Monday, February 28, 2011

The Berlin Consensus

I swear sometimes the best reading of the week is in The Economist letters page:

SIR – The prolonged success of the German economy is always an inconvenient reality for thosewho support a broadly Anglo-American approach to economic management, such as The Economist (“A machine running smoothly”, February 5th). If liberal labour markets, low taxes and worship at the altar of shareholder value were the key determinants of success, you would be writing about the glittering future awaiting Britain and the United States, not Germany.
The truth is that the Germans are successful because their companies are well managed by competent, educated employees who care more about whether the company will exist in a quarter-century rather than just the next quarterly earnings.
Maximina Yun

Next Up: Issa Subpoenas Issa

They say that to a man with a hammer everything is a nail.  No surprise, then, that Rep. Darrell Issa, investigatore di tutti i investigatori has responded to a ruction inside his own staff by--investigating his own staff.

Like I Said...

M. C. Beaton is the author of more than 100 romance novels.  An intereviewer  remarked "So searching for a husband is not part of your real life. Beaton replied:
Fortunately not. God, I would hate to go back to that. I once did a programme for the BBC on dating in middle age. I was 57 at the time and I felt quite young. And I found that women, the reason they wanted to marry was to have someone to change the light bulbs. They didn’t like going into pubs and restaurants by themselves. They just desperately needed a man around – not particularly for sex or romance, but to do things in the garden. And they had sort of teed off at the Hammersmith Palais and I sat in the front row as they were setting up the cameras, and all these creaky old men kept advancing on me for a dance. I felt quite terrified.
Like I say, we're surplus.

Sunday, February 27, 2011

Pensions Again: Raising the Retirement Age

I agree with thoe who say (a) in a world where we all live longer, it is only reasonable to raise the retirement age and (b) (inconsistently?) that it's an outrage to try to solve our fiscal problem on the backs of those who work the hardest for the least money at the worst jobs.  There is a good end run around this problem, though I don't expect anybody to be pushing it soon: means testing.  The people least able to provide for themselves are the ones most likely to work in the kinds of jobs where they are least able to take care of themselves.  A lucky few (that would be me) have the disposition and the opportunity to keep working indefinitely at jobs they love and might well (but don't tell my boss) be happy to carry one with for far less money.    For the most part we are the ones that shouldn't be part of a state safety net scheme anyway (except by way of contingency) and you could save a lot of bucks if you'd just cut us off.

Pension Data Porn

I enjoyed the New York Times' Friday data mashup on public versus private earnings, though it's a shame they weren't about to come up with something by way of an estimate on pension/benefit compensation,  It does occur to me, however, that there is at least one problem with measuring pension/benefit compensation, both public and private, and that is for any calculation to be meaningful, you'd have to estimate the likelihood that the promised benefits will actually be paid.  I don't think that the remotest likelihood that public entities will be able to honor their more fanciful promises to teachers, prison guards, fire fighters, etc.  Perhaps a good rule of thumb (though imperfect) would be to scale the number down to the current level of funding.  This isn't perfect: you need to make all kinds of guesstimates, not least as to the appropriate interest rate (and I sign on with those who believe tht the rates currently used most places are too high).  You'd want to do the same with private sector obligations, of course, but since the private sector has pretty much killed off its defined-benefit obligations, it shouldn't be much of a problem.


Herman Cain.

Saturday, February 26, 2011

Weekend Wikis

Iphigenia in Aulis

Iphigenia in Tauris

Sewer Socialists

Adrian Lester

Everything Clear Now?

"I don’t have a stronger message than this: Kill yourself working for Egypt,” Amr Khaled told a crowd of thousands.

Link.  Thanks, John.

Barry Lyndon on Irish Ancestry

I presume that there is no gentleman in Europe that has not heard of the house of Barry of Barrogue, of the kingdom of Ireland, than which as more famous name is not to be found in Gwillim or D'Hozler; and though, as a man of the world; I have learned to despise heartily the claims of some pretenders to high birth who have no more genealogy than the lacquey who cleans my boots, and though I laugh to utter scorn the boasting of many of my countrymen, who are all for descending from kings of Ireland, and talk of a domain no bigger than would feed a pig as if it were a principality; yet truth compels me to assert that my family was the noblest of the island, and, perhaps, of the universal world;  while heir possessions, now insignificant, and torn from us by war, by treachery,by the loss of time, by ancestral extravagance, by adhesion to the old  faith and monarch, were formerly prodigious,and embraced many counties, at a time when Ireland was vastly more prosperous than now.  I would assume the Irish crown over my coat-of-arms, but that there are so many silly pretenders to that distinction who bear it and render it common.
 --William Makepeace Thackery, Barry Lyndon, 
Ch. 1, page 1 (Penguin, 1975)

Reagan and the Magic 77

My Father at 100--Ron Reagan's touching new memorial to his father--reminds me of nothing so much of Geoffrey Wolff's unforgettable memoir of his own father, The Duke of Deception. Wolff's is more ambitious and searching work, more polished--Wolff is, after all, a seasoned professional.  But no matter.  Each book is a courageous effort by a likable man to come to terms with the ghost of a much-loved but  notably flawed parent.  Anybody who has ever had or been a flawed parent can relate, and let's stipulate that that takes in most of us.

Ron clearly does like the great iconic celebrity who used to carry him to bed and race him in the swimming pool.  And you'd have to concede that celebrity papa, whatever his vices, was never quite the same emotional train wreck as Wolff's lying, cheating, con artist.   But as others have remarked, Reagan senior did have that hard impenetrable emotional core.  It is Reagan junior's job to try to understand how it came into being, and just how it worked to complicate their lives.  The inquiry takes him back to Dixon, IL, where papa grew up and to Ireland, the home of their ancestors, and to a variety of insights into their common past.

There are a number of well-crafted anecdotes in this highly readable account but I think two define the story, and remarkably, they are borne up on a common structure.  One is the story of how the 11-year-old Reagan came home alone to find his father drunk on the front porch, and single-handedly maneuvered father's helpless body upstairs to bed.  The other is how Reagan as a lifeguard over seven seasons on the Rock River saved the lives of 77 people.  That would be one a week for every week of his service.

The core commonality is perhaps obvious: plucky young loner drags helpless adult to safety.  So as not to be misunderstood, young Ron provides the interpretation.  Of the drunken-papa incident, young Ron says that "Dutch [i.e., his father] did what heroes do.  he manned up, took charge, muscled his pop to bed, and spared his mother's feelings besides."   Of lifeguarding, he waxes more expansive:
Picture yourself at 17.  Give it a second--really take yourself back to the insecure, somewhat awkward, not-nearly-as-adult-as-you-thought self that was the actual 17-year-old you.  Now, imagine yourself sprinting through the night toward the bank of a rushing river.  To make things more interesting, let's toss nearsightedness into the picture.  You've slung aside your glasses--along with your shoes and clothes--as you race to the river's edge. ... Tonight, the rescuer will be you.  Saving him is your summer job. Go.
So in each case Dutch mans up and saves the day.  And actually, there's one more common theme, although it may not be evident so far. That is: in neither episode, did the object of the benefaction show gratitude to the savior.   Or at least, if his father showed gratitude, it has been edited out of the story: grandpa emerges in papa's stories as, at best, an object of a kind of amused contempt.  As to to the swimmers, the point is clearer.  As Dutch appears to have said, and as young Ron is at pains to repeat--of all the lucky 77, only one ever thanked their rescuer. The rest either shrugged it off or tried to tell him how they hadn't really needed the help.

