A little of this, a little of that

A summary of unpleasant events that people do not like.

I have some sympathy for the problems of income inequality. But I don't think we're getting that resolved by passing a "Buffett rule" or a millionaires tax, etc. Major tax reform, either taxing capital gain as income (you would have to stop taxing corporations in order to do it) or taxing consumption instead of income, would go a lot further to dealing with that. Neither seems likely to come out of the people protesting as options they would be willing to support.

But the major point is the litany of woe caused by the banking/financial sector. 

As one can tell from these charts, monetary policy doesn't appear to have panned out in an ideal way. We are currently paying money for banks to sit on money rather than lend it back out, their intended economic utility (as the market's diviners of capital loan requirements in the general economy). And if one looks at this, one can see why we've basically been fucked for the last 3-4 years. Our monetary policy has a target inflation rate. We haven't hit it for 3 or 4 years now. One reason is that the banking sector is hording money instead of circulating currency as it is supposed to do. A good question is why? Why are they not making loans? Well one reason is that the government is paying better returns than they feel they could earn on those loans (I think they are wrong there, but that's because I know how issuing loans works for banks and just how well it can profit them to do it).

I'm not sure what sound monetary purpose that serves, but it clearly isn't panning out for the rest of us. I don't think you are likely to find a protest movement coalescing around reforming monetary policy (besides hardcore Paul-ites who don't want monetary policy to exist in the first place) or for having Obama appoint new members to the Fed board (he's had two open slots for his entire term and has done nothing). But I'd have to think it would be more effective for the economy than screaming about college loans.

With my endorsement

College loans, discuss

So to mollify some of those protesters, this seems like a good idea. I'm fully aware that student loans were written into the bankruptcy laws because they had high default rates, and for that matter aware that they're the exception to the bankruptcy system. It still seems nuts that we force people who have no ability to pay to pay for something that is essentially a mortgage payment.

What that should mean is that they will have high interest rates or will be given out less frequently (and for fewer types of students, in need students/students studying fields more likely to pay out). This would indeed have the consequences of a) fewer people would go to college. I, like McArdle, don't find that very troubling because of the abundance of people in colleges who clearly have no idea what they are doing there. And for that matter, neither do the colleges. and b) colleges could have to stop raising tuition at astronomical rates because the government funded spigot of free money would go down in its flow. Which would mean in about 10-20 years or so college could again start being a reasonable expense for some that could be paid off during attendance (by working) or shortly there after (by taking smaller loans/working less).

Other options: adopt a percentage of income post-graduate scheme for payment. People who earn more could be paid off sooner, so they'd have some incentive to get to it, and others would have incentive to take lower paying jobs (teaching for instance, or different medical specialties for medical students) because they could now afford it instead of a fixed payment that might represent a very large amount of their income. This would also mean that the college has some incentive for either a) training people who could potentially earn higher income or b) training people such that they will most certainly have a job post-graduation. And not for training people in useless degrees. I think this admits that our over-credentialed/over-licensing society uses college largely as a degree mill for jobs rather than as self-enlightenment and self-enrichment, but we really cannot afford to continue lying to ourselves about the utility and experience of college as some sacred rite of passage at the prices we must pay.

Alternative medicine

Also known as "medicine". When it actually works.

In this case, not so much.

But it is still an interesting question about what sort, if any, interventions are necessary by government to deal with these ineffectual products (homeopathy, almost literally the same sugar and water of the generic placebo variety) being sold by the millions.

And I'd have to agree, the proper public policy response is basically to put a label on there to warn people that they're being hoodwinked, but let them if they wish to proceed from that to waste their money and time on ineffective (or at best placebo) treatment. It's really only fraud if people are unaware of the benefits and risks of their fiscal transactions. If they're still dumb after being informed that they're reliably going to be wasting their money, I say let them be taken advantage of.

One interesting qualifier would be that there could probably be better or more transparent information about actual medicines and their measurable effectiveness against various ailments. There are plenty of pills out there that can cost a minor fortune and yet have almost zero health impacts relative to placebos. In other words, there's plenty of actual medicine that's barely mediciny.

Taxation

The economic justification for having a separate and lower tax rate for capital is the sensitivity of capital inputs to tax relative to labour inputs.

However, the effect of lower taxation on capital rates is to generally subsidize the following
1) Home ownership and housing prices. Especially at the upper middle price point (the capital gains exclusion on housing ends around a half million, or 250k for an individual rather than a married couple). I already don't see the need for a home mortgage interest deduction, but I certainly don't see a need to further encourage home ownership and housing price inflation beyond that already distorting subsidy. We have plenty of incentives even without these for property ownership relative to renting shelter (price stability is higher, inflation protection on fixed interest mortgages, privacy, individual control over renovations or additions, school district placements for children, etc).
2) Financial sector growth. I suppose it's nice that banks and mutual funds can expand. But do we need a national industrial policy to encourage it further?
3) Corporations. It would seem to me the best subsidy to offer corporations is to abolish their income taxes and tax income where it reaches people instead. We have very high corporate income taxes in this country and this is a problem for global investment (Even the supposedly socialist Europeans have much lower corporate taxes than we do). What doesn't seem necessary is to push capital flows toward large cap companies in favor of small businesses or entrepreneurs or even smaller competing corporations in the same industries. Corporations already have favorable regulatory structures (barriers to entry) and abolishing their income taxes allows a considerable market advantage for global investment. Further benefits in the form of huge capital accumulations seem unnecessary.
4) Wealthy individuals. Large portions of individual wealth are accumulated in stocks and bonds and housing. For the average person, capital gains taxation is a dream world. Indeed, the average person's "investments", in the form of stock especially, are locked up in 401ks and IRAs, and unless these are ROTH accounts, are already taxed at income tax rates regardless of the devices used to invest for retirement. Essentially this is a highly regressive income tax device as a result. (this does not even include the disparity between people who make money by trading money and people who make money by trading their labour, who then must have their employers pay payroll taxes, further diminishing their post-tax income).

