money can work

Macroeconomic summary

This is fairly good at summarizing from a true economic perspective (ie, plus and minus). The key problem is that 'plus' and 'minus' are still very subjective terms. A 2% gain in home ownership, or the access to necessary credit to support people as they attempt to move up the socio-economic scale is a subjective gain. The cost of massive loans to make those gains, to people who couldn't actually afford them, and the repackaging of these unstable loans as investments (investments that most risk assessment firms failed to understand until too late) is also subjective, but as we are seeing, a very stiff price to pay for those gains.

It is worth considering how much it will cost to 'fix' and how much it costs to adapt. In the case of financial information, the key question is transparency. When the public doesn't know what they are buying (either as a mortgage product or as a security traded mortgage investment), then its pretty clear that the market can misbehave. Health care and its insurance agents have the same issue. So some level of (enforced) regulation becomes appropriate. Supposedly we passed a law (Sarbanes-Oxley) a few years ago, after the Enron scandals, that required better disclosure information. Obviously it hasn't worked out all that well. It is worth trying to discern why that might be. Much like our income tax system, the costs of compliance should be streamlined as to be minimal (or even non-existent). A company should naturally want to know its economic standing and because of the usefulness of reporting its relative successes (when it should have such) on Wall St to attract new capital, most necessary fiscal statements are basically already compiled.

The trick with this situation is that the fiscal statements did not tell the whole story. For example, WaMu bank was just bought out by JPMorgan. The reason: the massive profits they were raking in for the earlier part of this decade came from loans and credit issued to people who couldn't afford it. Hence they were raking in high interest payments from unstable creditees. Eventually giving money to poor people and saddling them with higher risk assessed interest rates (and payments) as a profit bearing industry has to collapse. Few were commenting on this type of practice and those who were, such as this article suggests, seemed to think it was a good idea. In practice, some level of consumption or credit should be available to people, even those who have questionable credit history or impoverished incomes. I think the issue is how to set up a means of providing it without the associated marketplace being an unstable profit-death spiral in need of repeated bailouts or failing banks.

Of more utility is long term thinking here. People in minimal economic circumstances presently should be provided the opportunity to move up as their abilities allow. That basically happens because access to credit can allow people to begin reducing consumptive habits and debt spending, not because access to credit gives a license to expand personal lifestyle. It basically becomes an offset for financial emergencies and creates a safety net for unemployment or slow work cycles, but this is not how it is universally treated. For example, young people with new credit routinely overextend and pile up debts in both credit, student loans and new mortgages. Managing this complicated affair is not taught in basic education and few parents lived through the experience themselves. But instead of providing responsible methods of use, the credit card industry simply thought of this as a profit generating cash cow, or the golden goose. It was of course, a way to eventually starve and kill the golden goose by dragging it down with debts, not a way to profit.

arguments of nothing

fact don't matter

psychologically

As usual, the lack of intellectual skepticism or cognitive dissonance in our population is not surprising, but remains a serious challenge.

I did find amusing the abnormally large percentage of NPR/PBS news followers who actually realized that Saddam has no credible links to Al Qaeda, while the bulk of the population, or at least significant minorities who followed other news media were convinced (despite there being no reason for this strange bedfellows association). A simple question, why would he do that, would have sufficed to put it to bed until some shred of evidence was used to support it. There has been no evidence, and the point was quietly abandoned after Saddam's trial/execution (during which time nobody bothered to publicly inquire if he was working with bin Laden or his surrogates).

So basically, as I'm fond of pointing out when I do a study on a divided issue, the facts are parsed and truth is ignored. Only previously held ideological points matter to most people. I usually try to side with the side that uses less deceptive tactics or fewer baldfaced lies to make their case. Truth doesn't need desperation in its defence.