So, revised version: Dutch is the person who mans up and saves the day, even for people who do not want to be saved (there is actually a third such story, a coda,  involving Dutch and a five-year-old in a pool in Sacramento--her father, like so many before him did not appreciate the favor).  But there is a surprising discontinuity with respect to young Ron's treatment of these iconic yarns. That is: of the first--the drunk-on-the-porch story--young Ron does not believe it.
Only it didn't happen that way--it couldn't have happened that way. My father, just turned 11, was small for his age; he'd have stood maybe five feet tall and weighed barely 90 pounds. Jack, nearing 40, probably tipped the scales at 180. Dutch wasn't big or strong enough to drag Jack anywhere...
Young Ron's skepticism seems entirely justified here.  All the moreso because it is of a piece with the book's larger theme.  For young Ron entertains no illusions about his father's more general character. He recognizes him as most people do today: as a fabulist, an illusionist, a master of Irish blarney, the man who never let the facts get in the way of a good story, the man who thought World War II was a movie.  All the more remarkable, then, that Ron thinks the 77-saves story is true.
By hurling  himself into the river to save the lives of drowning strangers, he was not only proving his worth, he was setting the world aright.  How many of his rescues were legitimate (allowing for a handful of young women desperate enough to be saved by such a handsome lifeguard that they got themselves in as bit more trouble than they'd bargained for)?  I'd put the number at ... 77.
bona fide rescues, not just shoulders through the megaphone--over seven seasons at a smalltime river park in Illinois--that guy would have been in Ripley's Believe it or Not.

It's the precision that raises the eyebrows.  If he'd said "five," I suppose I wouldn't have blinked.  If he'd said "a lot," I couldn't have quarreled.  If he'd said "a lot--and some of them were actually drowning," I probably would have joined in the good-natured hilarity. But exactly 77?  It's the numerological sum of the letters in "Christ."  It's the number of branches of learning in Islam. It was Red Grange's number at the University of Illinois and the Chicago Bears.  Maybe we could retire Dutch's lifeguard shirt.

I should clarify my purposes here.  I have no interest in playing "gotcha" with a guy who died seven (sic!) years ago (and I certainly don't doubt that Reagan believed his own story, as he seems to have believed all of his stories).  I don't really want to make trouble for young Ron, who, as I suggest, comes across as an enormously likable man and who in any event wrote a gripping book.   I guess my point is to remark (once again?) on the extraordinary durability of stories, particularly in families, and how much we find ourselves to cling to them, no matter how skeptical and clear-sighted we may seem to be.

Footnote:  another part of the swimming story involves the retrieval of a set of false teeth.  The beneficiary, according to young Ron's account, was a certain Gus Whiffleberg.  As of this writing, Google recognizes no instances of the name "Whiffleberg"--except references to the Reagan story. 

Friday, February 25, 2011

Ringtone Watch

I see that you can get the "Zadok the Priest," the British coronation anthem, as a telephone ringtone.  I wonder if anyone has told the Queen.

Who Said It?

An answer to the libertarians:
Human beings are not "individuals" to begin with; a large majority of them are not even legally competent to contract.  The values of life are not, in the main, reducible to satisfactions obtained from the consumption of exchangeable goods and services.  Such desires as people have for goods and services are not their own in any original sense, but are the product of  social influences of innumerable kinds and of every moral grade, largely manufactured by the competitive system itself.  The productive capacities in their own persons and in owned external things which form the ultimate stock-in-trade of the human being are derived from an uncertain mixture of conscientious effort, inheritance, pure luck, and outright force and fraud.  He cannot be well  or truly informed regarding the markets for the productive power he possesses, and the information which  he gets has a way of coming to him after the time when it would be of use.  The business organizations which are the directing divinities of the system are but groups of ignorant and frail beings like the individuals with whom they deal.
Who said it?  Find out here

Thursday, February 24, 2011

The Private Equity Tsunami: A Dog that Isn't Barking

Josh Kosman's The Buyout of America isn't a great book but it is better than so-so.  As a history of private equity, it serves up a lot of edifying anecdote, albeit without much by way of disciplined evaluation.  The subtitle is designed to beguile you: "How Private Equity Will Cause the Next Great Credit Crisis."  The introduction serves up a hair-raising, if hypothetical, encounter between President Obama and his secretary of treasury, set for late 2011, in which the secretary explains to the President how private equity defaults are  driving the economy off a cliff.

Strictly speaking, we're not there yet, and who can tell what will happen in the remaining months.  But there is pretty good reason to believe that it simply isn't happening--that we will suffer nothing like the cascade of defaults that Kosman predicts, or at least not this year.

I don't count this as quite as big a blooper as it might seem: writers make this kind of mistake a lot and it really doesn't do much of anything to take away from the merits of the argument in general.  Moreover, I think Kosman probably had a reasonable basis for making his prediction when he did.  His problem: interest rates.  My guess is that he wasn't counting on anything like the near-universality of near-zero interest rates that appears to be our blessing and fate at least for the moment.  Low rates can be forgiving (sometimes too much so?) in the worst  of investment climates, and we can hardly be disappointed if, indeed, it turns out that he was wrong.  Meanwhile it appears the PE industry might have read his book: the business press reports a lot of restructuring of private equity loans, not least to head off precisely this sort of calamity.

He may address this issue in the paperback version which came out last November (the Kindle, which I read, appears to be based on the hardback).   I don't see anything about it at his personal website, but he does offer one beguiling freebie: a catalogue of "speculative grade" (heh!) credit facilities and bonds due through 2014.    The list  is a year old but it is free.  Moody's website offers an update, but it'll set you back $550.  Let's hope that Korman shares his copy again. 

Wednesday, February 23, 2011

People who Bought

The King James Version for Kindle also bought Sex in the Sanctuary by Lutishia Lovely.

You'd think they'd find enough sex in the King James version itself to satisfy most tastes.

Who's Unionized Now? A Wisconsin Footnote

I'm beginning to suspect that everything I assumed about public employee unions is wrong (Teachers actually make less than private sector employees!  Public employees in non-union states do pretty well!).  But I suspect I'm not alone in this--I suspect a lot of folks are more surprised at this kind of data than perhaps they are letting on.  Anyway, I don't see why my (erstwhile?) ignorance should bar me from popping off on the topic. So here's a point I haven't seen elsewhere.

Specifically: there seems to be some general dismay over the (alleged) declining support for public sector unions.  But I haven't seen anybody link this point to the almost-universal decline in private sector unions.  Start with my neighbor, the City of Vallejo, the poster child of municipal bankruptcy. Granted (or assume for purposes of argument) that ladelled out the goodies to its  public sector workers.  But Vallejo is a blue-collar town, where (at least 40 years ago) you would have found a strong temperamental disposition to favor unions in general, and so a willingness--call it "only fair" to allow public employees into the fray.  If there is still support for public employee unions, I suspect it is carried forward by inertial force.  I doubt that all those dis-unionized private-sector blue collar workers would be so tolerant this time around of allowing a protection for public employees that they no longer enjoy.

He Dropped A Briefcase Full of Swiss Francs?

Dictator loses grip in desert

 Link.  Thanks, John, and yuckey yuck.

History Lesson Redux

The other day I wrote:
I went to Google Images and typed in "nazi brownshirts shouting down speakers."  I  got 2,240 images.  Adding the word "-Obama," I got 568.  Translated: roughly 75 percent of these images are trying to tell you that our President is a Nazi.
Tonight in the comments, Anonymous wrote:

Try the same exercise but with "-Bush" instead.

 Anon has as point. Repeating my exercise tonight on the original phrase, I get 2,230 (where did the other ten go?). Abstracting Bush, I get only 659.  So, not much more than a rounding error.   Of course, one could get into a diverting exchange over the issue of which President really did most resemble his great German forebear, but I would think that line of inquiry unprofitable (one of those occasions when I'm just as glad that I don't get many comments).

BTW,  minus both Bush and Obama, I'm down go just 335.   So only about one seventh of the images can show us brownshirts without invoking a more contemporary "parallel."

Tuesday, February 22, 2011

No End to Extend and Pretend

I ran into an old acquaintance of mine, a lawyer who has been Chapter 11 business bankruptcies since rocks were soft.  He's a deals kind of guy: quick in and out, look the facts in the eye, slam bam thank you ma'am, scrape a few pennies off the table and goodbye.  I asked how things were going   He shook his head.  "Extend and pretend," he said.  "Extend and pretend and--and no deal?"  I asked.  Yes, he said, that's about it.