So I'm not quite sure why we still preserve this distinction of "income" from "income". The purported economic argument that still makes sense is to avoid, or at least lower, double taxation because of the existing corporate income taxes and then to tax also their dividends and capital gains. But if you sweep out the income taxes at the corporate side, then the gains and dividends no longer double taxed. And you could just as well tax them at regular individual marginal tax rates. This would have the effect of encouraging lower and middle income investment, for example when people are younger and tax brackets are likely lower, or older retirees who are living off of retirement savings, and provide a diminishing return to large capital accumulations. Progressives and pragmatists would win under this logic because the tax code would become more progressive. The tax base would also increase, potentially increasing government revenues. Conservatives would then also win because they could probably decrease marginal tax rates and get to sell a tax cut to the public. Small businesses and competing corporations would win against incumbent large caps gobbling up investment capital at subsidized rates. Corporations could win by not having to game the income tax system and their profits could be untempered, investors could receive larger dividends, etc. Renters and lower-to lower middle class people would win by not having inflated housing prices in dense urban areas. And so on down the line.

The only people who lose out are the aforementioned parties who benefit from the status quo.

So I would bet that a policy shift like this would never happen.

Summary of the ongoing

QE II: Good. Overdue. Kind of an odd admission that monetary policy should have been tried at the outset however instead of a massive fiscal stimulus that was used to expand government programmes without the usual justifications. I don't buy the Austrian Business Cycle approach, primarily because the nations that have more monetary stimulus in response to this seem to be pretty stable and still kicking and especially because monetary policy looks like it caused and extended the Depression, several previous "panics", and the early 80s recession (deliberately in that case). This is not exactly a ringing endorsement of the Federal Reserve's ability to carry out its primary charge of course, but it is an endorsement of its ability to do something. Just a question of whether it wants to.

START ratification, not happening: Bad. Pointless political posturing involving an old adversary that apparently the Republican base is still easily afraid of (Russians are coming!, those evil Commies!). I don't think that ratification particularly improves or degrades our national security. Nuclear arms don't get used and we'd have enough either way to deter attacks of that kind by nuclear nation-states. What would help is that we'd be spending less money on maintaining and securing our nuclear arsenals and that would free up resources for other, probably wiser, uses of the money. Considering the deficit and the continued ability of the US to field military forces for conventional uses is kind of a big deal for national security, I'd say reducing that deficit by getting rid of useless stuff in the budget is a lot smarter even if it somehow magically makes us less safe in the minds of Mitt Romney and others. Mainly because it provides a diplomatic "victory" to Obama and Clinton.

Korea (War 2?): This I need to keep an eye on. I'm not an expert on the DPRK's inner power workings, but I'd guess that, like the torpedoing of the destroyer last year, there were some deliberate internal power struggles shaking out in the form of belligerent acts. The questions are how does the ROK respond (the sinking of the destroyer went through international channels to try to line up China against the action, I think this was marginally useful), and do these belligerent acts continue and even escalate?

The ongoing saga of to be groped or not: I don't understand how this sudden belligerence by civil liberties advocates is written off as personal inconvenience. We who give a shit have been complaining since the outset. When body scanners were shown to be an ineffectual giveaway to a corporate lobby, when we had to take off our shoes for no apparent reason, when people were detained without explanation at border crossings or for bordering planes and some of them tortured and/or detained for years despite no evidence of wrong-doing ever being presented (and usually, eventually released, without any compensation for the state's behavior), when no fly lists could be gone around by people who know to do so (ie, terrorists or spies) and couldn't be gotten off of by the many thousands of innocents who were targeted by them, when we passed the PATRIOT act and then again when we reauthorized its powers despite their documented abuses, when we've expanded and militarized the drug war at home, and so on.... We don't stop complaining about abuses of power and line crossing simply because the public's line keeps moving inexplicably further toward "MORE SECURITY!" Or because the administration changes and says "Trust us, we're not those other guys".

