Thursday, April 30, 2009

I'm Doling Out Free Information Today

This blog is coming to you today from the Portofino Hotel in Orlando, Florida. I'll post some pictures and some thoughts later, but until then, I'm offering a rude awakening to some people.

WSJ Opinion. Arthur Brooks. Here's the quote:
They are fighting a culture war of attrition with economic tools
Here's the free info: "They" are going to lose that war. As the TickerGuy is fond of saying, you can't fight the math. The rest of the article is equally impressive.

Tuesday, April 28, 2009

"Thanks for your support; now screw you you fat ugly pig!"

Don't get me wrong, I loooooove politicians. They are always so true to their principles and never, ever, ever, ever do anything to compromise their integrity. (I think you get the point.)

Ok, politicians are idiots on both sides of the aisle. But I like having Specter as a Republican, because the more split the Congress, the less they are able to accomplish, i.e. the less they are able to F-up. But wow, Specter will do anything to salvage his career. Read this gem:
“I am not prepared to have my 29-year record in the United States Senate decided by the Pennsylvania Republican primary electorate -- not prepared to have that record decided by that jury, the Pennsylvania Republican primary electorate,” Specter said. 
Do I need to explain to Specter that his '29-year record' was allowed to take place because of the largesse of the voting public, specifically the Republican party. I realize the GOP has fallen outta touch with the general public over the last few years, but to insinuate that the 'jury' that has allowed you to be in office for 29 years owes you a favor is completely backwards. Politicians are amazing. They may be snakes, but they are amazing snakes.

Maybe 'S.P.E.C.T.R.E. 2012' would be an appropriate campaign slogan.

Schooling the Public

New York Times. Column on education. A few of my thoughts:
Between 2004 and last year, scores for young minority students increased, but so did those of white students, leaving the achievement gap stubbornly wide (emphasis mine)
I'd like to see the 'but' changed to an 'and'. Is that not what we want as a society? Minorities scores increased? Great! White kids (majorities??) scores increased? Equally great. Why is it a bad thing that the white kids had improved scores as did the minority students? Had the minority students' scores improved and the white kids' scores worsened, would the NY Times be celebrating this fact? I find the connotations of this sentence troubling. I know the point of No Child Left Behind is to close the gap, but I don't think we want that gap to be closed at the expense of one group versus the other.
The results point to the long-term crisis in many of the nation’s high schools, and could lead to proposals for more federal attention to them in the rewrite of the No Child law
Let me get this straight. The results of a federal public schooling program have been lackluster and disappointing, so the answer is for proposals to do more? I personally would love to see more responsibility to be delegated to the states and cities. I'm also of the flavor that advocates giving vouchers to parents and letting them decide where to send their kids. I think this is the most disgusting position the Democrats maintain. If we were serious about helping improve the prospects of general elementary education, we be open to radical reformation of the system. Innovative, entrepreneurial and varied. Hopefully Obama is as brilliant of a politician as some claim him to be. I'm praying that he's keeping the Teachers Union on his side to get re-elected in '12, then saying 'Screw You and your monopolization of the system and abject failure under that monopoly; I'm going to truly help our school system by doing some crazy shit with Arne Duncan'.

I've rambled and gotten off topic. I'm done.

I come from El barrio...

For that matter, the entire state of New Mexico could use a little more sunshine disinfectant.
Yup. After Bill Richardson's failed attempt at Secretary of State and then his 'boo-hoo' 'for the good of the country I'm removing myself from consideration for the Secretary of Commerce' pay-for-play bungling, the (my) state's AG is now getting some well deserved spotlight. Now, let me be clear: It's New Mexico. Just like the Oakland Raiders, we do things our own way. It's the Wild Wild West. So this shouldn't really surprise anybody inside of the glorious 505. That being god is our government corrupt. My only hope is that Iceman takes to the skies and cleans up our Mig problem.

Hey Gary King - snnnnnfff - you stink:

Two Videos Getting You Up To Speed

The first is Janet Tavakoli giving an enlightened overview of what has been happening. If you're not skeptical about crony capitalism, this video should do the trick to convert you. HT: The TickerGuy

The second is Charlie Rose interviewing Stiglitz, Ross Sorkin, Ackman, and Kelly. This video focuses more on what has been going on the last two months. As usual, Charlie Rose is great.

Friday, April 24, 2009

NBA Playoffs Update

It's been a wild first couple of days in the NBA playoffs. After watching a few games, here's where I stand:


I still think the Lakers will sweep the Jazz. I still think the Hornets will beat the Nuggets. I still think the Rockets will beat the Blazers. I still think the Spurs will beat the Mavs.


I still think the Cavs will sweep the Pistons. I still think the Celts will beat the Bulls. I still think the Magic will struggle to beat the 6er's in 7. I still think the Heat will beat the Hawks.

Thank you for your concern, but as you can see, I still think I am perfectly prescient in my plausible predictions.

SIDENOTE: If you are not doing Streak for the Cash on ESPN, you should be. If you are doing the Streak, you probably picked the Lakers to win last night. If you had a Streak of 5+ going in to that game, I laugh at you. Especially if I told you to pick the Jazz before the tipoff.

NOTES on the NFL Draft: I've forsaken most offseason activities for all sports b/c I find myself too busy with "in-season" sports to worry about "off-season" sports. That being said, I know you are clamoring for my take on the upcoming NFL draft. I'm going to take a few minutes to address the needs of some of the more interesting teams.