The second article has several points of use. Those familiar with the laws of human stupidity will not be surprised. The interesting kicker (again, not surprising to those acquainted) is that intelligence has some flaws of assessment.
Basically, idiots aren't bright enough to realize they are incompetent. And generally do not know enough to judge the characteristics of the people who are competent. Consequently I find it very easy to recognize the behavioral patterns of idiots and seek to avoid them. The key issue is that intelligent people, considered competent for the purposes of the study, tend to presume that other people are at least marginally as competent as they are and tend to underestimate the level of incompetence. Which naturally presents problems when tasks are delegated by competent people to incompetent ones, where the competence of each is not known or assessed. This means that the likelihood of picking incompetent leaders is heightened by a basic assumption on the part of intelligent, competent, political independents that someone running for public office must be at least marginally qualified. The ideological factors involved basically already create affirmation biases on the part of the rest, whose votes are easily cataloged on the basis of their voter affiliations. There are exceptions but these are largely made up of people who have significant research on particular topics and reach conclusions that are outside the norms of their political party (such Democratic economists and their views on trade or Republican ones and their views on drugs). In other words, there are required levels of competence needed to overcome ideological bias in the first place. If we appropriately assume a fixed ratio of incompetence, then the inevitable conclusion is that there are significant numbers of people whose opinions are based on zero factual evidence, at least as high as 50% on any given issue.

That article essentially reached the same conclusions as the book on Presidential rankings I recently read. That certainty is distinct from vision, and that intellectual curiosity, the need for advice from people much more skilled in specific arenas of public policy, and the ability to flexibly manage these advisers by selecting those most competent, is far more important than most of the silly things the media reports on, even most factual matters. We don't want certainty, we want someone who can both lead and react. There should be an idea, some clear vision of where we want to go, but the President should be able to flexibly define how to get there by using good advice. This is something we should have been able to observe from the previous 8 years. So basically, for those who haven't made up their minds, the best idea is to vote for the guy who seems least certain and most willing to proclaim their ignorance on some particular topic (but who still has some idea where to go).

osu wins

And oh yeah, OSU beat USC tonight. Except the OSU was Oregon State and not Ohio State, which makes the victory all the sweeter for someone stuck in Ohio but from another state.

I really wish they'd drop the pretentious 'The ...'. It makes the likely philosophy grad school attendance so much more embarrassing. Hopefully a few more prominent losses in the semi-pro world of collegiate athletics (basketball and football at most schools) will do the trick.

barr, or tina fey

The more I think about it, the more I wonder why McCain didn't just nominate Tina Fey as his VP. I suspect she's probably smarter than his actual choice and basically looks the same. Would have been that hard to get people not to notice the Governor of .. Alaska? That Canadian accent thing isn't that hard to do. I switch accents all the time, surely a trained comedian does accents, no? Plus she's basically the only funny part on SNL, when I've bothered to catch any of it. Wouldn't that have shook up Washington more than picking a theocrat in a dress?

I looked at the political compass today to see where Palin rated (Biden was a Dem candidate early on and was already a known quantity). To my alarm, I confirmed several things that I was already aware of.

1) McCain has himself been moving up the social chain (in the wrong direction as far as I'm concerned).
2) He's still not as high as Bush v2, Romney or Palin. (Romney is the top dog in that fight, though Palin is pretty close).
3) Obama sort of moved since Iowa. McCain really moved, but usually these people move toward the 'center' (ie, center of American politics). Apparently I really underestimated the need to mobilize the religious right in national politics. In which case, I've really underestimated the growing amount of such people in voter rolls (and may be fairly alarmed in about another decade if these trends continue). The pull of statist/free marketeers in America is incredibly high. That seems totally contradictory, but then Turkey did just have a party like that win their election.
4) I don't have a candidate. I've been concerned since Barr somehow got the Libertarian nomination, but after more closely looking at him specifically I have to wonder how the hell they did that. He's basically a slightly more socially liberal Republican and not a libertarian in any meaningful way. His position relative to McCain's starting point is striking.
5) For all the complaining people might do about Barr, if people actually noted most of his politics, there's not enough difference there to attract voters away from McCain. By contrast, Nader and the other real 'leftists' are out there to attract attention away from Obama (if that's possible). Only if McCain continues to tie himself further to this right-wing statism (ie, fascism) will Barr resume any significant appeal.