Personally, the track record of Obama on this, an issue that libertarians might expect at least some sympathetic ideas and actions from liberals (civil liberties), is so bad that I'm ready to write him off finally. I already didn't care for the rhetoric of protectionism or the Keynesian approach rather than the monetarist approach to the economy (even a mixed system would have been palatable coming as it does from a modern American version of liberalism), and the focus on health care rather than education was redeemable, but not for a health care bill that didn't fix anything important (long-term deficit and health care inflation are still out there). So far I'm not seeing a litany of accomplishments, but of woe here. Therefore, I don't particularly care if he loses in 2012 as long as it's not to some completely batshit insane Republican (Romney, Palin, Gingrich, probably Pawlenty). Give me one of the governors (or ex) who sounds like they actually care about governing (Daniels, Christie, Johnson) and I might consider them passable. I'm not sure that this will be the case, sadly. I'm actually fairly convinced that the GOP and in particular its membership of conservatives and social conservatives in particular is rather deranged at present and will do something to guarantee another 4 years of Obama.

I might say this is fine if there were issues that Obama has supported or championed that I cared about. But I'm mostly seeing yet another vile politician whose supporters ignore failings because it's "their guy". Look its bad enough when people do this when there's some asshole on their favourite sports team that they overlook because he's got the right colour jersey on. Do we really need to extend this us-them dynamic of thought to politics? Are we that lazy? I guess so. I think it's kind of pathetic to parrot out platitudes because someone says so and never bother to check that they actually know what they're talking about. Never mind the facts, I KNOW this guy is evil and this one is not because they're on my team!

Buffet style

A la carte TV

I've been pushing for this for a long time. I basically only use ESPN at this point (Comedy central is watched online). Even the History or Discovery Channels serve no purpose anymore. And I might pay for several HBO shows or a couple on AMC, but not for the movie channels themselves.

Basically what seems to be the argument here is that bundling allows for higher quality programming. Except that it doesn't. The actual source of what are considered higher quality shows tends to be not the cable networks, but the premium networks (HBO/Showtime). Every once in a while SyFy does something considered good (Battlestar was actually pretty lame, especially the ending). And AMC seems to be having a pretty good run (they've even a zombie show now that got its highest ratings ever). So if the argument is that bundling will kill the quality, maybe it'll kill a couple shows, but those shows might have ended up on a premium channel instead of a cable channel. The actual source of a high quality show as a perception tends to be that it hits a good niche in the market of entertainment and gathers a devoted following, and not that it tries to appeal to the broader, casual, person seeking explosions and full frontal nudity on television.

Ideally you'd be paying for the show itself, as often happens with people buying or renting the DVDs now, or paying for the channels that have the shows you wanted to watch. In my opinion what that actually means is that if a show isn't very good, and nobody wants to pay, say, $2 an episode to watch it, it's going to die off anyway. The actual impact is that fewer crappy shows get made, not fewer good ones, or alternatively, that more shows which have a strong niche appeal are made and which develop strong followings. It's true that there would be less revenue involved. This model does seem to have hurt music labels, but I'm not very concerned if media moguls profit margins are hurt. It concerns me more that we get to pay less money to those media moguls, or alternatively, that we only pay them more money if they give us a product that we actually wanted in the first place. There's another problem too at the other end. I'm not willing to pay $40 a month or so just to watch basketball games on cable right now. I don't participate in the market at all that way if I don't pay for their product. If they instead let me buy just the channel(s) I wanted, at a rate I feel was fair for those channels, or the shows I wanted (when there are shows I'd want to watch), then I'd be spending money on this. Instead I can just buy DVDs, go to the movies, or browse the internet (essentially watching TV for free on the last part). There will be an increasing number of people doing this last part and it would seem like the appropriate response is to make a flexible approach to selling something to them. This is the model adopted by iTunes and its clones in the music market. It hasn't stopped piracy or free riding completely, but it's a lot better than having to pay $15 for a new CD that has only some songs you might have wanted in the first place. There's a market there now that didn't exist and which could be captured in television as well. Shifting to it, in my opinion, would look a lot more like indie rock scenes with lots of niches with their own tastes for high quality rather than a plummeting cliff of entertainment quality.

Random thought

In some marginally technical fields, it seems like there should be more of a market for technical advisors or professional shoppers. So if one is buying a car or a computer or some other gizmo, if one doesn't know much about the field, rather than going to some dealership or big box store and relying on biased advice of the salesman and probably not getting the best deal you can, why is there not some other independent person whom you could tell them what you want/need, talk over what that means you're (probably) getting, give them a budget range, and commission them to go find the products that you desired at a reasonable price?

I realize there are people who do do this (for example in technical gadgets or fashion), but it would seem like something that people could advertise their services for and, in time, would largely do away with the need to deploy salespeople (and finance people who in effect work against the salesperson and the consumer). Presumably the reason that stores and car dealers do this is that there are profit margins to be had in pushing products associated with technical products, but if there are small and pervasive armies of professional buyers who are aware that most of these products are worthless or, at best, worth less than they will be charged, these margins will be reduced or even eliminated. At that point, the sales people might have jobs as independent contractors who are genuinely working for consumers rather than employed by the company to push a product.

Buy American!

Or not

I'm actually sort of curious about this.