We're talking commercial cases here--yawning  basketball-arena expanses of empty retail, warehouses populated only by the resident Doberman, stuff like that.  I asked him if he had any idea why lenders were so loath to cut their losses on these sour deals.  He said he didn't have any idea.

I have two, though only one makes sense.  One is that the lenders are thinking that someday the market will turn up and all these glum looking losers will turn into fairy princes.   Well, they maybe right and maybe pigs will fly and a horse will learn to talk.  But if not, what?  Here's my second guess:  bureaucracy.

Consider: "workouts" has always been a low-rent operation for the bank.  Not  a profit center, not something we like to think about, nothing we are going to use for a color picture in the annual report.   As you will surmise, I have a soft spot for these workout guys: it's nice to meet a banker without a blow-dry and they have a sense of realism that is refreshing, at least as long as it is not my money.

My guess is that a grunts in the workout infantry know perfectly well that a lot of these deals are going nowhere.  They also know there is absolutely no percentage in presenting this hard truth to the boss.   It may be your hard truth but it is my paycheck.

This insight (if true) is one more item in a growing inventory of insights about the market meltdown that can be filed in a single folder: management incompetence.  Failure has a thousand fathers but it's becoming increasingly clear that a prominent source of our late misery is the ignorance and arrogance of the people at the top--people who would rather blow up the company under their own feet than listen or try to understand.  No wonder that the same informational slippage might pursue us all the way down the line. 

Al Jazeera: Not There?

Just (136p pst) flipped to Al Jazeera hoping for some Libya footage. I saw a talking head from Rome and this message:
Al Jazeera has been suffering interference on its Arabsat satellite frequency. During jamming Al Jazeera English can be watched on Hotbird 13E Frequency: 11034 Vertical FEC: 3/4 Symbol rate: 27500; on Badr4/Eurobird 2 (26East) Frequency: 11680.8 Horizontal; SR: 27.5: FEC: 3/4; and on Nilesat/ Atlantic Bird4A (7West) Frequency: 11393 Vertical; SR:27.5; FEC: 3/4. Al Jazeera Arabic can be watched on Nilesat 7W Frequency: 11555 Vertical FEC: 3/4 Symbol rate: 27500.
Link  I have no idea what most of that means but I gather they are trying to tell me how to elude the jammers.

Monday, February 21, 2011

Welcome, DeLong Throng

Follow Me, Men! your one stop shop for nothing in particular.  That's our problem--branding--unless you can identify an audience for "attention surplus disorder "  An "underrated" ranking from  DeLong is too kind, although the tag "law professor" is somewhat misleading: it is true that I've been on the coal face down here at the law school man and boy these 40-plus years now but after all that time I'm pretty much of a busted flush on law: I would rather talk about Caravaggio or Shakespeare or Verdi or Genghis Khan.   And more, oh so much more: I offer a nomination for The Luckiest Horse in the Fifth Millennium BCE, and The Biggest Fathead in the Second Millennium AD,  plus the predictable mindless yapping  and the occasional absurdly misguided prediction.

Oh, and at no extra charge you get The Wichita BureauThe Alabama Bureau, My Cousin Dave, my sister Sally, my friend Joel,   my friend Toni and the twins, Ignoto and Ignota.  Oh and of course, acute or acerb asides from Mrs. Buce.

So wallow and disport yourself ad libitum.  And as the serving maid said to Prince Philip--"Save your fork, ducks--there's pie!" 

A President's Day Question II: Remember Coolidge?

I've always counted Calvin Coolidge among my favorite presidents--not so much for his presidency as for what he seems to have been as a person: modest, funny, self-deprecating.  And the man who said:

“There is no right to strike against the public safety by anybody, anywhere, any time”

In the form of a question, does anyone remember the Boston Police Strike?   And does anybody ever hold a Coolidge Day Dinner?  Apparently not: per Google, zero hits (until now, of course).

H/T to these guys, who beat me to it.  

A President's Day Question: Is the Republican Party Dumping Lincoln?

Critics of the New Republicans have become habituated to expressing shock and scorn at how the norms of the usurpers betray the principles of Abraham Lincoln, their supposed founder.

It's a worthwhile gimmick; of course there have always those--high density around the country club at Memphis--who can explain to you why the Great Emancipator was really the Great Criminal.  The point is that they've pretty much transplanted themselves from the old South Bourbonocracy to the New South Bourbonocracy of New Gingrich, Jim DeMint and whoever.  It's a tectonic shift: I can remember showing up as a carpetbagger in Louisville in 1960 to find (I was surprised) that blacks who voted (there were a few) almost inevitably cast their ballots for the GOP.  On further inquiry, I could see that they were perfectly rational.  Not only were they dancing with the fellahs that brung 'em, but they were recognizing that (then) new-age northern Republicans were genuinely a more creative, forward-looking--and, clearly, less racist--then their older, tireder Democratic competitors.

Boy, that was a long time ago, huh?  You've got to admire how, in the interim, the new, forward-looking elites of the once-new Republican interlopers have learned to make their peace with the old, backward-looking elites of the Confederacy.   And I'm beginning to wonder--is the whole Lincoln thingy a sign of the change?  As to their betrayal of their founding principles, could it be that the Republicans aren't even embarrassed any more?

I'm not sure, and I don't know how to do a definitive test, but I suppose one rule-of-thumb gauge would be the incidence of that great icon of Republican solidarity--the Lincoln Day dinner.  In my time, these dinners were part of the Republican glue (just as Jefferson-Jackson day dinners were for Democrats).  And guess what--apparently they are fading away.  Here's a brief Wiki summary, with a money quote from South Carolina Lindsey Graham: "We don’t do Lincoln Day Dinners in South Carolina. It’s nothing personal, but it takes a while to get over things."    I Google-searched "Lincoln Day dinner" within the past year and came up with 102,000 hits.  "Reagan Day Dinner" gets you 34,900.  "Lincoln Reagan dinner" gets you 12,600.  Now this:
Lincoln, rarely considered a capitalist icon,did more for strong and able ownership than any president in U.S. history, perhaps more than any leader in world history.  He sold millions of acre of land held by a neglectful government, transferring ownership into the hands of new owners who would make a garden in the wilderness.  He transferred ownership of millions of men from masters who abused their own property back to the men themselves, the best owners of all.
That's Andrew Redleaf in Panic (2110), one of the most sophisticated items I've read in years on the actual workings of a free market, and absolutely top-notch on the evils of crony capitalism. 

Sunday, February 20, 2011

If You Build it , they will--What?

Somebody is hacking Andrew Samwick's blog:
New Hampshire Public Radio ran a story yesterday about Governor Lynch's request that hospitals in the state stop building new facilities. Normally, governors never miss an opportunity to encourage new business in their state, because in most markets, greater investment leads to better services or lower prices.
Does Samwick believe that?  Does anybody?  Isn't the history of statecraft the chronicle of costly and vainglorious monuments to the narcissistic folly of the leading elite?  Isn't the planet just littered with this stuff?  And at a more tawdry level, isn't the disease of modern health care rooted (at least in part) in the wretched excesses of overbuilding that we inflicted on ourselves under Hill-Burton.

Ah well, I suppose the pyramids did provide employment for bricklayers.    And did their bit for tourism.
I met a traveller from an antique land
Who said: "Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things.
The hand that mocked them, and the heart that fed.
And on the pedestal these words appear:
'My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!'
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away

Word Watch: Macroprudential

For "Macroprudential Analysis," The OECD offers:
The assessment and monitoring of the strengths and vulnerabilities of financial systems. It encompasses quantitative information from both FSIs and macroeconomic indicators that provide (1) a broader picture of economic and financial circumstances such as GDP growth and inflation, along with information on the structure of the financial system, and (2) qualitative information on the institutional and regulatory framework—particularly through assessments of compliance with international financial sector standards and codes—and the outcome of stress tests. 
...all with a 2004 source. The Economist's search base (extending to 1997) brings up a total of 15 instances, the earliest 2003, two last week.  Anna Gelpern leads off with it this weekend at Credit Slips.  Google reports "about 120,000" hits, 70,000 in the last year, 10,300 in the past week.  I see that the Bank of England is looking for an economist on its Macroprudential Policy Design Team (salary,£40 - 45,000).   We may look forward to a Journal of Macroprudential Studies, a Center for Macroprudential Policy, a masters' in Macroprudentialistics.