Let's start with the Seahawks: After an abysmal season last year, the Hawks get the benefit of a high draft pick. I have a big problem with drafting skill players at the top of the draft. It usually engenders the player with a sense of entitlement despite accomplishing little more than having their named called on national TV while looking dorky holding up a jersey next to the Comish. There seems to be twice as many highly touted busts as big stars. Likewise, it seems as if many of the best players in the league today were picked in the later rounds. Look at last years two Superbowl QBs. Roethlisberger was the 11 pick in the draft (1st round, but not top 10) and Warner has a story familiar to us all (grocery boy turned QB). It will be tempting for the Hawks to grab Mark Sanchez if he's still on the board (which he will be unless a team trades up). Sanchez can come in, sit behing Baldback for a few years then step in to the starting job. How's that working out for another USC grad Leinart in 'Zona? Sanchez might be a great QB, but I'd rather get an experienced QB through free-agency or a trade (in a few years in Seattle's case). I don't care who they pick, but they should get one of the many OTs talked about and have a great QB protector for years to come. Either way, the Hawks will be fighting for a wildcard pick while going against the 49ers in division.

The 49ers: After 2 or 3 disappointing seasons as the 'hot pick' that stayed cold, the 9ers are primed to follow up their solid finish under new coach Mike Singletary atop the NFC West and are quite likely to have home-field advantage throughout the playoffs. It's almost unfair that they also get the #10 pick in the draft. I expect the team to come out of the gates slowly, 3-3, but by then Goodell will have reinstated Mr. Michael Vick.  Vick will sign with a fatherly figure like Singletary and Vick will make a stupid mistake in his first game. The Niners will lose that game, Vick will be put in Singletary's doghouse; but after that, the 9ers will finish 9-0 (12-4 overall) with Vick throwing bones to Crabtree (the 9ers pick this year). You heard it here first.

The Cowboys: I know the Boys don't have a first round pick, but they don't need one. After being liberated by letting go of Owens and moving into their new awesome stadium, the Cowboys are gearing up for a really exciting season. Last year was a disappointment, but Jerry Jones has made sure the ship is sailing straight this offseason and there are high hopes in Dallas. That's too bad. After the Mavs impending collapse to the Ginolbi-less Spurs, the Cowboys season will be an even bigger letdown. Despite being led by the wickedly smart Jason Garrett on offense, the Boys will give up an average of 29.2 points per game this year. The new stadium is nice, but just like my mother lied to me as a child, "It's the inside that counts." Well, in this case, the inside is a giant piece of poop that will rot for 17 weeks from August to 2010.

Have a great weekend!

Wednesday, April 22, 2009

Lure your audience with a catchy first line!!

I think the NY Times is doing it wrong:
 Jeremy Tyler, a 6-foot-11 high school junior whom some consider the best American big man since Greg Oden, says he will be taking a new path to the N.B.A. He has left San Diego High School and said this week that he would skip his senior year to play professionally in Europe.
You mean this Greg Oden? 


BPGTOPF                                                                                                        PPG



I know Greg is just a quasi-rookie, but you're trying to promote your article by saying this kid is the next best thing since Greg Oden? 21 minutes a game? 8 points and 7 rebounds for a big man? I like Greg Oden and hope his career takes off, but from what we've seen so far, I sure how this Tyler kid projects better than what we've had from Oden up until now.

NY Times should stick to the arts.

Sunday, April 19, 2009

Economics Quiz

From the NY Times. When taking the quiz, make sure you are taking it with a Keynesian perspective. If you don't know what that means, take the quiz anyways and see how you do. Then, if you are feeling brave, post your score in my comments section!

I was 16/18 with one of those just being a total brain fart.

Link of the Day

Mario Rizzo's post at ThinkMarkets is stellar. Be sure to read some of the comments.

Saturday, April 18, 2009

Explicit Negative Rates from the Fed?

When I first started getting into Econ sometime last year, I thought those calling for the abolishment of the Fed where a little bit loony. As with any notion that is originally found extreme I thought it implausible and dangerous. I've come around. Having a central bank that is able to manipulate the interest rates of a whole economy is in fact the implausible and dangerous action. That being said, I don't foresee the termination of the Fed as anything that will happen in the near future. Now that you know where I stand on the issue, let's look at Greg Mankiw's upcoming letter in the New York Times:
Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend.
Normally I would talk about the lunacy of this proposal as if fits in my ideal society, but we don't live in my ideal society. My society wouldn't have a central bank. Given the fact that we do have a central bank, and looking at the proposed policies, arguing for an explicit negative rate from the Fed almost seems like the least of all evils. (I'd still argue that the best action would be to give the people a set of guidelines that won't be changed and tell people to deal with it, instead of changing policies willy-nilly and promoting confusion). I have seen and read commentary arguing that the Fed funds rate is effectually already negative, but for the Fed to be explicit in their pursuit of rampant inflation (by acting with the Treasury) as a means to produce negative interest rates would be troubling. The power to even theoretically pursue such a policy is troubling. Imagine being a responsible long-term lender and you have entered into contracts over the last few years with a nominal interest rate of 5%. Each lender has a responsibility then to also adjust that nominal rate so that it reflects the effects of inflation. Without a central bank, lenders are directly responsible for their own analysis of the perceived underlying inflation or deflation in the economy. But with the Fed present, lenders need to somehow factor in the potential manipulation of a currency by central bankers that are nominated by the Administration. While many efforts have been made to minimize conflicts of interest between Fed members and the Administrations nominating them, and while I'll assume that Fed members act in the best interests of society, there is bound to be some influence put upon a Fed so focused in DC. To ask lenders to take losses on responsible loans is another bailout for those who overextended themselves during the last decade.

Now, it could be argued that a bailout to the borrowers will at least allow them to pay back some of their debt instead of simply defaulting on it and going into bankruptcy. But for Mankiw to still be talking about 'aggregates' as if that all-encompassing-word could ever possibly hope to reflect the underlying complexities of society, is in my opinion misguided. He may think that this proposal is the best one on the table, or he may be proposing what he thinks has the best chance of actually passing through Congress/the Obamadministration. Nonetheless, the more the government stays out of the way and the sooner it let's entrepreneurs step in and assess the situation the better off we will all be. Instead, the government seems set on trumpeting its own importance and trying to clean up the mess that its myriad of follies helped create. I'm by no means trying to oversimplify the situation and simply blame everything on the big, bad government. Private actors were an integral part of this collapse, but the government has done its best to make sure these private actors don't pay the price for their mistakes.