Let's suppose you have a car manufacturer. Where does one suppose the car was MADE (and not simply what nationality is the manufacturer itself associated most closely)? Does anyone care to check that sticker out? Is a car a big ticket item enough that a consumer rationally opposed to supporting some devilish foreigner (say, from Venezuela or Russia) or rationally consumed with purchasing high quality goods (say from Germany, in theory) that they would check when they might not check whether their shirt is from Thailand, Taiwan, or mainland China? Or does it work only the other way around, that their concern over high quality and fair prices prevents them from becoming greatly concerned where a car was made? Not being generally concerned with making sweeping assumptions of quality products or using price discrimination based on origin, I don't find it all that consuming a purpose to look for goods only from certain places. And that leaves aside the actual difficulty of tracking down where a car's various parts were made and assembled simply by looking at one sticker relative to where a shirt or a motherboard were made. Or the possibility that a person may have internal biases, wanting something to come from closer to home rather than say, Hawaii or California, for whatever reason (most common with food production).

In fact, I've never cared. If a guy down the street is making something high quality at a fair price that I have a want or need for, I would buy it just as easily as I might from some random shop vendor in Mumbai. One can probably make some reasonable assumptions of quality based on company or brand names (I find this also a bit much of a shorthand too, particularly for things like medicinal products), but national origin seems like a false dynamic on which to judge this, particularly since large companies are almost always multinational.

It's been a couple days now

But Ohio, seriously get a grip. (check the sign)

And not just Ohio. Now LeBron's ignominious exit from Cleveland and the reaction it garnered from the team ownership and city is being compared to slavery? Uhm. No. Slavery the escape was "I'm getting the fuck out of here". Free agency the escape is "I'm getting paid and I want to win, show me what you can do with those or I'm going to the next table to see what they'll give me". There is no comparison there worth making. All the war analogies we usually use for sports, this is much dumber and useless. It might have been true enough decades ago (say during the Comiskey/Black Sox scandal), but not so much anymore.

I get that Gilbert would be bitter because it does seem like LeBron made up his mind months ago on this one and the manner of handling it was terrible. But really, an owner in football will cut players who have laid out everything on the field and sacrificed more than just money to win games and get paid all the time for shrewd business reasons. Players have every incentive to the same to the owners on the level playing field that has been worked out and established from years of contracts between players and owners. But it's not slavery. There is no ownership of players. And there isn't even any implied. It's more about loyalty and the way these things are handled publicly. You burn your bridges the way these things were done, expect people to be angry and lurid in their commentaries. My guess is that I probably wouldn't want to play for Gilbert either if this is how he treats his players and I was such a person who could play basketball at that level. I'm a big fan of Mark Cuban for that reason. You demand much of the people you pay as an owner of a business (or a sports team), but you should reward them, coddle them, provide room for growth and give them every incentive to believe that you want them to succeed just as much as you are trying to, and they'll reward that treatment with loyalty of their own.

You just sign the checks and you're just the paycheck.

Ideas

One thing I love most about this is the last line. "Still had the idea though."

Of course...chicken nuggets? Ouch. Maybe I should be aiming much lower.

So long to that

HSA, not yet gone, but certainly forgotten

This sort of reform was overlooked very early in the process (Wyden-Bennett was basically a plan to force everybody to get a private HSA for example, more or less what Singapore does). The positive side is that final law didn't quite kill it. Yet. Which means that there are businesses and individuals still getting these types of plans. The negative side is that the door is wide open to kick them out of the marketplace as an option for consumers who seem to feel they need health insurance. If, or more likely when, catastrophic health coverage of the type aligned with health savings accounts is no longer considered as meeting the government's mandated level of coverage, then there won't be HSAs and their associated low-cost insurance plans. This is personally inconvenient for those of us who have them, but it's also significantly more expensive for the system as a whole. One reason people get them is that their health expenses are traditionally low enough that they can afford them out of pocket. This, in light of rules requiring (finally!) transparency of medical care prices but not for two years, would be pretty easy to take care of routine and preventive medical care then by essentially paying tax-free cash for most of it, reserving the insurance itself for true medical emergencies (serious injuries, dread diseases, major surgical procedures, etc).

If that's not an option, expect health care spending as a percentage of GDP to keep climbing and placing more burdens on taxpayers. People who have made these market choices and are pleased enough with them over their alternatives need to start (shudder) lobbying in order to keep the mandated forms of health insurance out of and away from the HSA market.

I could put strychnine in the guacamole

Budgeting experts for households will tell you that it's the big stuff that gets people in trouble. Buying too much house, too much college, too much car. The nickel and dime of cutting back on 5 dollar cups of coffee and packs of smokes will help you stretch for those things. But they really don't matter much over the long run and anyway often have plenty of hedonistic value that isn't as easy to figure as the mistakes people make in paying for the really big things that may offset the problem anyway.

We've got way too much house on the federal (and state) dime just in those future entitlement programs (Social Security and Medicare/Aid), not to mention dozens of major programs outside of the big two hogs (FDA, DoA/food subsidies, hell we've still got tobacco subsidies, DEA/Drug war, DoE/NCLB) that could stand to go away without much grief from anybody who could consider themselves a "fiscal conservative".

So instead the solution is... to save a penny. Or actually less than a penny.