So far, no sightings for "microprofligate."

Ivan's Eclogue

Here's Ivan who fled the slash-and-grab of Our Nation's Capitol for bucolic idleness on an Alabama farm:
...I had my grandson to help. We et dinner (that’s lunch elsewhere in the USA), went out and fed the sheep and goats and lambs and baby goats, checked the barn, then got two 1500 rolls of hay loaded on another fellow’ one ton truck to bring to a Pakistani friend of mine because he is out of hay for his animals, which includes a huge menagerie and a cow he hopes will be a milk cow on about a two acre lot. We managed to get the rolls of hay rolled off the bed of the truck much to the joy of the kids there without them rolling over any of the kids, then headed to a little farm on Slaughter Pen Road which is on the Tennessee side of Ardmore – a border town in Alabama and Tennessee. The people there had some khatadin-dorper cross sheep and I needed a new ram because I sold my old ram a couple of Sundays ago to a Guatamalen family trying to get in the sheep breeding business. I needed to change rams because I didn’t want inbreeding problems. But the people did not have a catch pen they did not have a place to pen up their little flock so you could grab one and manhandle him into the cage we had put on the back of the truck. Grandson and I did a lot of pasture strolling herding the sheep toward the owner but they’d break and run as soon as they saw the rope in his hands. Finally, the fellow’s wife came out with a special pan of goodies and the sheep came over to feed. The owner grabbed, caught a leg, grandson caught a leg, another fellow caught a leg, I caught a leg and we had the young ram – which probably weighs at least 100 pounds. He was born last April. I brought the truck around and all of us got him in the cage. Getting him unloaded was no problem. I drove the truck into my catch-feeding pen and opened the cage gate. He saw the dozens of ewes out there, all of them his when breeding season starts in late August, and he leaped out. I opened the gate into the barn lot and he trotted in. it was like the ewes had told him “you da man.”  It was getting dark then so I fed the dogs, including two great Pyrenees that weight about 90 pounds each, fed the barn cats (7), made sure the chickens (45) roost door was open, and went to the house. On a farm that’s considered a successful day – everything got done.
 In your face, Publius Vergilius Maro.  

Mundo Pequeño

Fresh in from Palookaville's finest used bookstore: Will Eisner on The Protocols of the Elders of Zion:


No, let's rephrase this: a (graphic) novel by a Yiddish-American artist about a French-German-Russian libel against the Jews, in a Spanish translation published in Catalunya with an introduction by a famous Italian. With multilingual bibliografía, including páginas web.

Small world.

Saturday, February 19, 2011

Comparative Advantage in Everything

From the NYT account of "niche plastic surgery:"
Dr. Holly J. Berns, an anesthesiologist, feels as if she is on a seesaw when she travels from Dr. Yager’s office to suburban clinics. On Long Island, she said, “they’re doing everything they can to get the fat taken out of their buttocks.” In Washington Heights, “it’s the opposite — they just want their rear ends enlarged and rounded."
Two words: "comparative advantage:"
Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. .... By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically; while, by increasing the general mass of productions, it diffuses general benefit, and binds together, by one common tie of interest and intercourse, the universal society of nations throughout the civilised world.  It is this principle which determines that wine shall be made in France and  Portugal, that corn shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England.
--David Ricardo, The Principles of Political Economy and Taxation 81 (Everyman Edition, 1973)

A vanful of glutes lumbering across the Throgs Neck Bridge.  The mind reels.

Dorcas and Porcas, etc.

Cute piece up at the Beeb this morning about the Pope's plea that children be given more "truly Christian names."  It seems to have struck a vein--the comment thread is approaching 400, and still quivering.  I haven't read them all, but more than perhaps was worthwhile.  I surmise (a) that there are more "Zipporah"s than you might guess; (b) that "Dorcas" is not unheard of--I used to know a "Dorcas," and evidently it was the name of a onetime BBC presenter.  Commenters point out that poor Dorcas gets her evil association via "Dorcas and Porcas" in  Beatrix Potter, but I suspect that the lure of the uninflected form would be enough to ruin poor Dork's life on any playground in the western world.  Others  make a point re Gomer--forget about Mayberry, its Biblical roots are evidently  far more unsavory than I knew.  "Philemon" may be quaintly archaic, but I suspect that its female form, "Philomena" was once fairly common.  I grant that I've never met a "Methuselah" or a "Jezebel."  There's also a bit of backchat over the question of who these Old-Testament names can be called "Christian" in that they are, by definition, BC (or, if you must, BCE).  This suggestion excites the wrath of those who declare that the whole of the Old Testament is a prefiguring of the new--and the counter-wrath of those who say that the Gospels cannot be called "Christian" in that Christianity hadn't been invented yet (cf. Acts 11:26).

Many people recall beloved ancestors who deployed a richer palette of Biblical names than may be common today. My father's old New England family seems  to have been remarkably unimaginative in its selection of names "from the Christian tradition."  I do have a some-kind-of grandmother who was Christened "Relief White," and married "Lemuel Dole," so as to become "Relief Dole"--which I suspect marks her as less a Christian than a secular socialist.

Friday, February 18, 2011

The Underbelly Defense Budget Plan

The Economist remarks, as if in passing and no longer needing citation, that the United States spends as much on defense as the next 20 nations combined.  They may be using more recent numbers than I; consulting Wiki (which draws on data from the Stockholm International Peace Research Institute ), I find that it the true number is only a paltry 17:    Start with the United States at $663 billion; cumulate the next 17 (from China through to Greece) and you get $666 billion (ours is also a larger share of GDP than any of the others except Saudi Arabia, Israel and the United Arab Emirates).

All of which leads me to wonder--what if we decided we could live on a sum equal to just the next 15 (rather than 17) countries--lopping off a sum equal to Greece and Israel, with sum of c. $14 billion each. That would be a saving of about 4.3 percent--not a lot, but hey, it's a start, not so?  

[For comparison: the President has talked about cutting $78 billion over five years, with most of it caboosed (surprise!) into 2014 and 15.   The Republicans don't seem to be able to get their act together on this one but  my guess is that when the moment(s) of truth come, they won't want to cut much of anything at all.]

Another Quarter Heard From

Stories, we got stories:
By the end of the 1980s, Deb had divorced Jimmy.  A few years later, they remarried.  But soon she left him a second painful time, and he moved to Los Angeles to get away from the situation.  He freelanced as a paralegal, which kept him afloat.  But he had no health coverage, so when a molar went rotten he yanked it himself with needle-nose pliers.  he was drunk at the time and bungled it, splintering the tooth and leaving chunks in the bloody gum.  Herman happened to call a few days later and heard about the tooth and the fever that had followed.  he demanded that jimmy go to the hospital. At the emergency room, they told him the wound had gone septic.  While waiting for the on-call dentist, he suffered a heart attack.  Jimmy was fifty-six, but by the time he was discharged he had become an old man. In the following months, he aged further, grew forgetful and anxious, suspected that people were walking up behind him.  He checked endlessly that his doors and windows were locked, that the gas was off.  He often called in sick at the law firm where he freelanced, then eventually retired--it was foisted on him.

History Lesson

Wishing to make a point about the alleged freedom of students to shout down speakers on campus, I went to Google Images and typed in "nazi brownshirts shouting down speakers."   I  got 2,240 images.  Adding the word "-Obama," I got 568.  Translated: roughly 75 percent of these images are trying to tell you that our President is a Nazi.  Next up: how Obama made himself Chancellor of  Germany in 1933.

Footnote: add "-Pelosi" and you are down to 529.

What Would Tyler Say?