I've gotten a little off topic, but the points remains the same. Promoting more government intervention may be the proposal to actually get serious consideration, but it promotes using the very institutions that manipulate reality in hope of keeping the curtain pulled over the imbecile wizard.

If the NBA playoffs aren't your cup of tea....

....maybe DonkeyBall is.
If the game is simple, playing is not. The sport turns on the donkeys’ stubborn nature, a quality that is encouraged by the referees. Some are trained to buck or to duck their necks — sending the players sliding to the floor — and referees reward the mischief with carrots. Other donkeys plant themselves under the hoop, providing players with a reliable scoring opportunity.

A Soothing Voice

There is a certain level of calmness to the way in which Tyler Cowen speaks. The combination of his intonation and pacing, supported by a sound level of self-doubt and logic, makes for a really enjoyable listening session. Over the course of the last week I've listened to his bloggingheads session with Will Wilkinson, and two of his podcasts a Econtalk (Monetary Policy and his Econ book). Here's a sample of Tyler talking about blogging and entrepreneurship. The sound of his voice is strangely calming to me.

Friday, April 17, 2009

Breaking down the NBA Playoffs

I love the NBA playoffs. 40 games in 40 nights on TNT is awesome. Every year there is some series that surprises everyone (think Hawks/Celtics last year). Some team inevitably gets hot and seemingly can't lose (Lakers rolling through the epic WC of last year). Every round has a matchup that is so even they could play best of 77 and it would be won 39-38 (Houston/Utah last year). There's the older team knowing that this year is likely their last with the current nucleus (Detroit last year). It's great and this year will surely feature the same awesomeness. I'm giddy (even though KG going down has momentarily faded that giddiness). Let's break each matchup and then I'll throw out some preposterous predictions:


(1) Cavs vs (8) Pistons

What was one of the marquee matchups the last few years in the Eastern Conference has been demoted to what should be a first round laugher. The Pistons were going to struggle some this year and it would've been a surprise for them to challenge for the EC, but I didn't expect them to be 8 seed material. Who knew that Chauncey was that valuable to the team, and who knew Iverson was going to struggle THIS much with the Pistons. Lebron gives everyone trouble, but he has been the bane of the Pistons' playoff existence the last few years.

Lebron is on a mission, this team has playoff experience. Cavs in 4.

(2) Boston vs (7) Chicago

I'm not even going to mention KG during this breakdown. KG was really overrated for this team and they won't miss KG at all. KG didn't bring anything to the table for the Celts and they won't miss KG at all. Ok, I failed. But Chicago is young; they were a promising team a few years ago, the up-and-coming team of the EC, but that went down in epic flames. Seriously, Deng, Wallace, Williams, Heinrich, Gordon. They were supposed to be good. That was a few years ago, and while D. Rose has been great this year, I think people have written the Celts off, but they won't let that happen. I actually see the Celts having an easy time with the Bulls.

KG's injury sucks, but I think the Celts have a surprise in them. Celts in 6.

(3) Orlando vs (6) Philly

Orlando is going to struggle. They've been playing terribly of late and I think they are assumed to be the only challengers left to the Cavs, and I don't like that combination. I can see them subconciously getting ahead of themselves and worrying too much about how they are going to handle the Cavs while overlooking their first two rounds. Well, after they lose Game 1, they'll be in for a struggle. That's right, I'm calling this series as the surprise battle that nobody saw coming. The point of this playoffs breakdown is not to be accurate but to make outlandish predictions. Responsible journalism gets thrown out the door when talking about sports (unlike my completely professional job while covering all other subjects). Philly is not a good team, but I want them to be good for a few games. Orlando seriously outmatches the 6'ers and I can barely even remember the name of the 6'ers coach, but I gots a feeling about this one.

Orlando in a 7 game battle.

(4) Atlanta vs (5) Dwyane Wade

Atlanta shot outta the gates this season, settled into the 4 slot and just kind consistently rode that wave to the seasons end. Miami's 2-12 players are nothing amazing (yet) but I like Spoelstra walking the sidelines and Wade doing insane '06 theatrics. I have a feeling this will be a popular upset pick (which bothers me), b/c I think the Hawks are really good. If I was being responsible, I'd pick them to win this series and then give the Cavs one hell of a battle. But I'm an idiot and I want to see Wade and Lebron battle in round 2. So, selfishly, I'm picking the Heat. I just want you to be warned, I'm probably wrong. The Hawks are a fun team to like when they are the 7 or 8 seed. There is something unlikable about them in Round 1 as the 4 seed. They become likable again if they play the Cavs in Round 2. Write that down.

Wade in 6

More worthless predictions: Cavs and Celts advancing to ECF. Shockingly, I have the Cavs going to the finals.


(1) Lakers vs (8) Utah

I think Carlos Boozer hates his life. As a Duke fan, I really liked him in college. As a person, I really found him despicable for screwing the Cavs like he did 3/4 years back. I can never really be a fan of his after that sleaze move he pulled. He had a verbal agreement with the Cavs, they left him not under contract for like an hour, and he jumped ship. Yeah, it's tough to pass up a few million and the opportunity to be the Alpha-Dog; and the Cavs GM was an idiot for even letting that situation be possible, but still, it left a bad taste in my mouth. I'm going to hold that against him until he saves the life of some kid or something. Also, as much as Chris Paul is admired and as awesome as his game is, I can't let go of the fact that he punched Julius Hodges in the balls during the ACC tournament a few years ago. That's just low; that's something a soccer player would do. You play the game, and you get every legal advantage you can get. You do not punch a guy in the balls. Let me repeat that: YOU DO NOT PUNCH A GUY IN THE BALLS. I hold those two events against those two players.