That scam "works" in Office Space only because he moved the decimal point over a couple spaces by accident. And they did it a few thousand times a day. Let me know when something crosses into the 9-10 figure dollar range per year (not per decade) at least on the chopping block. I'll take this more seriously.

(there is one idea there that does qualify, but welfare reform is best thought of as not giving as much money to people who are wealthy first, which is probably on the order of 10-12 figure range per year in costs in terms of wealth transfers from poor to rich through the tax code (HMI), public pensions, agricultural subsidies, many forms of college subsidies, and non-means tested social security and medicare).

Good for a laugh

(video disappeared over night..and is back now)


Elizabeth Warren was on Colbert last night and was pretty diplomatic about saying...the same thing (that they in fact didn't pay back the money we gave them "in full"). She has not been really happy with almost anybody involved with TARP money, including GM. Which is not surprising.

the other calling

Money man

"the interest-only negative-amortizing adjustable-rate subprime mortgage. You, the homebuyer, actually were given the option of paying nothing at all, and rolling whatever interest you owed the bank into a higher principal balance. It wasn’t hard to see what sort of person might like to have such a loan: one with no income. What Burry couldn’t understand was why a person who lent money would want to extend such a loan."

- From what I understand, banks were making a killing rolling these over by securitizing them. The fees involved were sufficient to cover the fact that the mortgage itself went into default almost immediately. At least until they started issuing these NINJ loans with a negative amortizing schedule. Then they didn't start hitting bottom until the housing market finally realized it had no clothes anymore. (all this is explained in the next couple paragraphs of the article itself too).

Financial innovation is not a bad thing. In this case, it allowed someone to discover real asset prices by essentially shorting a market which was bloated and overexposed. Short selling also isn't much of a problem because if enough people (and their money) still think something is valuable, the market corrects for it. But when people realize that they're buying things that are supposedly valuable but really are worthless loans to people who will never pay them back, it is appropriate to have a product where people bet that those people will never pay them back. The shorts get paid and everyone else loses (in the long run). This was supposedly a bad thing that people lost millions on these dumb bets. But I'd rather know something sucks sooner and faster and most people will ultimately lose less money when this happens. Note also that he didn't short sell stocks. That's typically a losing game because it's much like playing roulette. You can't always tell which stocks will die. You're usually better off buying up the ones that are undervalued and letting them go up than betting they will fail. But credit default swaps, essentially shorts on the housing market in this case, are a bit different hunting ground.

Amusing personal bits and pieces.
"He’d become a doctor not because he enjoyed medicine but because he didn’t find medical school terribly difficult." - Ahh. I suspect this is my conundrum with law or economics.
"“I wanted to help people—but not really.” - Ahh again. Indirect is the way to go here.
"In writing, he presented himself formally, even a bit stuffily, but he dressed for the beach." - Tie? Who needs a ridiculous piece of scarf strung tightly about the neck?
"...to learn how to interact more profitably with his fellow human beings" - Hmph. Who wants to do that? Learn how to act?

"...By this time the craze for Internet stocks was completely out of control and had infected the Stanford University medical community. “The residents in particular, and some of the faculty, were captivated by the dot-com bubble,” - The usual routine is that very smart people are some of the first people to be taken in by insane financial patterns. This is partly why Goldman Sachs and others were buying up those worthless loans and figuring out ways to make money off of them, and why they always had willing investors for them, thinking they had figured out a new way to game the market and make a fortune. But for the most part, if all you are is a part-time investor making your income off of internal medicine or engineering and throwing money where everyone else seems to be in the latest craze, trying to stay ahead of it, there isn't a way to game the market. That's the way to lose the game. When everybody else runs for something, you walk away. You walk toward it when other people are running away. That's typically the way investing works best (analogously speaking, the "ick investing" part is much like this philosophy). It isn't surprising that this guy made a fortune (for his clients) doing this as a result. All it took was the fine print and the pattern of trillions of dollars doing...really nothing at all except to call itself busy.

"It was as if you could buy flood insurance on the house in the valley for the same price as flood insurance on the house on the mountaintop." - Uh, yes, asset prices were this distorted because of the enormous faith in ratings agencies. Who were essentially being paid to produce "favorable" ratings.
"Bad behavior was no longer on the fringes of an otherwise sound economy; it was its central feature." - Good times.

And that last point. Something of a humility to it.
"It was very quiet" - Nobody cares when you're right anyway.

Running scams

So...

If you saw Wall Street and wanted to become a investment and finance guy... I am reminded of the story that Palin read Animal Farm and viewed the pigs as the heroes.

This explains a lot of how finance has become a sort of scummy profession if the people in its den looked approvingly on the people who wanted to scam off a few billion dollars from the system without regard to the penalty on the markets themselves, the institutions they worked for or traded with, and the investors whose money was involved. Here's the tricky part: it wasn't illegal. I'm in the camp that doesn't quite buy that Goldman Sachs did something that was illegal either. Almost certainly there was an ethical question however.