Usually interesting and always excitable Tyler Durden runs a little extrapolation and discovers a 10.6 inflation rate.  My friend John wonders if Tyler will look at this morning's 55-point runup and predict a 20,000 Dow.


Joel Gives me my Word of the Day


Down the Backstretch

Well, who'd have guessed?  No one will be more surprised than I but I reach the three-quarter post today--my 75th birthday.  I hardly expected to be alive at this age, saying nothing of solvent and healthy.   A nice wife helps promote the general mood of gemütlichkeit.  More, they still pay me to yell at 25-year-olds, and how cool is that?

Afterthought: But I remember now that the "happiest age" is supposed to be 74.  Uh oh.

Further Afterthought:

Solon: Count no man fortunate until he is dead.

Buce: Shut up, Solon.

Thursday, February 17, 2011

Remember Second Life?

  Yesterday it was a flippant aside; today I really mean it: what ever happened to Second Life?  You remember Second Life, yes?  As Wiki says, it's a "virtual world" where,
Residents can explore, meet other residents, socialize, participate in individual and group activities, and create and trade virtual property and services with one another, or travel throughout the world (which residents refer to as "the grid").
A couple of years back, for all the buzz you might have thought Second Life was on the verge of becoming our First Life, taking over our brains, our energy, and our, you know, everything.  And then--what?  There's still a website, of course, but right now it is still showcasing the news that "Valentine's Day is Monday, Feb. 14."   Thanks, we know that and we wonder where is the Avatar who should be updating that.  Could it be that he is over at Facebook playing Oregon Trail?  Meanwhile the Wiki reports that the sponsoring company closed half of it office last year, and is down to 245 employees--Facebook, for comparison,  declares it has over 2,000.  Could we be hurtling towards history's first-ever virtual Chapter 11?

Ezra Klein Explains Our Government

Ezra Klein is getting a lot of buzz for having said:
Literally. If you look at how the federal government spends our money, it’s an insurance conglomerate protected by a large, standing army.
Link.  Ir's a clever line and it has the added merit of being true.  David A. Moss' When All Else Fails, subtitled "Government as the Ultimate Risk Manager," is a superb exegesis on exactly that point.  It is tempting --but pretty clearly inaccuraate--to try to apply this label to all governments.  More tempting still is to try to figure what sort of label applies to which.  Dutch Republic?  Joint stock company.  Venice?  Gang of pirates.  And so forth.

Wednesday, February 16, 2011

Thank God there Aren't Any Pictures

Kim Jong-il's Son Assumes No. 2 Position

Headline.  Thanks, John (who should have been a copy editor).

Reagan, Wasserman and the MCA

I didn't watch all of the PBS special on Ronald Reagan this week--as is my custom, I tend to do my TV watching with one hand tied behind my back.  For the most part, what I saw struck me as remarkably fair-minded, with a lot of thanks to the remarkable tact and insight of young (!!!) who evidently loves his dad with a kind of clear-sightedness that perhaps only children can muster.

But did I wonder--did anyone tell the story of what seems to me to have been the great inflection point in Reagan's political career?  I'm thinking of the time when he was President of the Screen Actors Guild and he cut a deal with Lew Wasserman of MCA allowing MCA both to represent actors and to hire actors for movies and TV.  That deal helped to launch MCA onto the Empyrean heights of the Hollywood elite, and Wasserman seems to have remembered who his friends were: by all accounts he was the driving force behind the early episodes of Reagan's life on the public stage.

Allowing Wasserman to run with the fox and hunt with the hounds always struck me as the very definition of double agentry--a monstrous betrayal of the actors he was supposed to be representing.  Yet I admit I am not clear whether the actors thought so.  He did get elected to another term at the head of SAG.  I do infer that Reagan's entanglement with MCA became a political problem of sorts later on, when MCA abandoned its agency business to concentrate on production.   How did Reagan understand his own role (sic)?  I don't know; this seems to be another one of those cases where he disappears behind that Cheshire cat smile.

There's a highly charged account of the whole episode in Dan Moldea's Dark Victory: Ronald Reagan, MCA, and the Mob, available on line.   I liked even better the rendering in Connie Bruck's When Hollywood Had a King, one of my all time favorite business books.   I haven't gone back to look at Lou Cannon's biographical stuff and I haven't any idea whether it appears in Ron Reagan's own account, My Father at 100 In any event, while you can't call it exactly "unknown," I've always thought it deserves to be better known.. 

Things That Go Bump in the Night

Two swallows make a summer.   I've read essentially the same story in the last few days from two different sources with no reference and, so far as I can tell, no direct relationship, to each other. I think the common heading might be "a collection of devices whereby we live more and more in our heads."   First, here's Steven Randy Waldman at Interfluidity (critiquing Tyler Cowen):
 ... In spheres such as health care and education ... are difficult to evaluate relative to alternative uses of resources. Cowen reminds us that health care and education are widely viewed as “growth” sectors, but to the degree we collectively overpay for them, “revenue” overstates economic value. A substantial portion of these expenditures should probably be accounted for as transfers and excluded from measures of aggregate production. But of course, we have no means of estimating the size of the appropriate haircut.

I’d add another important industry to government, health care, and education: financial services. Like with health care and education, we simply are unable to evaluate the degree to which payments to financial service providers represent wise use of resources and to what degree they represent transfers to financial industry stakeholders. Inherent informational problems associated with investment quality, combined with the temptation by service providers to exploit these difficulties to extract transfers, renders financial sector revenue highly suspect as a marker of value. Also, financial services are intimately involved in the other problematic sectors: One thing that binds government, health-care, and education is that all are financed in roundabout and sometimes opaque ways that soften near-term budget constraints and that shift costs and risks, both across time and onto people other than the purchasing decisionmaker. The means by which government, health-care, and education are financed help keep them vulnerable to agency and information problems.

I think of government, education, health care, and finance collectively as the “information asymmetry industry”, and I find it terrifying that many people presume that they are the future growth industries for the United States. Dani Rodrik has pointed out that tradable goods are special, in terms of engendering development in often corrupt emerging markets. Cowen offers an astute explanation: tradables that compete in international markets are usually low-information-asymmetry goods. Apparent value (revenue from trade) and real value are likely to be closely aligned and hard to fake. I worry that specialization in the information asymmetry industry could be an antidevelopment strategy for developed countries.
And here is Richard Bookstaber on the evolution of accounting:
The orientation that accounting took for railroads was, not surprisingly, focused on the assets of the company--the track and rolling stock, along with the depreciation of capital--rather than earnings.  Value was defined simply as the cost of assets less the depreciation of the assets over time.  This orientation carried through smoothly to other industries of that era, principally manufacturing and transportation, where cost could be used as an index of value.

For real assets such as physical plant, assembly lines, machinery, and real estate, valuation in terms of costs is logical: a business can reproduce the enterprise by simply going out and buying each of the component parts that constitute the production process. But the relationship between the cost of assets and the value of the enterprise does not work as well for companies with intangible assets, and these increasingly form the basis of economic value today. Intangible assets--ideas, patents, proprietary software, brand names, trade secrets, trademarks, and copyrights--have values that cannot be extracted from their costs.

The reach of intangibles is extensive; as Charles Leadbetter has said, "modern corn is 80 percent science and 20 percent corn," alluding to the extensive lab development behind hybrid corn seed.   By some estimates, intangible assets now make up 80 percent of the value of the S&P 500,  They are what provide companies with their franchise value, sometimes bordering on monopolistic market position.  Intangible assets are the product of imaginative people who walk out the door every night; others are formulas locked in a vault.  And in many cases, once they have been created and intellectual property has been claimed, they cannot be reproduced at any price.
These guys are telling the same story, not so?  About how more and more of our life is taking place inside our head?  And correspondingly, less and less consists of things that go bump in the night?   But while we are on the subject of living in one's head, does one do Second Life any more, or is that just too 2001? 