I digress. The Lakers are good. And if they can find a way to work around Bynum; they will be great. They can go big; they can go small; they can go deep; they can go Kobe. The have Phil doing crazy Asian stuff on the bench. They've got Mental Jack courtside hollering at officials. They can't be beat. This whole Kobe/Lebron factor reminds me of Obi-Won Kenobi and Darth Vader in Star Wars IV: A New Hope when Obi-Won and Darth are about to do battle:
Darth Vader: He is here.
Governor Tarkin: Obi-Wan Kenobi? What makes you think so?
Darth Vader: A tremor in the Force. The last time I felt it was in the presence of my old master.
Governor Tarkin: Surely he must be dead by now.
Darth Vader: Don't underestimate the Force.
Governor Tarkin: The Jedi are extinct, their fire has gone out of the universe. You, my friend, are all that's left of their religion.
[answering a comm signal]
Governor Tarkin: Yes?
Voice over comm: We have an emergency alert in detention block AA-23.
Governor Tarkin: The Princess? Put all sections on alert.
Darth Vader: Obi-wan *is* here. The Force is with him.
Governor Tarkin: If you're right, he must not be allowed to escape.
Darth Vader: Escape is not his plan. I must face him, alone.
The 'I must face him alone' part is exactly what is going on between Kobe and Lebron right now; I'm just not sure who is Darth Vader and who is Obi-Won (ignore the fact that Kobe raped a girl. Ok cheap joke, Kobe if you're reading this blog, I was joking). I see them both just blitzing through their conferences. More on Obi-Won/Vader later...

Lakers in 4

(2) Denver vs (7) New Orleans

I was talking to my amigo yesterday and asked him the question, "Is Denver secretly good? Is there something I'm missing here?" The WC has been awesome the last few years. They've come back to earth a little this year, but I am flabbergasted at the fact that Denver is the number 2 seed. Chauncey obviously has done a lot for them as far as leadership goes, so I struggle to write them off, b/c he's got huge playoff testicles (not nearly as big as Sam Cassell's though). But I could swear that NO is way better than Denver. NO was great last year. They were the number 2 seed and took the Spurs to 7 games and looked like they were going to be a dominant force this year. 5 games separated the two teams this year; which is negligible. The teams split the season series. I think the 2 seed through 7 seeds are pretty much equal and any three teams could advance to round two.

I don't think Denver can get out of Round 1. I'd like to see them never get out of the first round for some reason. Hornets in 7 winning a road game for the series.

(4) Portland vs. (5) Houston

Another great matchup. Of course the 4/5's usually are, but Portland has been the semi-surprise/non-suprise of the year. It was surprising to see them in the top 9 of the WC for the first 1/3 of the season, but when you thought about it and accepted the fact that they have a great nucleus, it ceased to be a surprise and now they seem like a mainstay. Houston had the T-Mac debacle turn out to be a blessing in disguise. They've been better without him. I also think we forget how good Ron Artest really is. He's a GREAT on the ball defender, gets it done offensively and is a totally repressed nutjob. This works in his favor. Have you seen "I Love you Man"? Ron Artest reminds me of Jason Segel's character when a stranger confronts him about not picking up after his dogshit. Jason Segel responds by just walking up to the stranger in a confrontational manner and making really loud/crazy noices in the strangers face. I feel like RonRon could do that at any minute and that scares his opponents; except he's not going to do that because he's found his 'Happy Place' (sorry, two movies references in one sentence). I also like the prospect of Houston never making it out of the first round with this team, but now that T-Mac is on the sidelines, I think it would be great for them to make a playoff run with him being a non-factor. It would belittle T-Mac for handling his injury this year like a D-Bag.

Houston in an exciting 6.

Ok, finally:
(3) The Spurs vs. (6) The Mavs

This battle usually takes place later in the playoffs, but with the Mavs struggling to find their groove until the last two weeks of the season, it's a first round Texas Two Step instead of a WCF Two-step. No big deal. Going to college in San Antonio, I know first hand how much these two teams hate each other (or at least the fan bases). The Mavs are the hottest team in the league right now, and the Spurs are coming off news of Ginobli being done for the year and Timmy D's health less than stellar. Tony Parker has shown me that there are admirable Frenchy's out there and Greg Pop will come up with a great gameplan. Throw in Mason and Finley hitting shots and they will be a tough game for anybody. The Mavs though are playing great basketball. As soon as they realized they would be the 8 seed at least, it loosened up their playing style and they've been able to beat some really good teams down the stretch. The teams split the season series and this is that one series where the teams could play a billion times and it would split 50/50 (ingoring the fact that the Spurs would fade because of a lack of depth/age). My favorite part about the Mavs this year is that it will convince Mark Cuban that maybe this nucleus could actually still win a championship, so instead of blowing the team up (like he should have done after '06's fail) he might try and add pieces again and watch them putter to 6/7/8 seeds for another two years. Then Dirk will be done and the Mavs will have to retool from scratch. I think the Spurs will win because I have little faith in Rick Carlisle. It's gonna be great though.

Spurs in 7

Ludicrous predictions: Lakers and SPURS going to WCF. Spurs will be the surprise team going that far. I think the Lakers will lose 1 game in the WC. It's going to be memorable.

I hate picking the Cavs and Lakers to go to the finals, b/c that's what everybody is picking. But I'm not going to pick against the grain just to do it. That's stupid. The Lakers and Cavs are simply the cream of the crop in their respective conferences. Obi-Won and Vader. I think Lebron is going to do ridiculous things throughout the playoffs and leave his stamp on the game. In fact, he's been doing that all season. His team is quite mediocre relative to their record and 9ppg advantage over opponents (100ppg scored vs. 91ppg against). The Cavs are unstopable. So I'm picking the Lakers. I love Kobe, but he is the perfect Vader. And that's the thing, Vader beats Obi-Won in their Death Star battle. But Lebron is going to leave his stamp on the game, just like Old Ben Kenobi. Lebron is going to influence this story for years to come and go down in history as a better player than Kobe. But Kobe gets this one to cement his status.