I don't really like that 'right-wingers' (ie, classical liberal/libertarians) don't have choices in this campaign at all (although fortunately Josef Stalin isn't running either, so there's always that). Yet somehow there are these significant differences between Obama and McCain that we're supposed to choose one of them? I think not. For all the blogs I've done on this, each has felt like I've had to boil the tea leaves in order to see which is which (reading them is just not satisfying). The closest people I've had in the game from an ideological perspective have been Paul and then to a lesser extent (much lesser), Obama. On most of the 'key' issues, say education, health care, national defense/foreign affairs, there's really not much of a gap. Even the current economic 'crisis' and oil et al, there's not much to speak of. These side factors like abortion and very, very slight differences in tax policy are about all there is. Whoopie.

I think the best option for me right now is to go around the day before the election and talk to people who are over 35, then write in the name of the most sensible person I meet (who is a legal citizen and not an ex-con, I'm not old enough yet to write myself in). Otherwise, give me a guy talking about crazy things in a serious manner any day of the week (Paul and his rally for the gold standard for example). At least it shakes things up and presents a real outsider perspective to most issues.

Based on Barr's website (which is hardly a reliable indicator of his policies I know)
Pros: budget hawk
for private/free market systems on health care
anti-kelo
against corn ethanol subsidies (or other energy subsidies, including the oil ones we currently have)
Against Iraq War and massive defense spending (world military presence still needed?, against who?)
Mediums: against PATRIOT act and FISA (now anyway, late to the party)
Against Dept of Education..but his educational plan is basically the return of the 500 Polish lords: return the power to local school boards. I'm not certain that parents know any better how to educate their children than the teacher's unions. And they for damn sure don't know how to tell whether their children are learning anything meaningful and potentially instructive for later use. But at least he's against NCLB and the bloated education budget.

Quite frankly the only way education will eventually be fixed is to focus it not on the demands of parents, but on the demands of students. And no, I don't mean students get to pick the erotic subjects that interest the typical teenager. I mean the individual student has more sway over what they get into and how involved they are in their own education. After elementary school, there's very little new information that couldn't be gleaned privately through a cultivated habit of self-directed learning. The involvement of parents is then to coach the child on how to approach these decisions and to either provide funds (through tax credits/scholarships) or to select an appropriate academy to help harness the natural academic gifts of an individual (should they have such).

:Opposes gun laws, but it's not clear whether he opposes them on some constitutional basis or because there's no need for them. I'd prefer that they pick a middle ground here, where guns can be controlled sometimes for specific reasons, but not for wide-spread bans. It's possible a handgun ban can have useful effects for example, but there are negative unintended consequences that can result as well (such as the potential need for armed resistance of a runaway national government, something that hasn't been seriously attempted in over a century)
: opposes affirmative action. There's economic basis for doing this, namely that it doesn't really work. The effective target for the bend back method is not race, but poverty. It's really poverty that reduces opportunity. Race is a visible reminder of the nature of who comprises the poor, but isn't necessarily the main factor of determinations of personal achievement. I would argue the relative poverty and, in particular, the relative poverty of educational resources from a young age usually brought about by poverty are a more significant problem that would go much further to aiding people of any race or distinguished subset of society. But there's still some positive externality to be raised by having a public means of achieving this and to distribute some levels of equal opportunity (and not equality of result). So long as there exists a public institution, there exists the need for that institution to distribute positive externalities on some level (education, roads, defense, fire/police, for examples). Some levels of social welfare or insurance can be considered in this category, but there is a careful balance needed between 'encouraging' idleness and providing genuine assistance.

Negatives:
Immigration policy is baloney. I'm tired of our country being run by xenophobes.

Marriage issue being left to states is inherently going to create some fuzzy issues. In particular, it might be possible for people to use the old 'bloody Kansas' self-determination system of Stephen Douglas to stack the ballots in different states. I can't see that playing out well and it does not adequately protect the rights of the individual. While I recognize that 'marriage' as a legal term should remain distinct from 'marriage' as a religious term, there's absolutely no legal reason for any state or local entity to enact laws which discriminate on the basis of these unions being homosexual. There are only discomforting personal reasons or religious animosity, neither of which is a necessary call to impose populist will against the rights of the individual.