Tuesday, February 15, 2011

Redleaf's and Vigilante's Panic

I can't remember any book I've read on the financial crisis (and I've read more than a few) quite as distinctive as the wretchedly misnamed Panic by Andrew Redleaf and Richard Vigilante. Misnamed inasmuch as a better title would have been the subtitle: The Betrayal of Capitalism.  Must be the publisher's fault: the authors use a version of the latter for their proprietary website, and it certainly is a much better description of what they seem to believe they are describing.

Distinctive how?  Actually, not in detail: almost every element in the book parallels--though it often improves upon--an insight from elsewhere.  But I don't know anyone who has put the pieces of the puzzle together in anything like the same way.  This is a point worth stressing because on first blush it might be possible to mistake the book for a standard right wing diatribe.  Thus early on, the authors declare:
We are staunch Republicans who believe that Ronald Reagan was the greatest president in our lifetimes.  We firmly believe that the market, like the Lord, punishes the wicked eventually.
 And there's more: their enthusiasm for entrepreneurship seems almost Hayekian (although Hayek's name appears only once while the  word "entrepreneur" appears 88 times in the manuscript).  His enthusiasm for the morality of entrepreneurship seems almost Randian (although her name does not appear).  And they veer dangerously close to right-wing absurdity on a few issues--notably the question whether Fannie and Freddie were the helpless pawns of a misguided government housing policy (they weren't).

But don't leave yet; in fact their presentation is far more original than you might guess on first blush.   Granted that they love markets but there is a whole panoply of  issues on which their approach is more sophisticated and challenging than vulgar libertarianism.  One: they've got a far deeper and  more subtle understanding of how finance-trading gets done than anything I've seen elsewhere, excepting only Richard Bookstaber's superb Demon of Our Own Design.  They write fully informed about both trading and academic work and offer provocative explanations of why it is that  professors miss the good stuff. They present a stimulating account of the place of risk in markets (not what you think) and the (dis)similarities between financial markets and the market for goods.

And two: for all their loud Reaganism they aren't at all hostile to regulation--but it had better be smart regulation and it appears they harbor firm convictions as to just what "smart regulation" might (and might not) entail.  Specifically, they our current regime implements a kind of a "green zone"--as in Iraq--inside of which the well-connected find protection and comfort, while outside chaos reigns.   Put differently, the worst sort of crony capitalism.  Consider:
We have heard it said that crony capitalism is indistinguishable from socialism.  Wrong.  It's worse.  No Democratic administration, with the exception of Roosevelt's first term, has been as abusive of markets as the [George W.] Bush administration.   ...The socialists are an intellectual party comfortable with abstraction and with theory.  Moreover, precisely because they have visionary and ambitious goals ... the socialists have recognized they can get where they want to go only by riding on the back of capitalism.

Crony capitalists have neither the inclination for theory nor the interest in general economic success that attaches to the socialists.  It is no accident that in our lifetime all the worst administrations for economic policy have been Republican ...
 [On the last point, they make an exception for the Gipper; what the hell ever possessed them to think that Reagan was an honest capitalist is beyond me but this blind spot doesn't destroy the force of the argument.]

Operating against this background, the reader will hardly surprised to learn how deeply disaffected the authors are for just about everything that passed as reform policy over the last couple of years.  Don't take over the banks. Don't save the undeserving. And most of all, not TARP, oh dear God,  not TARP.   Rather, first--early on--force lots of disclosure, from "banks" and "nonbanks" alike--get everything on the record, because uncertainty is the great enemy of smooth functioning.  And in the crisis itself:
What was needed, instead of TARP, was a three-sentence piece of legislation: (1) For the next one hundred eighty days the U.S. Treasury is authorized to buy asset-backed securities whose price appears to be an extreme discount from economic value.  (2)  For the purpose of calculating the debt of the United States, securities purchased under this authorization shall be credited against that debt at purchase price ....  (3) All securities acquired under this authorization must be sold within twenty-four months.
 I have to admit I'm still digesting all this; I find it sufficiently engaging and provocative--and original--that I want to give it some thought.  On the other hand, it makes sense to distrust anybody who writes with such easy  assurance.  I'm not at all sure they are snake oil salesmen even though, at times, they sound like snake oil salesmen.   Yet I grant them this: they are almost distinctive in their commitment to a favorite theme of mine--specifically that "the market" is not a mantra or a magic trick or a philosopher's stone.  It's a complex human artifact that probably nobody understands in full (that may be in the nature of its being as market). It's refreshing--if unsettling--to engage with anybody who seems to grasp that point at all. 

Monday, February 14, 2011

The Thoma Thread

Cross my heart and spit over my shoulder, most of the time I do not mind being an obscure  little barefoot backwoods blogger with a friends-and-family audience--it relieves me of all responsibility to be, well, responsible, and it keeps me sheltered from the winds (cyclones) of dogma.

But Mark Thoma picked up a piece of  mine the other day on "who gets and who pays" in government social programs.  So far on the piece, I have no two comments; Thoma, at last count, had 49 58.   Yes, I know: many of those comments were silly or simply misguided.  But quite a few really helped to move the ball down field.

One theme that emerges: I talk about transfers from haves to have-nots.  But what about transfers from have-nots to haves, or from haves to have-mores?   Ah, yes, that's a fair cop.  I believe it was Aaron Director who used to argue that if you aggregated taxes paid and benefits received, you'd find that lower and upper classes subsidize the middle.  In an age of the opulent 0.1 percent, I don't see how that can be entirely true any more.  But I can sure think of programs--yes, I'm talking about you, public higher education--where the "public" benefit does seem to redound to the middle or upper middle, at the expense of people (a) who don't need it and others who (b) will never be able to enjoy it.

There is the entangled question--much commented upon--of how much education exists for neither teachers nor students but for the absurdly dysfunctional student loan industry.  Just as the health care industry drives health policy, and the weapons industry, defense--and, I suppose, the prisons motivate the Arizona stand-and-declare immigration law.

I believe it is fairly standard social theory that as a society matures, it builds up the barnacles of special agendas, sucking the lifeblood out of the main body.  And that it gets harder and harder to claw your way into the elites.

Oh, and finally this exchange with "Lambert Strether:"
Buce writes:
[W]hoever is in the hand-out class will find himself branded with an outsider label.
Well, in this country the banksters are the hand-out class. $14 trillion, last I checked. When do they get branded?


How to Guess Your Age-- Again

Seeking to answer the question "Who is Esperanza Spalding?"  I stumbled on the list of Grammies for Best New Artist.  I find I recognize almost everybody from the 60s and 70s; from the 80s and beyond, pretty year zilch.  Except, now, Esperanza. She is pretty good evidence (not so?) that Portland really is the coolest city in the US of  A.    And here she is:

Happy Valentine's Day true lovers everywhere:
Thou didst swear to me upon a
parcel-gilt goblet, sitting in my Dolphin-chamber,
at the round table, by a sea-coal fire, upon
Wednesday in Wheeson week, when the prince broke
thy head for liking his father to a singing-man of
Windsor, thou didst swear to me then, as I was
washing thy wound, to marry me and make me my lady
thy wife. Canst thou deny it? Did not goodwife
Keech, the butcher's wife, come in then and call me
gossip Quickly? coming in to borrow a mess of
vinegar; telling us she had a good dish of prawns;
whereby thou didst desire to eat some; whereby I
told thee they were ill for a green wound? And
didst thou not, when she was gone down stairs,
desire me to be no more so familiarity with such
poor people; saying that ere long they should call
me madam? And didst thou not kiss me and bid me
fetch thee thirty shillings? I put thee now to thy
book-oath: deny it, if thou canst.
That's Mistress Quickly to Sir John Falstaff in Shakespeare's Henry IV Part 2, Act II Scene i.

Sunday, February 13, 2011

How Hard Is It?

Brad DeLong is in a somewhat ungentlemanly tussle with Jason Koznnicki over the relative difficulty of, well, relativity.  Brad quotes Richard Feynman discussing "what we teach our physics students in the third or fourth year of graduate school."  He might have recalled the received account of education in economics. "We" (="they") "teach the same thing in One-A, 100-A and 200-A--it takes three times to get them to believe it."