Lakers win the championship in 7 as the Cavs can't protect the home-court they famously defended all year. Remember, it was the Lakers that were the only team to beat the Cavs on their home court this year (excluding the meaningless last game of the year vs. the 76ers). Watch this championship go down as one of the top-5 finishes to an NBA season.

The Model Essay

I don't agree with this article, but I think it perfectly captures one major side of the debate. I'll be sure to comment about it and reference it in blog posts to come. A sample: 
Three broad steps must be taken to remake this failed, unstable model: one, regulating global finance; two, correcting global economic, social and environmental imbalances; and three, devising ways to make sure economic progress is aligned with social needs.

Thursday, April 16, 2009

Maybe the Bulls knew something we didn't

The Chicago Bulls laid an egg last night against the Toronto Raptors....or so I thought. With a win, the Bulls would have secured the 6th playoff spot in the East and would face the battle-UNtested Orlando Magic. Instead, the Bulls played terribly and ended up in the 7th spot, set to face the defending champ Boston Celtics.

I thought the Bulls really screwed the pooch last night, but it turns out, maybe they knew something we didn't:
Kevin Garnett isn't ready to start the playoffs, and Boston Celtics coach Doc Rivers said Thursday that there's a strong possibility that he will miss the entire postseason.
 Hmmmm, that changes things.

Regulatory Link of the Day

If this opening paragraph doesn't get your attention, then I don't know what will:
In my mind’s eye, I envision a street fair—one of those happy community gatherings at which sellers of handcrafted ceramics, funky clothing, herbal remedies, fresh vegetables, and edible delicacies congregate to display their wares for the strolling customers, who chat amiably with the stall-keepers and with one another. Suddenly, amid horrified shrieks and the roar of a giant engine, a truck plows through this placid setting, scattering twisted debris and broken bodies in its wake. Finally, after wreaking a hundred-yard swath of death and devastation, the truck stops, and the driver, Ben Bernanke, climbs down from the cab.
That's Robert Higgs, author of Crisis and Leviathan. It's a recommended link for my series on Regulation.

Wednesday, April 15, 2009

What Is Seen and What is Not Seen

Famous French Economist Frederic Bastiat wrote an enchanting paper entitled, "What Is Seen and What Is Not Seen" in 1848. My first exposure to economics literature was (fortunately) from Henry Hazlitt and his "Economics in One Lesson", published in 1979. The premise behind each piece is quite simple. I'll focus on Hazlitt. His one lesson is this: 
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
His example is that of a glassman. Suppose you are walking along the street one day and come across a tailor's store with the storefront's large pane of glass broken. Surely, you would soon see a glassman pull up in his truck, sweep up the broken glass, measure the window space, go to the back of his truck, pull out a new sheet of glass, and spend the rest of the afternoon installing the new storefront. The tailor, who owns the shop, will pull out his wallet and hand the glassman $100 for his troubles. "Wow! That's great," you say. The glassman has $100 new dollars to take home to his wife and family. That wife will take some of the money to the grocery store and purchase food and some of the money to the jeweler to buy a necklace. The grocer and jeweler will then in turn take their newly earned money and cylce it further and further into the economy. This observation inspires you. That night you decide to go around town breaking all the glass storefronts in town; generating a plethora of new business for our glassman, who will then give the money to his wife and in turn to the grocer and jeweler. You are, in essence, stimulating the economy. And the faster the wife passes the money to the grocer and the jeweler, the faster is the velocity of your new stimulus.

Hazlitt (and Bastiat) goes on to point out that you would be mistaken in this analysis. What is 'Not Seen' is the baker. Had the tailor been able to save his money, instead of paying the glassman, he would have bought his daughter a celebratory cake for her graduation. It is easy to 'See' the money pass hands from glassman, to wife, to grocer, to jeweler; but it is much more difficult to 'See' the baker, sitting idly in his shop with no demand for cakes, cookies, and sweets.

So what's the point of this lesson I am passing on? This. "Pipe Made in India Incenses Illionois Town". I just finished reading this article in the New York times, and it is a great learning tool. Besides its forced alliteration, the article goes on to lament about the fact that a union worker recently 'SAW' a train passing by with Indian steel piping aboard. The article continues to focus on the 'Seen' aspects. The town that is no-longer its once bustling economic center; the jobs that would be created if a congressional clause stipulated that piping be made domestically; the unfair 'dumping' being done by Indian and Chinese producers. All of this is easily 'seen'. What is not seen is the small business owner paying less taxes for cheaper steel; the local public school teacher getting a raise because her government saved money on steel and could afford to give her another $1,500/year; the janitor paying less for gas because the oil company used cheaper steel to bring in the Canadian oil. I feel badly for the small town and especially the man with 6 unemployed kids. But requiring the rest of the region to pay more for American, when a less expensive Indian alternative is readily available, is selfish. Using legislation to force a janitor to pay more for gas to support your kids would justifiably frustrated the janitor. Only the janitor would never 'See' this hidden cost.

There's yet another economics lesson to be learned within the article. Near the end, it talks about how the United Steelworkers union is teaming up with the Sierra Club to fight this problem. This lesson is about Bootleggers and Baptists. Here is an explanation of B&B:
Both groups want to ban Sunday liquor sales. One out of concern for others. One out of self-interest. Politicians who support such a ban always invoke the altruistic motive. The altruists give cover to the self-interested advocates for a particular policy.