There's a line in Rounders that is closer to how the ethics of business might work better (not ideally, but better): "You can shear a sheep many times, but you can only skin it once." There's another line that seems to describe how they actually work: "If you can't spot the sucker in the first half hour at the table, then you ARE the sucker." Ideally you want business to be not zero-sum games, but positive sum trades. People purchase something they want, you provide it for something you want (usually money). Maybe you would work it so they give up more than they thought they would, but they still get something in return. In practice, a lot of high finance seems to be more of the zero-sum angle where everybody is trying not to be the sucker in the room. And they're too busy skinning the sheep to worry about the wool they could get over the long haul. If you can get in and get the money, fuck the long term is the way to play the game right now.

I'm not sure how that attitude gets regulated or restricted, even by the market.

oh yeah, its that day too

I suppose I would be remiss without bothering to note that it's a tax day.

Things I will not be doing
1) Filing my taxes. Already done
2) Getting a refund. Always, always, better to keep money all year and earn interest or use it to pay down interest based costs than to provide the government with a 0% loan. I don't care what your supposed wisdom is that it's better to get a lump sum refund from the government. The lump sum becomes an excuse to squander money rather than pay down debts anyway. So you are still wrong. Most people do not even have this much of an excuse in place, seeing this as "free money" or "money from the government". Again, you are wrong. It is YOUR money. They're just giving it back to you after having free use of it for many months.
3) Complaining that half the country doesn't pay taxes. They don't pay federal income taxes, yes. But they pay a whole bunch of other taxes (excise, payroll, state or local, property, sales). Sorry, but the supposedly vile redistributionist empire of the United States will find a way to make you pay something. Rich people do pay a lot of money off in some manner and this may be an inefficiency of government, not to mention an inefficient method to propose paying off the deficit/debt problems of governments, but don't start to pretend that there are armies of people who pay nothing at all as a means of opening that line of argument.
4) Protesting the existence of the IRS to the IRS. Talk to Congress and the President and propose alternative methods of successfully financing the operations of government and public services (or alternative methods of providing public services if you don't think the government, and the federal government in this particular case, should do so). Don't bother bureaucrats doing a job that in effect we have selected that they should do. Similar to people who might complain about the military without bothering to complain about the people who sent the military off to do something disagreeable.

One thing to bother complaining about is the level of complexity in the tax code. And of course this is one such complexity. I'm not seeing a positive reason to keep the HMI deduction around except to privilege realtors and homeowners (ie, mostly wealthier people) for higher property values. Basically I object on some limited grounds to redistribution of wealth from rich to poor, mostly on grounds that indicate how ineffective some of our methods have been at accomplishing stated goals, but I don't see a moral or economic grounding to defend redistributing wealth from poor to rich and using the tax code or any other political device to do so. This was, among other reasons, a very simple basis for taxing so-called "Cadillac health insurance plans", because such plans were largely, but not exclusively, purchased or provided to wealthier people in lieu of taxable income (which they could easily afford to expend on health care or insurance should they want it privately).

And checkmate

So as usual, the problem is everybody's, but we can blame it on the powerless

It makes much, much, much more sense that the problem with mortgages was adjustable rates resetting than subprime loans. It's true those NINJ loans were probably fucked up. It's true that loaning to people who didn't put money down may backfire. And it's true that a loan with a high interest rate probably doesn't work for most borrowers in the first place. But if they could afford the payment then, if it was a fixed payment it doesn't matter. They could afford it now under most circumstances. What makes far more sense when you realize the number of speculators who lost their shirts over people getting kicked out of their homes is a comparison of prime and subprime loans that shows they're basically the same rates of default loans. It's the ugly cousin in the room that nobody wants to talk about: non-traditional mortgages of that variety. There are circumstances where an ARM makes sense. That sense is partly true for someone speculating on a second property (though a straight interest-only loan rather than an ARM probably makes more sense still in that case and if it's a rental property a fixed rate is perfectly fine). We can refer to a subprime mortgage with a "balloon payment" all we want, but all that "balloon payment" really is is the rate resetting upward in an ARM. And if that's what it is, then the problem is too many people got ARMs and not enough people bought homes with a sense of the risk for themselves. That is, that interest rates would go up and that they would not be able to afford that increase, and from the perspective of banks, that most people wouldn't default because housing price increases would either allow more people to refinance out of these goofy loans or they'd allow them to sell to get out from under the payment. Neither of those models of thinking was realistic.

Differences between elitists and consumers

2009 top grossing films
USA gross rank/Global rank. Film. Imdb overall/Imdb top 1000 ratings, presumably a cast of characters who have some film buff status.
1/3)Transformers 2 (6.1/5.3)
2/1)Harry Potter and the whatever it is now (7.4/7.0)
3/4)Up (8.5/7.7)
4/8)The Hangover (8.0/6.8)
5/10)Star Trek (8.2/7.6)
6, climbing/7)Twilight 2 (4.5/4.3)
7/12)Monsters vs Aliens (6.8/6.8)
8/2)Ice Age 3 (7.1/6.6)
9/11) Wolverine (6.7/6.3)
10/9) Night at the Museum 2 (6.0/5.6)

19/16) Inglourious Basterds (8.5/7.6)
21/22) District 9 (8.4/7.7)
22/U) Watchmen (7.8/7.5)

I have a couple notes.
1) Twilight- wow. Ouch. When the goofy wizard stands up better for ratings, you know you've done some crappy writing.. And a low 7 score is like a C+ average on imdb, so Harry has nothing to gawk at either. It looks like 3 and 5 of that saga were respectable, but none were far outside the C-C+ range. Congratulations on somehow creating a reliable money siphon for tweenage girls and their parents/significant others' wallets without having had to come up with a reliable product. In other news, I'm somewhat surprised the Transformers "movie" scored a 6 by comparison. Again, I must remind myself, people are dumber than I give them credit for on the average.