Thoma on What we Pay for and What we Get

Kudos to Mark Thoma for his injection of a bracing note of clarity into the debate over what we get v. what we pay in "social welfare" taxes.  It's a theme I've tried to tackle before, perhaps never so well.  I herewith offer my spin, not his, but I think I catch the thrust of his piece:  you can separate our social welfare taxes into two categories: "class action buying," where we transfer money from ourselves to ourselves (on the one hand), and wealth  transfers from haves to have-nots.  Scandinavians seem tolerant of taxes because they see a lot of it as just group buying (the same would go, I suspect, for lots of local government taxation).  "Liberals" in the United States don't like to talk about the wealth-transfer aspect because they understand that once you call something a wealth transfer program, it fails.  Conservatives are happy to leave them hoist on their own petard: if it is not a wealth transfer program, why not just leave it to private discretion?

Thoma counts himself as a defender of social programs, although his approach differs a bit from my own:
The key here is to overcome the belief that the majority of people using these services are "gaming" the system to get handouts they don't deserve. If we are going to successfully defend the social insurance system, it is this belief that must be countered. Of course such behavior goes on, there will always be people who try to take advantage of any system that is put in place (in the public or private sector), but this is not the predominant feature of these programs. The share of "deadbeats" is not large, it is relatively small given all the good such programs do, and that's the message that needs to be delivered. The social benefits clearly exceed the costs of providing these services, but it will be tough to make this case convincingly -- the opposition can always find isolated cases where people take advantage of the system and surround them with negative publicity. This has been a successful strategy, and it will take a concerted effort to counter overcome such efforts.
 I'd put  it a bit differently.  I suspect we have a bit more going on than mere gaming of the system: we do have a fair amount of wealth transfer.  The question is, should I mind?  It's a complicated topic, but on the whole I rather think not.  I grant it is should be a primary goal of any decent society to try to create a system where nobody needs wealth transfers, where nobody feels the need to game the system.  But that's a utopian vision and in a world this side of the grave, I'm willing to live with the cost.

Commentators inject two other pertinent issues.  One, how much is it all a matter of "racism?"  I'd say there is a fair amount of racism in the system, but I think we may confuse cause with effect.  Durkheim taught that every society needs an outsider class to affirm its own solidarity.  So whoever is in the hand-out class will find himself branded with an outsider label.  The other questions whether the whole system is run not for the recipients but for the provider lobby--in particular the health care companies that profit so prodigally from a government-mandated payment system.  Too true, too true, and as I guess I've said before, I think too little attention is being paid the fact that the big winners from Romney Obamacare are those same providers.

Good Reads: Hiding in Plain Sight

Almost everything in the NYTimes Sunday Book Review is worth attention this week.  Sam Tannenhaus' undeluded appreciation of Daniel Bell.  James Kugel undertaking to make religion believable.  Ed Glaeser on the great wen, or wens.  Michael Scheuer on Osama and what David Letterman once called "classic seventeenth-child issues."   Douglas Walker on why we have two spy agencies (takeaway: Donovan had a medal of honor; Hoover was short and lived with his mom).   And so forth. 

Well: almost all the non-fiction stuff.  It occurs to me I pretty much left off reading NYT new fiction reviews years ago.

Saturday, February 12, 2011

Opera Note: The Met's HD Nixon in China

I'm delighted I had (took) the chance to see the Met's HD Nixon in China today, and oddly, I'm just as glad I didn't see it when it first came out 24 years ago.

Why would this be?  The simple reason is that this is an opera where I suspect just everything has to be first-class to make it work.  And it's hard to think of any place that comes even close to the Met for supplying the support that the creators would need.

But more than that: we know so much more about Nixon than we did 24 years ago. We know more about how awful he was--but we've also come to to recognize what an interesting, challenging and in so many ways constructive person he could be.  And it is hard to think of any opera that offers a complex  hero with quite so much complexity and nuance.  Peter Sellars in a commentary mentioned Mussorgsky--I assume he was thinking of Boris Godunov--and Verdi's Simon Boccanegra, two other stories of flawed and troubled leaders.  This is a useful insight and it is a compliment to Sellars--and, oddly, to Nixon--that Nixon is able to stand in their company.

It's an imperfect work, for all that--almost three separate works, each act in an entirely different style, and some parts work perhaps better than others.  In the first act, we see Nixon and Mao face to face in dialog.  Here the librettist (Alice Goodman) works almost straight from the script.  It's a delight to see/hear Nixon in all the creepy weirdness that we've come to know so well, and also Mao, floating free somewhere between sagacity and senility on a transit that neither he nor anyone else can quite follow.

The second act gives us Pat Nixon.  I was thinking before I saw her that she might be the toughest nut to crack in this effort at recreation--so taciturn, so bitterly private.  I think the creators did the right thing here: with Pat, in contrast to her husband and Mao, they simply didn't try all that hard to hew close to reality.  They created a woman who could give herself voice and who came across as a plausible Pat, quite aside from the question whether she was the actual Pat.

But the second act was largely dominated by that hoariest of operatic staples: a ballet.  Here it is that hoariest of Marxist staples, "The Red Detachment of Women," as recast by Mark Morris (and  it is one of my great regrets after a lifetime of cultural gormandizing that I passed up a chance to see the real "Red Detachment of Women" in London back in the 70s).  With one qualification that I'll get back to later, I thought it was a complete success: a full-blown panorama, at once funny and very scary, of the Chinese past, and of what the Maoists thought of their past.   It ends with a show-stopping coloratura (three high C's), from Madam Mao (Kathleen Kim), fit company for Olympia or the Queen of the Night.

The third act I thought didn't work as well.  The team tried to give us the back-narratives of the protagonists on interwoven musical lines.  It was worth a try: the idea of listening to Nixon and Mao as they to explain and justify themselves was promising as a  device for adding texture to their encounter.  But the creators seemed to have cluttered things up a bit by trying also to interweave some insights from Chou En-Lai and Henry Kissinger, and it didn't help (Pat Nixon and and Madame Mao came along for the ride).  The stage became too busy and unfocused.  I'm not sure, it might have been the libretto and the characterization, maybe the music, perhaps the singers--maybe something as simple as the fact that their voices were not well enough delineated.  But I found myself checking my watch.

Chou in particular was the one of the six who seems not fully thought out.  Chou has always gotten a bye from western observers of China as the thinking man's Maoist, the suave and cultivated cosmopolitan who rose above the vulgarities and excesses of his boss--yet how he could survive at the top so long without some blood on his hands would seem to be a question.  In any event,  there's a problem here, and   it is much like Pat Nixon's: Chou is too private,too guarded, too circumspect for easy presentation on stage.  You'd have to take liberties like the creators took with Pat.  For good reasons or bad, they didn't do so with Chou.  (the fact that Chou was dying of cancer didn't make it--aren't we all dying of something?).

Which leaves Kissinger and here I think the creators missed a great opportunity   With Nixon, they made a great success by presenting him in all his nuance.  Kissinger, they just left as a clown. This isn't fair and worse, it isn't good theater: Kissinger is at least as complex and interesting as his boss and it was a shame not to present him so.  Perhaps part of the problem is that they felt the need to run him into the ballet as a sexual predator.  But of all Henry's indisputable vices, I'd say that sexual predation is probably quite a long way down the list. Granted that  he liked to greet the photographers on the arm of a blonde a head taller than he, in a $7,000 frock.  But by all accounts, he didn't bother stay the night: he'd slap her in a cab at 10 o'clock so he could go home and tuck in with a good book.

These failures are defects, but not fatal defects.  Unlike so much new stuff, Nixon in China seems to have grown in esteem over its lengthening lifetime.  As I say, I think we understand Nixon better; very likely we understand John Adams better; perhaps we understand ourselves better.  It's an arresting piece of work and very much deserves its place in the very short list of new operas that might actually be worth seeing a second time.  