The altruists often inspire the general public to encourage politicians to "do something." But they lose interest in the details of the legislation. The bootleggers, the self-interested folk, spend a lot of time on those details making sure that the legislation is structured to line their pockets.
The 'altruists' in the NY Times article are the Sierra Club. They'll push for pipes that meet a more stringent standard in order to 'protect the environment'. But when the legislation gets written, I'd imagine the United Steelworkers will have their hand on the pen.

Presidential Pets

Unlike Jack Byrnes, I'm not a cat kind of guy. I know that may alienate some of my readership, but dogs are way better. If BHO would have gotten a First Cat before a First Dog, I'd move back to China (sarcastic laughter). But that got me thinking, if Presidents were judged not on policy but on pets, who would go down as the Best #1 in our history?

Worst Prez: Likely Andrew Johnson. While a handful of presidents had zero pets, Johnson had only white mice. I think that's kind of weird.

Honorable Mention for Best Prez: John Quincy Adams (Alligator); Van Buren (tiger cubs); Buchanan (an eagle)

Coolest Prez #3: Jefferson. Washington had a bunch of hounds, a parrot and a horse. Adams had only horses. But Jefferson was the first Prez to say, "F it. I'm the President of the coolest new nation in the world, and I'm gonna get me an animal that represents our awesomeness." So he got a mockingbird, and then Lewis and Clark gave him two bear cubs. Bear cubs!! I wonder if Sally Hemings was responsible for feeding them? Jefferson definitely gets some extra points for starting the trend.

Coolest Prez #2: Silent Cal. This guy gets knocked all the time for being a crappy President (and undeservedly so, I might add). He was one of the most libertarian presidents in our history. After him, Hoover and Roosevelt oversaw the most liberal expansion in the federal government; a trend that has continued throughout the 20th century. If you want to read a good book about this expansion, check out "Crisis and Leviathan" by Robert Higgs. Anyways, Mr. Cool Cal had an awesome army of pets: A bunch of dogs (Terriers, Airedale, Sheepdog, Bulldog, Shepard, Birder, Collies, Chows), birds, cats, and now the good stuff: Raccoons named Rebecca and Horace; a donkey named Ebeneezer; a bobcat named Smokey; a bear; an antelope; a wallaby; a pygmy hippo!!; and some lion cubs. 

Coolest Prez #1: What? You thought Silent Cal couldn't be topped? Me neither, but check out this cowboy: Teddy Roosevelt. I could almost change my opinion of his cousin's presidency because of how eclectic this collection is. The usual dogs and cats; a pony; a macaw; a BADGER named Josiah, a PIEBALD RAT (which upon further research, is actually just a dog, but still sounds cool); a garter snake named Emily Spinach (was this dude smoking weed?); FIVE BEARS; FIVE GUINEA PIGS (presumably not allowed to play with the bears); more snakes; two kangaroo rats; lizards; roosters; an owl; a FLYING SQUIRREL (compensation for a lack of Air-Force One?); a Raccoon; a coyote; a Lion; a Hyena; and Zebra. Take that Mike Tyson

Check out the whole list

Best opening paragraphs to an article I read today...

Jamie Whyte. London Times. I'm going to share the opening: 

Those who favour “stimulating” the economy often employ a medical metaphor. The economy is a dying patient. Questions about the long-term effects of its treatment are irrelevant. All that matters now is keeping it alive.

They are foolish to employ this metaphor. Economies cannot die. Even during the Great Depression of the 1930s the economy lived on. The gross domestic product of most industrial countries dropped by about 30 per cent. I am not sure how to translate that into the medical metaphor. Moving 30 per cent less? Losing 30 per cent of your body weight? Whatever: it is not the same as dying.

So long as humans survive, we will have an economy. People will produce and consume food, shelter, clothes, entertainment and, with a little luck, much more besides.

This means that stimulators draw exactly the wrong conclusion from the sick patient metaphor. We should be relatively unconcerned about the economy’s immediate future. We know it will survive. What matters is its long-term quality of life. Crippling a patient who would otherwise die may be worth it. But crippling an immortal patient who would otherwise have to endure a brief period of intense pain is not.

Clever reasoning indeed.

Yeah, It's Tax Day

Whether or not you're going to a tea party today (I am not, but I like the idea), taxes are due today. I just finished reading a bevy of tax-related articles and the more I read, the angrier I became. Articles penned by people of all sorts of different political bases continued to stoke the fire burning inside.

1) Federal taxation makes me sick. Why the heck is it so high? Part of this logic is based upon one's ideal government structure. Those of us that believe a top-down mentality is best and that Wizards of Oz can pull levers and push buttons to manipulate society into achieving the most ideal society yearn for taxation to be centralized. Think of it as government's form of economies of scale. Funnel all the money into the central entity, and that central entity is best able to delegate where and to whom that money goes. Put the smartest people together and they can make magic happen. On the other hand, those of us that believe a ground-up mentality is best and that some sort of Hayekian spontaneity is the best path yearn for taxation to be decentralized. Think of this path as one that promotes experimentation among different communities. Some communities might fall behind at first; some communities may thrive at first. But innovated government is made possible and it opens up the feedback loops desperately lagging in big government.

I'm in favor of the latter, the Hayekian spontaneity. I'd much prefer to see local taxation at 35% and federal taxation at 7%, meaning local communities and governments can control delegation of spending. Not only does dispersal of tax money let locals have more say in the appropriate allocation of said money, but it weakens the leviathan located in DC. In fact, this was one of the main intentions of the Framers of this great nation. Jefferson was well aware that a  large government monopoly poses a direct threat to individual liberty:
"The natural progress of things is for liberty to yeild, and government to gain ground."
The intrigue presented by pooling our money in a central location is understandable at first glance. But allowing that much monetary power to be placed in so few hands is dangerous. In the best case scenario, those in power are benevolent angels that truly have the public's interest at heart. But even then, if those angels make a mistake, it's an expensive mistake. No small group of technocrats can effectively dole out billions and trillions of funds as planned. The human brain is incapable of accomplishing this mighty task. But what if at the foci of government, instead of angels, we have humans, prone to the whims and desires and manipulation of others. Favors? Corruption? Where would it end?