Federal Reserve opposition. The fractional reserve system we have in place is at least marginally effective. The problems it has caused have generally been studied and learned from. The principle issue has been the lack of effective oversight (when needed) and the lack of effective economic policies by successive administrations, often countering the advice given by members of the Federal reserve or providing less than adequate free market conditions (such as creating artificial barriers to competition). This sort of thing, and the populist opposition to it, goes back all the way to Jefferson, certainly to Andrew Jackson. I don't get it coming from a party of economists however. I'll have to get around to reading Hayek.

Only in America

Only in America is it possible to compare each new instance to events that far surpass it in scale or grandeur. The current method is to compare our economy, which is in some level of disarray and or tatters, to the Great Depression. Only in a country where no one understands history is it possible to put an event in scope beyond its true nature and attempt to place it some higher historical context (which it doesn't actually analogize to). To be sure there are occasions where I have seen something which actually impressed upon me as a great(er) event equal to its predecessor, but calling our current economy on a precipice to the Great Depression I have not seen. That's a totally different ballgame..one which we are indeed attempting to enter into (by doing these silly bailout schemes), but one which is going to have to require some serious and deliberate attempts in order to recreate anything like it.

Attempts to call this are basically like those which make Bush's presidency out to be the worst in history. It's bad, but there's a difference between sort of fucked and totally fucked. I guess it's just hard for some people to tell the difference while its going on right in front of them. It's even harder when the media's efforts to cover things are basically to describe the rape rather than to ask questions which might interpose the people in a cause of right action to intervene.

must ...kill...pennies!

Still calling for the death of the worthless penny

It'd be nice if we did this. As for how it works, things get rounded off to the nickel. Prices will probably shift somewhat (though the advertising value of $.99 instead of $1.00 is significant). I'd also like to see the end of the dollar bill. Such as I've heard, even strip clubs use two dollar bills now. That should be a good indicator that a dollar isn't worth the printing if even strippers won't take them.

vet committee ballots

Hall of Fame Vets vote on these guys.

Santo -- yes
Torre -- iffy yes (catching helps)
Hodges - no
Allen - yes
Kaat - no
Tiant - no, but close
Oliva - no (Outfield is crowded in Cooperstown)
Oliver - no
Wills - no, but close
Pinson - no

And these guys have a special panel
Dahlen - yes
Magee - yes
Ferrell - no
Gordon - no, closest outsider (better him than Jim Rice)
Mays - no
Reynolds - no
White, Deacon - no
Stephens - no
Vernon - no
Walters - no, but possibly the best pitcher on these lists.

middle class economics

http://www.chicagotribune.com/business/chi-mon-middle-skill-jobs-sep22,0,2036559.story?track=rss

What's funny here is that I've been saying that our educational system and its 'desired' outcomes totally ignores the vast majority of occupations and their educational requirements for a while now. And that using vocational/apprentice type training is more than satisfactory to compensate for this problem.

summary of events

http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/

This seems like the best summary of things that happened from a pure financial perspective. There were political events involved in the two Macs for example that aren't discussed (and quite possibly provide reasons they were 'weakly supervised'). But by and large this is very in depth explanations for the federal reserve activities of the past few months.

AIG bailout and the current Congressional push for a major bailout both raise some significant questions over what the intention is. I'm not sure if it's create and foster stability (by injecting needed capital investments) or get people to assess risk more appropriately on the financial scene. And the long term effects are probably worse than the present 'cure'. It is unlikely that even with some major investment firms/insurance companies running into trouble in specific elements of their portfolios that the entire American/world economy would go into total chaos. I admit it would be unpleasant, but what would happen is that the 'good' parts of their portfolios would be sold off to competitors in order to secure capital to service the debt portions. People who invested in the companies who acted strangely will get hosed and in the short term we'd have some economic problems (of either FDIC problems or huge amounts of debt piling up that cannot possibly be serviced).

