado. According to this single datapoint, it isn't happening this time. This is indeed surprising: California clearly does seem to be in a mess, but evidently not so much of a mess that people want to leave--yet.

Update: Good comment thread on the topic at American Prospect. Cue one-liner from Ezra but I am not sure it really fits.

Macro as Phrenology: A More Nuanced View

Willem Butler (via Mark Thoma) offers an account--far more elaborate and sophisticated than my own, of the similarity between Macro and Phrenology:

The most influential New Classical and New Keynesian theorists all worked in what economists call a ‘complete markets paradigm’. In a world where there are markets for contingent claims trading that span all possible states of nature (all possible contingencies and outcomes), and in which intertemporal budget constraints are always satisfied by assumption, default, bankruptcy and insolvency are impossible. ...

Both the New Classical and New Keynesian complete markets macroeconomic theories not only did not allow questions about insolvency and illiquidity to be answered.; They did not allow such questions to be asked. ...

But read the whole thing, it'll scare the daylights out of you. There's also useful commentary by Thoma and a somewhat half-hearted rear guard defense by Brad DeLong.

Update: Looks like the theme is almost viral.

Bus Service in LA: Civility and Public Order

Eric Morris is intrigued to find that LA has pretty good public transport. He brings back memories: here's a bit that I posted in his comments:
I spent a year living in Sun Valley, working at the Federal Courthouse downtown, taking an hour-long bus ride each way every day. It was so much better than driving. I got a ton of paperwork done every morning before I ever hit my desk, and knocked off, inter alia, the Rouse translation of Homer’s Iliad in the afternoon on the way home.

There was this lady who got on before me–every day she would carry a bud vase with a single flower.

I shared the bus with a bunch of civil servants from Glendale who made it a social club; they’d share the birthday cake even with an unsociable bookworm.

Also: the driver knew how to merge from the (five?) lanes of I-5 down to the (three?) of the Pasadena.

I remember the LA bus system as a model of civility and public order.