2) R-rated films like the last 3 are going to suffer on the money. They all had much higher percentages of people voting on them than the various films above them. Meaning: people who wanted to see these movies did and had strong and mostly positive opinions. Pretty much everything from 6-18 was notable only for their replaceable value with one another in ratings and money. They were utterly forgettable films that nobody cared to vote in support of after seeing, or against (with the possible exception of yet another animated kids movie). One safe conclusion: the Terminator film probably should have stayed an R-rated movie instead of clipping down to get under the PG-13 mantle (it has an R-rated DVD, which seems tremendously smart from a 'marketing of DVD' perspective given that it doesn't appear to have been a remarkable film otherwise). It wouldn't have hurt its gross (didn't cross the 200 million threshold). That's not why people go to Terminator movies: to be entertained by explosions they can see with wimpy GIJoe, 2012, or Transformers movies. Same deal with the Die Hard movie a couple years ago. Leave the good shit in and fuck the teenage market (leave that to Twilight/Harry Potter).

3) Don't think Watchmen has the same international appeal as the usual superhero films. Considering the focus on the doomsday clock that the rest of the world (outside of maybe Russia) was only too quick to get rid of and put behind them.

4) Hurt Locker (8.0/7.6) ? Not in the top 25? Oh right, independent film.

Conclusion I can draw from this is there are still good quality films and other forms of media (books, music, etc) being produced. They're being swamped by meaningless drivel. There are maybe 2 decent films in the top 10 grossing ones this year (I haven't seen Up or Star Trek, so I cannot offer my own opinion on whether these are in fact decent films). And 7 other worthless pieces of cheap consumer swill with some sort of number attached to them (and Star Trek was only a reboot of a series of franchised movies prior). There's also one adult comedy piece which may or may not have been worthwhile. Comedies are routinely hard to rate. Either you found them funny or not with a notable few exceptions where if you didn't find them funny we should simply liquefy your brain and feed you to the zombies first: Monty Python, Dr Strangelove, Blazing Saddles, Airplane as examples. I'm not sure that "The Hangover" qualifies as a work of glorious fiction and humor, but then, I don't drink or intend to celebrate via a bachelor party either (either as a honoree or guest). Perhaps its humor would be lost upon me. Or perhaps it was merely dumb funny. Also: Not looking forward to the Sherlock Holmes movie. No thanks, wake me when you go back to the goofy looking half-autistic bachelor-by-choice investigating crimes by sniffing discarded cigars and examining the shoes of his clients or suspects with a distinguished aura of superiority. I fail to see how that formula needs to be sexed up to sell tickets. Invictus looks interesting. The Brothers looks interesting. Neither will be in the top 25. Holmes will. Disgraceful.

In any case, the consumer continues to get what they ask for or paid for: a lot of nothing. Last year wasn't much different (excepting the Dark Knight as the top gross and best rated movie last year). Gran Turino and even Slumdog and Benjamin Button were well out of the top 10 for gross income. All received large attendance bumps from their Oscar nominations, we can only hope that will improve the middle 20 for the present year which thus far includes such luminary works as 2012. Which I believe Emmerich first made back in 1996 so there isn't any need to see the new/same explosive version of the new/same formula. Iron Man was clever and amusing, and Wall-E was the "Up" of last year and that's about it among the popular films as quality regarded work (other than Batman v Joker with the blown-away rendition of the Joker stealing the show). I suppose it is too much to ask for consumers to become reasonable and to demand more from their escapist ventures. But you'd think that from year after year of this, they'd also get a bit smarter from the sheer rote mechanisms consisting of shilling out cash for the same sparse variety of Hollywood productions year after year. Profits are not a means to signal disapproval or disdain.

never give money to a crazy person seems like a better rule than this

money of god?

I've run into the "don't use credit cards" types before. They're sort of odd people. In that they're very messianic about this sort of discovery that debt is "bad". As though they've discovered some fundamentally world shattering idea that taking on more obligations than you can handle reasonably is not the best plan.

I myself use credit to gain access to subsidized cash or extended warranties but I don't "borrow" in the sense that I'm spending money I don't have very often (other than perhaps emergencies which I haven't budgeted for and must pay out larger sums). Even so, the idea that receiving money from others as a loan is somehow evil or bad is a common thread problem to religion. Islam still has rules against interest payments while Christianity had them for many, many years. In many respects this was a common stereotype over Jewish merchants and bankers who were permitted to charge interest in either society and used frequently by merchants as a consequence to grease the economic growth of their times.

I understand it as a matter of course through economics that risk in loans and money lost value over time should be accounted for. Apparently if you spent too much time in Sunday school instead of the Chicago school, this isn't the "reality" of money. Which seems to uncut many fundamental assumptions about reality actually.