The principle short term fallout is the impending credit crunch, something that's been coming for decades. I suspect that will help curb inflation at least, but will result in some unpleasantness for many people (either trying to buy things or trying to keep their ailing jobs). If that's better than letting this sort of thing play out, I'm willing to see..but in the long run it's almost certainly dumber.

review of Dilbert economist survey

the raw please

So this was the great thing I missed last week... a survey which wasn't by itself terribly useful at discerning the opinions of people. What I did find useful was the list of 'top' issues. (I, unlike Scott Adams, was aware most economists are Democrats, thanks be to Cato and the Carter administration).

1) Education. It's not clear whether this was meant as public education on financial matters or education in general, both, what. It's rather a vague subject. I'd definitely support a candidate who made some basic financial literacy a position point; if they were otherwise sound and sane. And I'd definitely agree this is probably one of the actual top issues of the campaign (not the faked top issues that the media has covered instead). As far as my own opinions, I don't think either candidate has put forth a plan that I feel addresses our national educational problems. I'd say neither of the two will make a difference here. Obama's plans are mostly to provide incentives for people after college. That however does not address the fact that most people in college shouldn't be there (they should be getting training more directly). Nor does it address the problems of how so many people arrived with "high school level" educations and the inability to then proceed further in higher education. I haven't really heard McCain talk at all about education but they both seem to be okay with NCLB..which means neither of them get any bonus points from me. Verdict: Both suck.

2) Health Care. McCain has a more free market approach here but it doesn't really create any short term solutions. If you are middle class or up in income you should probably have been moving your insurance toward privatization anyway. Tax benefits would help. If you are just poor enough to be not really dirt poor, then nothing in McCain's plan is going to make health care/insurance more affordable in the immediate future. Obama's plan is somewhat more palatable than say, the Clinton plan, but it still makes the basic assumptions that a) health care is a right (without defining either rights or health care) and b) that people should value it over other priorities. I'm not sold on those assumptions, hence I'm not a big fan of government mandates for health care. Nor am I convinced they reduce the costs by themselves anyway; there's plenty of evidence the contrary. Again, this is probably a neither vote. Both plans have some attractive elements and address different parts of the general health care problem; neither resolves it or presents a long term understanding of 'cost'. And yes, this should be one of the top issues. Verdict: both pretty weak

3) International trade: McCain. The union endorsed anti-free trade stance that is virtually required of a Democrat ticket is pretty obviously unpopular with economists. And most educated people come to think of it, which makes Obama's overall popularity with such people surprising. Obviously the non-economist educated folk have other higher priorities they value instead (I might not put in the top 3, but it's certainly the top 5 or 6). I'm not unequivocally in McCain's camp here. I'd prefer to see tariffs on sugar/sugar ethanol removed and most farm subsidies removed to facilitate freer trade on food for example. I haven't seen anything to suggest that farming is going to be opened up to the free market yet from GOP candidates either, but at least the whole 'must keep our shitty jobs here' mantra isn't on the ticket. Verdict: McCain, not even close.

4) Energy. This one probably should be ahead of trade, if only because parts of the trade pertain to energy developments (for example sugar tariffs). I'd have to say Obama is more likely to have a sensible plan here but neither one has a significantly different plan from the other. The one element I haven't liked is that Obama isn't very keen on nuclear power. But then unless we quit wasting the spent rods by burying them in mountains and waiting for the radioactive waste to kill humans off in a few hundred years, I guess I wouldn't be very keen on it either. Obama does put more of a premium on conservation, which is appealing, but isn't really an enforceable agenda (incentives maybe?) Verdict: Obama, sort of.

5) Encouraging tech/innovation. That's a pretty vague subset. I should think this is part of 'education' in a way. I'm not really hearing anything from either that they will enact some means that will spur creative energy beyond what is already taking place. In fact, in historical terms the creative energies of the free market are usually well ahead of government encouragements. What instead happens is the government steps in afterward and either 'endorses' the development by adopting it as a public works initiative or stifles it by not understanding it (such as they have tried to do with the internet and the radio spectrum at turns). I'm pretty sure things like solar power or wind have been funded by major corporations for decades (along with some government research). The idea that a President 'encourages' such behavior or that they even can do so is silly. Verdict: Economists aren't historians.