These individual tea-parties taking place around the country will no doubt draw some attention from federal legislators. Republicans will surely use these tea parties as an tool to promote an agenda they failingly adhered to for the last ten years. Democrats will use them as a impetus for investing in long-term investments like health-care technology or something similarly silly. But thousands of people acting in collaboration around the US will likely have little direct impact on the federal government. If, however, power was localized, these tea parties would have much more impact on the spending patterns of government. And herein lies the catch, the Federal government has been set up to insulate itself from nation-wide criticism. Local politicians are held accountable for their actions much more so than those elected to go to Washington. The people of Connecticut may be fed up with Chris Dodd's nincompoopery, but the fact that he is such a prominent Senator with legitimate power, means that by voting him out, the people of Connecticut will lose a powerful voice in the Senate.

I can be convinced into pooling money for military spending, but education? farm subsidies? healthcare? creating green jobs? Let those decisions be made by the communities of America. If you don't like your community, it's a lot easier to move states than it is to move countries. It's a lot easier to disown New York than it is to disown the United States. In general, I think people are proud of their home states. I know New Mexicans are surprisingly stout defenders of the Land of Enchantment. But I think (for the most part) people are tremendously more proud to be from America than any one particular state. We can all live under the umbrella of legal statutes and awesomeness that is America, but let's give the states more power to spend their constituents money.

2) Ok, that first part turned out way longer than I anticipated. Let's chalk that one up to just how feverish the articles made me. I also want to talk about BHO's charity tax. Before hearing the details of the adjustment, I was a little worries. But then I listened to him address the issue at the inaugural White House Press Conference and I became a fan of the logic behind the change. Right now, the top brackets of income earners wishing to make a contribution to charity are able to deduct 35% of the donation from their taxes. Lower brackets are able to deduct only 28%. Quoting the Washington Post:
Obama said the change would help equalize the tax break for those donating to charity. "When I give $100, I'd get the same amount of deduction as when some -- a bus driver who's making $50,000 a year, or $40,000 a year -- give that same $100," he said, adding that the provision would affect about 1 percent of Americans.
The part that frustrates me is that Obama proposes lowering the tax break for that highest bracket. I know Obama is making this adjustment to increase federal revenues, but if you really want to make things more "fair" or "equalized" by changing this discrepancy, then why not give a bigger tax break to the other 99%? Move the tax deduction for all Americans to 35%. Now that's change I can believe in.

Saturday, April 11, 2009

Masters Leaderboard!

Follow along with the Masters @ your favorite blog: FEV

Keeping an Open Mind

It can be easy to be set in your ways. Pick a topic to write about, pick your stance on the issue, and then pick data to back your stance. That's the easy way to write. This article about Raghuram Rajan shows off his discipline:
He [Rajan] says he had planned to write about how financial developments during Mr. Greenspan's 18-year tenure made the world safer. But the more he looked, the less he believed that. In the end, with Mr. Greenspan watching from the audience, he argued that disaster might loom.
Easier said than done.

Thursday, April 9, 2009

The Masters from Augusta National. Live Blog

6:09pm - Tiger is making a run. I'd love watching golf even if he wasn't part of the picture, but he manages to make the game even more exciting. I love watching him and want him to win every time. I want to witness history. I want him to set the bar so high that my grandkids will ask me about him 50 years from now. Let's see how close he can get to the top of the leaderboard.

Tomorrow is forecasting a little rain, so today's low scores might not roll over into tomorrow. We'll see. Also, if it does rain Friday afternoon/evening, then Saturday should make for some really interesting golf. A look over the scoreboard and none of the big names are necessarily out of the tourney. It's been a great first day, plenty of low scores and it looks like we are on our way to another great first Major of the year.

5:00pm - So Chad Campbell is on the verge of going VERY low. He's played well this season, making 7 of 8 cuts, but holy crap, he's threatening to post the lowest single day score in Majors history! Weather is nice, the course is playing relatively short, and the greens don't seem to be any faster than usual, so it's no surprise scores have been low; however, 9 under is surprisingly low. Remember, golf tournaments last four days for a reason, so don't get too caught up in your favorite golfer being out of contention. I'll be pulling for Greg Norman to ride the momentum of his -2 today; Tiger will always be in/on the hunt; and lots of past champions also went low. 

4:01pm - Espn coverage has started. I need to take a deep breath.

Link of the Day

I've been writing a lot of drafts about regulation, so it's only fitting that today's article is about regulation. I overwhelmingly approve of its message and it comes highly recommended with a 'Falcon's Eye View' stamp of approval. The article is insightful, to the point, and I think I have a crush on it. wow

Final Week of the NBA Season: What matters?

The NBA postseason is fast approaching and the 08/09 run has a different feel to it than years past. No longer is the East to be laughed at like the sad, wasted blonde throwing up on her new shoes and crying outside the bar at 3 in the morning. The West's top 9 teams are still superior, but for the first time in almost ten years, the first two rounds of the East playoffs will be worth watching. Last year was an improvement, with the Hawks garnering some attention by surprising the Celts and taking them to 7; and Lebron letting us peek at his capabilities. But everyone knew the Celts were coming out of the East, and would be playing a Western team that had survived the most brutal Conference tournament in my lifetime (no hyperbole; last year's Western regular season was absolutely amazing and brought back fans that had left the NBA since the post-Jordan era).