Afterthought: just how many instances of oral sex will henceforth be regarded as the de rigueur minimum for a modern opera to be taken seriously.  It's getting to be like the appearance of the brass band in Verdi.  Tan tan tara.

Update:   Mrs. Buce emails from home in Palookaville to recommend the NYT review by Max Frankel, who, whatever his chops as a music critic, enjoys the peculiar distinction of having been present on the tarmac at the original of the opening scene.

Friday, February 11, 2011

Another Amazon Puzzle

Amazon offers a Kindle version of the Financial Crisis Inquiry Report  for $7.45.  But why bother when you can go to the Commission's own site  and  download a  Kindle-ready PDF for free?

Ventry on the Mortgage Interest Deduction as a "Social Program"

A must-read of the day: Bruce Bartlett (via James Kwak) on what we get from "social programs" versus what we pay.  Among "social programs," they count the home mortgage interest deduction, although Kwak rightly acknowledges that "you could get into an argument about whether it’s really a social program.'"

At 12:21 pm, in a mood of idle mischief, I fired the link, inviting comment from my colleague Dennis Ventry, whom I knew to cherish firm views on the topic.  At  1:34 pm, my Blackberry began to smoke.  Blowing away the brimstone, I read:

Of course it's a social program. A poorly targeted, inefficient, and inequitable social program, but a social program nonetheless.

If the policy goal is to increase rates of homeownership (a dubious goal in its own right--rather, than, say, increasing the rates of shelter--but one we'll take as a given here), switching from a deduction to a credit would immediately increase the number of homeowners, as would-be marginal buyers (rather than those who'd own a home with or without the deduction/credit) make the tenure decision to own versus rent. Indeed, economists (i.e., except, perhaps, those working for the National Association of Realtors or the National Association of Home Builders) have found that it does not raise rates of homeownership (just ownership of bigger, more expensive homes).

The deduction's inefficiencies are legendary and numerous: distorts cost of housing relative to other investments; contributes to overinvestment in the asset class and misallocation of capital stock; artificially raises housing prices; raises unemployment (by decreasing labor mobility); destabilizes the national economy; encourages overconsumption of bigger, costlier homes; and encourages precariously high loan-to-value (LTV) ratios.

Finally, with respect to its inequities, the deduction disproportionately favors high-income TPs; distributes benefits unevenly across different regions of the country; and discriminates against minorities & low-income households. Moreover, it is the classic upside-down subsidy in that it provides 10x the tax savings for households with income exceeding $250K compared to households between $40K-$75K; provides no benefit to 65% of TPs claiming the standard deduction; provides no benefit to almost one-half all homeowners; no benefit to one-quarter of mortgaged homeowners; no benefit to renters; no benefit to low-income households; and only minimal benefits to middle-income and elderly households.
 Okay, any questions?  

Floyd Norris Misses the Point

There's an uncharacteristically obtuse piece up this morning from the mostly astute Floyd Norris, about the adventures of Irving Picard, the bankruptcy trustee in Bernie Madoff's case. Picard is going after investors for their fictitious profits but also in some cases--those closest to Madoff--he wants them to cough up the whole of their swag. He's not saying they were in on the fraud--this is more of a shouda coulda woulda case where he's saying that even if they didn't know, why it's just tough.

Norris compares/contrast the Picard story with the settled law of disclosure in securities fraud cases; the doctrine that requires you to disclose your own positions when you give investment advice. in these securities cases, "tough luck" is not a defense.   If you are currently dumping toxic waste you are touting, you have to warn the toutee. Norris says in effect that Picard is trying to use the "tough luck" defense against Madoff investors, and to make them pay up for, as it were, not finding out that they were being defrauded.

It's an interesting point but it misses a critical distinction: Picard is not Madoff. Indeed, that is a condition of his job:  he is stranger with the big key ring who steps in to clean up the mess after the bad guy has fled. In a sense he is the successor to Madoff; he takes over Madoff's property. But better to think of him as the agent/spokesman/representive of all he defrauded investors. Read him as saying: okay, granted Madoff defrauded you. Still, it was he who defrauded you, and his fraud should not be binding on me as the representative of the whole class.

It is perhaps a bit of a novelty--most bankruptcy cases are about plain-vanilla creditors, not defrauded investors. And maybe I have just been bathed too long in th brine of bankruptcy law. But it looks okay. At the very least, it the point that innocent-successor Irving is not properly understood as being in the company of all those criminals and malefactors whose evil machinations led to the creation of the disclosure doctrine.

One more point, a repeat, beginning with a full disclosure: so far as I know, I've never laid eyes on Irving Picard (although I had heard of him in bankruptcy circles). And I don't have a sliver of sliver at stake in the Madoff case. And I'm not surprised that Picard is catching so much flac today. But I suspect that when it is all over, Picard will emerge as a hero, a least in some circles--the guy who leveled the playing field and did more to help than to harm Bernie's victims.

There's another angle that Norris doesn't mention although I suspect he might agree with me. That is: I'm struck by the discontinuity between the SEC's disclosure mandate and the (mis)behavior of the big banks as they predate on their cusotmers. Think of JP Morgan quietly tiptoeing away from its Madoff hedge without telling buyers of its Madoff tracking fund; or Goldman not telling buyers of its toxic portfolio that it was assembled by the guy who wanted to short against it. Yes, yes, I understand that technically these transactions are not covered by he SEC doctrine. But to repeat a favorite mantra: there was a day when your banker was your friend, or at least a person with some fiduciary duty of loyalty to you as a customer. For the health of the system, we would do well to get back to that day.

Thursday, February 10, 2011


Vice Chancellor Jack Jacob of Delaware shows MGB how to find DCF:
[The expert witness] determined the ratio of MVIC to other financial measures such as EBIT, EBITD, DFNI,  DFCF, Interest Income and TBVIC...
--Le Beau  v. M.G. Bancorporation, Inc., 1998 WL 44993 (1998).


Was this on Fox? CNN?

I'm not sure, but the only place I found Hosni Mubarak live is here.  The video was split-screen, with HM on the left and a shouting (chanting?) crowd on the right.  The old man is offstage now but it seems the crowd is getting crankier by the moment.

[My friend Ignoto says he saw crowd footage on CNN in this morning taken from Al Jazeera but with the camera panned in so you couldn't see the AJ logo.]

Technical footnote: every so often--well, frequently--a voice on the feed will repeat an entire phrase.  Not just a part of a word or a random series of words, but an intelligible phrase.  Must be something about how they ship packets of info down the internet tubes. 

Update: Mrs. Buce says she heard it on Talk of the Nation.

Um, Yes...

What modern capital markets do very well is raise large amounts of capital from a broad base of investors who are persuaded to give their money to perfect strangers with precious little idea what these fortunate recipients are going to do with it.
 --Andrew Redleaf and Richard Vigilante, Panic (2010)

Wednesday, February 09, 2011

Windshield One, Bug Zero

I always think of Ron Paul as a short guy. Apparently he is not,  but that chip-on-the-shoulder, you-want-a-piece-of-me attitude so often sounds like it emanatesfrom Jimmy Cagney or  Danny DeVito--someone writhing and shouting while dangling three feet off the ground in the hand of a giant (Arnold Schwartzenegger?).

And are the Koch brothers tall?  Maybe so, although in real life (as distinct from theatre) I suppose it doesn't matter.Either way, they are the ones I picture patiently and inexorably overpowering the little weasel as he tries to horn in on the big time.  All of which may add nuance to Rortybomb's. preview of today's House hearings on "the Kochtopus:"  here's Paul again, beating up not so much on the President, or the mainstream Republican party but on his own allies sectarian adversaries in a famously fragmented libertarian movement. They say the job of every Republican president is to make his predecessor look good. Maybe the job of Ron Paul is to make the Koch brothers look good. 

Can We Agree on This at Least?

The greatest sentence in the English language is:

"Aroint thee, witch," the rump-fed ronyon cries.

Go on, aroint thee.  And on thy way back, bring me a spot of rump-fed ronyon.  With onyon.