6) Wars/Homeland Security. Much as McCain at least demonstrated one instance of strategic thought, my basic impression is that he has not illustrated a strategy. Instead he has illustrated the problems and threats and promises to deal with them, in some vague undetermined way which is somehow obviously better than Obama's way. While Obama has his usual vagueness in answering questions dealing with these subjects, the hints of strategy are more promising (to me) for international security. Verdict: Obama.

7) Mortgage/housing crisis. Obviously Bushv2 has no clue what to do here. I don't think either of the candidates do either. Since this is to me a ludicrously simple problem, it should be higher on the list (easy solutions). I have several suggestions which I've read or cobbled together from my fragmented economic research.
7a) break up the big banks so we can't get into this 'too big to fail' business.
7b) actually enforce regulations on the books
7c) including those which pertain to making loans to people who obviously can't afford them.
7d) don't bail anybody out unless through FDIC. Banks or individuals.
7e) make the loan documents standardized with an easy summary page for consumers.
Since I have heard instead a very vague message of 'reform and regulate', I'd like to know what that means. But I'm pretty sure neither of them will make a difference because it's pretty clear neither of them knows what to do (other than that Bush/Bernake isn't doing it). Verdict: The idiots win

8) Social security. It's pretty obvious that the short term solution is to either cut benefits for people on the top end or increase the payroll tax for people on the top end. The long term is to get rid of the thing by phasing it out to a private retirement system, but nobody is willing to do this. While Obama has suggested raising the cap on the payroll taxes, it's not like this is really addressing the core problem. Verdict: Obama, but mostly a push.

9) Environmental policy. Obama. Duh. What is funny here is that McCain used to make a bigger deal about being a hawk on the whole global warming issue...and still was crushed in the survey by Obama. Despite my reservations on things like Al Gore's plans or Kyoto, I am perfectly willing to see regulations and incentives in place to deal with pollution. If for no other reasons than to deal with the problems of property rights and public health.

10) Budget. Obviously the economists know something or other here, they aren't all that keen on Obama's ability to control spending. Because of the partisan nature of the survey, a 3% edge is a defeat or at best a push. Even with a recessionary period, it's still necessary not to spend for the sake of spending. Obama has so many initiatives proposed that I'm curious to see how much they'd cost and how this would be fiscally appropriate or responsible. McCain at least has a rather more direct means to attempt to slash the budget deficit (pork, with presumably cuts in domestic spending). Verdict: McCain, sort of. (This depends on whether social programs are more valuable than budgetary policies)

11) Immigration. Funny how this one was so much lower when educated people are asked to rate it's importance. It's also basically the only Issue of the Ignorant that made it into the list. And, not surprisingly, there's not much of a difference between the two anyway. Verdict: push.

12) Increasing taxes on wealthy. Obama will obviously do this. He won't be doing it in the way McCain's ads suggest he will (by raising them on 'middle-class Americans', right...). It's debatable whether this is important or not, but considering this is America (where we throw tea away rather than pay taxes).... I'd suggest that it's important only because it's an issue the normal voter might understand (but won't because they don't pay enough attention). As far as what they should do.. I'd be pushing a total tax reform with a sales tax instead. It seems to actually make more money anyway than the alternative (Virginia for example did this recently). This would in fact be a much greater increase in taxes on 'the wealthy' simply because it's so easy for 'the wealthy' to not be earning taxable income in the first place while there's no way for money being spent to not be taxed under that type of system. There's still a big language problem between 'wealth' and 'income' in this country. Verdict: Obama will do this, but I'd prefer he do something else. McCain won't do anything useful-- push.

13) Reducing waste (pork). So basically the populist type messages got in on the tail end of the economist's lists. I consider this a useful thing, but not a very important thing. And it's McCain's wheelhouse (obviously the economists think so anyway). I suspect it's mostly show because there are still other ways to garner political support from 'boosters' without giving out pet projects, but even if it isn't, he won't be able to stem the entire flood of monies pouring out on this crap. Verdict: McCain, but I'm too cynical to think it will matter.

One will note that issues like abortion, gay marriage, and creationism did not appear. It should be no surprise that the GOP is losing so much support outside of these 'core' issues where the population is becoming more 'educated'.