With the season winding down next Wednesday, let's take a look at what's at stake for certain team in their remaining games. We'll start with the East:

First of all, the race for the 8th spot is not over yet. Chicago, Detroit, and Charlotte all have 4 games remaining, fighting for 2 spots, with Chicago and Detroit sharing a 3 game cushion. However, Chicago needs to play Philly, Charlotte and @Detroit.  I personally would love to see the Bobcats make the playoffs, a) b/c I like Larry Brown and b) the Bobcats? seriously?!? They've secretly turned into one of the pleasant surprises of this season (along with OK City, Portland, and Ms. Marko Jaric). Alas, it won't really matter who lands the 8 spot, b/c they'll be going up against the King in the 1st round. So, let's focus on the top seeds:

Cleveland: The Cavs have the East's top spot all but wrapped up, but more importantly they hold a one game edge over the Lakers for the best record in the league. With their 38-1 record at home this year; it would be nice to be hosting any potential Game 7s in the finals. Look for them to win their next three games (including a statement game at home against Boston) before winding things down vs. the 6ers.

Boston/Orlando: It's funny, last year all the talkingheads were saying that Boston is 'one year away from being champions/they need one more year to gel'. Well that year is here. Granted, they won last year and it's supposedly always more difficult to repeat (even though my intramural team had no trouble doing so in college, booyah), but the Celts have hardly looked like the team destined to repeat. After starting 27-2, they've gone 32-17. They've been battling injuries, sure, but so has almost every other major team this year. The Magic have surprised everyone by being this good, especially when you factor in the Jameer Nelson injury (they lost their point guard in the middle of the season!!). With the teams splitting the season series, that home court advantage would prove extra important. Boston struggled mightily on the road last playoffs, and the Magic are still a young team, that would greatly benefit from being at home. Boston has the one game lead, but they also face the tougher schedule and have a greater need to rest older bodies.

Atlanta/Miami: I'll break down matchups in next Friday's NBA column, but it looks safe to say that Atlanta will be hosting this 4/5 battle. While Philly is only half a game back from Miami, they still need to play Cleveland twice and Boston once.

Eastern wrap up: The 7/8/9 teams will be battling for two spots this week with Charlotte the long-shot, but definitely still alive. The Cavs, Celts, and Magic will be playing all out all the way through the season in hopes of securing home court advantage in either the 2nd round or finals. And the 4/5/6 teams can't really do much to control their playoff matchups. So that concludes our Eastern conference picture. Let's go to a commercial break.

(Racial Commentary: White guys often lament about the fact that they can't dress as cool as black guys, or at least that they can't pull off the same kind of style that most black guys can pull off. But I've got to say that typical white-dude clothing passes through time a lot more easily. Larry probably wears the same clothes today that he did in that McD's ad, but I doubt Jordan is still wearing that technicolor carwreck when he hits the gym at Caesar's in LV)

Western Conference:

Lakers: The Lakers are one game back of the Cavs for the best record in the league and guaranteed homecourt advantage throughout the playoffs. The Lakers have the added benefit knowing that if they fall two games back of the Cavs, they can just coast through their final couple games and rest up for round one. Obviously, Coach Jackson will be looking to get Bynum some reps with the A-team, but unless the Cavs give up a game, the Black Mamba can look forward to a restful last week.

Nuggets: I am very surprised to see them here this late in the season. They were the whipping boy of the West's round 1 for the last few years and I didn't see that changing any time soon. Chauncey's leadership and not-as-washed-upness have apparently catapulted this team into legitimacy. But even though they are playing great basketball right now, I wouldn't be surprised to see them as underdogs in the first round. They've owned Dallas this year, going 4-0, but they split against the Jazz and it's possible they could wind up playing CP3 (against whom they went 1-3!). I'd be shocked to see them come out of the West, but at the rate they are playing, they seem like a solid #2 seed.

San Antonio/Houston/Portland/New Orleans: One of these teams could sneak into a #2 seed, or fall into a #7, but it looks as if these four will be playing each other in some combination in round one. Obviously the Spurs are dealing with the Ginobli news still, but this is the most experienced team in the league and I don't think they are afraid about playing on the road through the playoffs. I'd look for them to get solid first half reps, but ultimately rest up and keep the cards close to their chest. Houston needs home court in the first round. They are 32-8 at home versus 18-20 on the road and they aren't known for their playoff prowess anyways. This team has reminded me of a JV Spurs the last few years. Well rounded, fundamental basketball; Adelman is an ok coach, and if they can get out of the first round and over that mental barrier, I could see this team building momentum. Portland is young, VERY young, and their home/away record is similar to the Rockets. Look for the Blazers to treat every game from here on out like a playoff game in an effort to secure home court. With CP3 at the point, the Hornets can win in any situation, so look for them to rest up.


Jazz/Mavs: Don't forget that whatever team ends up in the 7 spot, will be able to make a little bit of a run. After watching the Jazz last year, it's not wise to just write them off. After watching the Mavs this year, it's wise to just write them off. Technically they are still alive for the 6 seed, but CP3 and the Hornets should take care of this team that choked away its chance at a championship a few years ago and have reeled and disappointed since.


Let's review the West: Portland and Houston are playing hard for position, and the Lakers will keep an eye on the prospect of home court, but with all the playoffs spots secured and an evenly matched conference, don't look for too much craziness in the final West week. One more commercial before final thoughts:

(Physics Commentary: Did Magic really made that shot with the quarter? Are you positive? And more importantly: Holy crap, soda machines used to cost only a quarter. I would drink a billion sodas a day if they were that cheap. And once the Fed starts printing the gagillions needed to service our almost sure to default debt, Magic will need to find a way to shoot a $10 bill into a machine to impress some kids on the Venice boardwalk. And even more importantly: what the heck ever happened to Slice? Even though my mom never let me drink it, I loved that orange deliciousness.)

Ok, so today's NBA column was a little dry. Hypothetically looking at an uneventful last week will tend to do that, but next week I'll be back with some awards for the 08/09 season that are hopefully modestly original and also match up breakdowns of the first round games. I'll also share thoughts on Vegas bets that will be on the boards.

Enjoy following the Masters. I'll be live blogging some of it.