The second story referenced is even more disturbing. Perhaps it is the deistic watchmaker leanings of any understanding of god that would ever make any sense that so offend me about the idea of this (and even that so little to me that I have no interest to explore such a question for its metaphysical merits). But the idea that faith rewards people with prosperity has typically been, to me, a more dangerous idea than the idea that you shouldn't take on more debts than you could handle (or in their case, none at all apparently). There's several major problems:
1) It gives the impression that "successful" people are in that state because of their unique faith rather than other attributes, such as education, intelligence, motivations, etc.
2) That then provides the conclusion that successful people are also never "evil" or that the accumulation of wealth or prosperity cannot be faulted because of its manner. The underlying assumption there being that "god wants me to be successful or prosperous", rather than something more fundamental to humanity like say "try really, really hard to be a decent person". Which seems more in line with the actual gospels and preachings of various religious figures (despite all the discussions over money in both the Qur'an and the New Testament, especially the latter).
3) That poor people are so fated because they are bad or unfaithful, in a sort of new twist on social Darwinism (something which to me seems like a typical perverse use of scientific theory, even already perverted scientific theories like this one, for the justification of other social ends, such as those of religious institutions to acquire more followers). And that assistance and charity toward the poor should be attached to religious instruction or indoctrination rather than other more fundamental needs (see: Catholic church decision regarding gay marriage and its threat to pull its social funding for other charitable works if policy on gay unions and individual rights is changed).
4) That bad situations are an incidence of some supernatural influence or an impact of less faith rather than an internal failing (other than a lack of faith). Leading to otherwise not properly attributing the causes and effects of a situation (both internal or external).
5) Leaving such difficult and complex decisions in the hands of a spooky supernatural figure might be more comfortable for people who don't understand those decisions and don't want to take the time to understand them. But it also leaves them open to being taken advantage of by the system. It seems totally irrational to make decisions regarding thousands, if not millions, of dollars of income or wealth and presume that you are not responsible for how well those decisions function.

I think it can be said that there are some interesting effects of religious belief upon money and wealth, as well as economic development generally. I think charity and concern for the poor is a valid social good to develop, and I think it fosters a general sense of freedom that money, or rather the goods that money provides us, are best earned and divided in an environment that divides these with some relative fairness and equality of opportunities. Business owners who reward their employees for example will tend to profit more because they will attract and retain better employees. The recent study that demonstrated that belief in hell (not belief in god and not religious worship or faith itself) was somehow correlating with economic growth is interesting as well. I think it suggests that people will tend to make "better" risk management decisions when they are afraid of how such actions will work out in the long run. This tendency is sort of bad, in my view for individuals to use. In the sense that it often leads them to pass up perfectly viable opportunities because of risk aversion (particularly true in public policy discourse, see: health care "reforms"). But it's also a useful tendency to occur on mass scales because it tones down its necessary counterpart, the "irrational exuberance" sort of thinking espoused by prosperity gospel champions and others like them (such as the spend your way to wealth crowd).

There's also a curious behavioral economics question about, for lack of a better term, faith in the economy. That is, when people think it will be good, then they will make decisions which, in the long-run, tend to make the economy "good". When they fear for the security of the economy, when they see their neighbours struggle or lose their jobs, then they tend to make decisions which spiral the economy downward. There's such a thing as irrational exuberance, where large numbers of people begin ignoring actual economic realities (such as: can I actually afford a new home when I have no job or means of income), which succeed in collapsing the system. But most economic activity is made over long periods of time with many small decisions. Buying this brand of toilet paper over another, buying movies instead of watching TV, and so on. These are not those sorts of tragic decisions that so weight our system down in the way a dumb home loan and the mortgage backed securitization loan on it are, and yet if nobody makes them with a degree of certainty that they will have money tomorrow still coming in, those decisions are made differently and often dangerously, both for on a micro scale for individual people and industries and the macro scale for GDP growth and inflation considerations. I'm not quite sure where the best line fit is to put the irrational exuberance of the prosperity gospel folks, but it does appear that a tiny bit of what they say is necessary for large scale economies to function. In a game theory sense, it might seem profitable for an individual actor to attempt to horde or otherwise scale up their situation and accessible resources. But in the long run they benefit a great deal more if other people also can have access to some of those resources. A competitive enterprise like a market economy relies a great deal on a lot of commonly made assumptions that center more on cooperative tendencies as a result.

Things to think about

That Dilbert guy is occasionally clever

1. Does this situation follow a pattern I've seen in scams?
2. Is someone giving answers that seem intentionally vague?
3. Is information conspicuously missing?
4. Is someone trying to rush me?
5. Could someone unscrupulous easily take advantage of me?
6. Have I regretted this sort of decision before?
7. How do I imagine other people will react to this decision?
8. If the expert is so smart, why isn't he rich?

The last one in particular is really fun. I don't have as much to think of #7. But then there aren't that many people who would even be able to react.

I might add one more. "Why is this person shouting at me?" or inversely, "why is this person talking so fast and low?" - In reference to virtually every TV commercial. Except for this one maybe. Not a whole lot of talking.