And yet, we must never forget that our causal beliefs are defined by their limitations. For too long, we’ve pretended that the old problem of causality can be cured by our shiny new knowledge. If only we devote more resources to research or dissect the system at a more fundamental level or search for ever more subtle correlations, we can discover how it all works. But a cause is not a fact, and it never will be; the things we can see will always be bracketed by what we cannot. And this is why, even when we know everything about everything, we’ll still be telling stories about why it happened. It’s mystery all the way down.
The picture that emerges is one in which employment growth in high productivity, tradable industries is constrained at the rate of housing supply growth in skilled cities. And that rate is slow; for much of the past decade, Houston approved about ten times more new housing each year than San Jose. Value creation in high productivity cities continues, but a lot of that value is siphoned off through taxes and transfered to residents of low productivity cities, who use it to buy non-tradable services. That dynamic would seem to be the main mechanism through which America has been generating net job growth over the past two decades.
Ron Paul is wrong about a lot, but he is right about this:
We have to move back from a Department of Offense and Empire to a Department of Defense and Security. We need to let go of paranoia. The cycle of fear has already done immeasurable damage to the constitution, the economy and regional stability and security (watch Iraq and Afghanistan implode in the next few years).
For nearly 100 years we have tried to stop runs with government guarantees--deposit insurance, generous lender of last resort, and bailouts. That patch leads to huge moral hazard. Giving a banker a bailout guarantee is like giving a teenager keys to the car and a case of whisky. So, we appoint regulators who are supposed to stop the banks from taking risks, in a hopeless arms race against smart MBAs, lawyers and lobbyists who try to get around the regulation, and though we allow-nay, we encourage and subsidize--expansion of run-prone assets.
The Great Recession provided Democrats a chance to reconnect with working and middle-class whites. But this chance was squandered by the end of 2009. Obama focused his first year on the Democratic issue of the age (universal health care) instead of the issue of the time (the dire economy). That mistake, like progressives’ over-reading of Obama’s 2008 victory, continues to distort Democrats’ understanding of the daunting electoral terrain before them.
We need a better press corps. This paragraph, one of the only data points in the story, contradicts the premise of the entire article. Don't they use editors at the NYT?
But a broad survey of about 100 public retirement systems suggests a rate of retirement that has remained within a relatively steady range in recent years, said Keith Brainard, research director for the National Association of State Retirement Administrators. “Before I would call this a trend, it would need to continue for another year or two,” he said.
In a community regulated by laws of demand and supply, but protected from open violence, the persons who become rich are, generally speaking, industrious, resolute, proud, covetous, prompt, methodical, sensible, unimaginative, insensitive, and ignorant. �The persons who remain poor are the entirely foolish, the entirely wise, the idle, the reckless, the humble, the thoughtful, the dull, the imaginative, the sensitive, the well-informed, the improvident, the irregularly and impulsively wicked, the clumsy knave, the open thief, and the entirely merciful, just, and godly person.
"The action leaves some important matters unchanged. No government has brought its budget under control. No political impasse has been broken. No bank has become better capitalized. No wages within the euro zone have adjusted to address their misalignment. And yet the markets are in a state of euphoria. It is like watching Ben Bernanke play Peter Pan, the European banks as an ailing Tinkerbell, and the stock market as the audience, fervently proclaiming "We believe in fairies!""
Many people seem to be under the illusion that Germany is a rich country.� It isn’t.� It’s a thrifty country.� German per capita income (PPP) is more than 20% below US levels, below the level of Alabama and Arkansas.� If you consider those states to be “rich,” then by all means go on calling Germany a rich country.�
Gingrich was out of power at the time, so this wasn't a direct bribe, it was more an attempt to mold opinion to keep Freddie respectable by buying the friendship of a voluble famous guy, with maybe some big payoff down the road if Gingrich made a political comeback. Moreover, paying Gingrich a lot after he was out of office serves to encourage the others in office to be nice to Freddie now in the hopes that they too can get what's coming to them down the road.�
While the traditional purveyors of recorded music – the major record labels – have suffered since Napster, good music has continued to make its way to market. Independent labels account for a growing share of successful music, measured both by critical acclaim and sales. While many producers of recorded music have been made worse off by changes in technology, there is no evidence that the volume of high-quality music, or consumers, have suffered. Many caveats are in order, however. Chiefly, it is not clear whether the results extend to other content industries where creation remains quite expensive. But the results are a reminder that an evaluation of copyright policy should be cognisant of its effects on both producers and consumers.
My whole shit revolves around having this peace of mind. It's peaceful, quiet, that's my day-to-day. I play my guitar, hang out with my girl. My kids went to their mom's this week. I'm chilling, no stress. After all these years, I've done well and I'm cool. I feel comfortable in my skin, I've saved some paper, everybody's healthy, my kids are beautiful and smart, doing different things, it's all good. I'm trying to maintain my shit like this, and do a fun project every now and then.
Why did we create a Congress?” The framers didn’t sit down and set up a Congress so they could imagine these 535 independent contractors all arbitraging fundraising opportunities. If that’s what the institution is, then let’s just shut it down.
Important insight into the current state of political parties.
"As we theorize,” write the half dozen political scientists who collaborated on “A Theory of Political Parties,” published this year, “parties no longer compete to win elections by giving voters the policies voters want. Rather, as coalitions of intense policy demanders, they have their own agendas and aim to get voters to go along.”
Narayana Kocherlakota, President of Fed Bank of Minneapolis, thinks that the Fed dual mandate is invalid because it is hard. At least we get an explanation about why the Fed seems to care more about inflation than employment.
An important and ongoing communications challenge for the FOMC is that it is much harder to quantify the maximum employment mandate than the price stability mandate. Changes in minimum wage policy, demography, taxes and regulations, technological productivity, job market efficiency, unemployment insurance benefits, entrepreneurial credit access and social norms all influence what we might consider “maximum employment.” Trying to offset these changes in the economy with monetary policy can lead to a dangerous drift in inflationary expectations and ultimately in inflation itself."
The end of the Chinese housing bubble will not be a disaster because the Chinese technocrats will know how to respond.
"Yes, the property bubble in China looks like its bursting. But no, this will probably not prove to be a catastrophe. Instead, we in the West are going to get schooled once again, when our Eastern ‘comrades’ show us just how to run an advanced capitalist economy. History, eh? It’s just one big irony."
On the Ropes with Herman Cain - NYTimes.com: The power of charisma: "Cain also likes to tell his audience that callers to his show went from “concerned” to “frightened” for the nation’s future. This, too, is true. More than any other candidate, Cain has managed to connect to those Americans — yet, unlike Sarah Palin, he has done it by unleashing optimism rather than bitterness. He can articulate a crowd’s worst fears — America is falling apart, weakening in the world, suffering economic carnage — and then reassure everyone that, no worries, we can fix it. If any candidate were able to relate to voters in this way and have a clue what he or she was talking about (there, in Cain’s case, is the rub), that person would be unstoppable."
"Compare the common summary of the attitude of 99% protesters – “I worked hard given the system and I didn’t get what the system promised me – and someone else flouted the social contract and was amply rewarded for it” – which doesn’t actually conflict with tripartite of initiative, hard work, and individual responsibility. Rather the disagreement is over what one should be responsible [i]for[/i]. If the state of nature doesn’t reward hard work, then the state of men must do so."
In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses — the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing — the program has the funds it needs to operate, without need for any Congressional action.
Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.
" Imagine that in 1990 bank CEO pay had been indexed to bank ROE. By 2007, CEO compensation would have reached $26 million. That is precisely in line with their actual payouts. If you believed ROE were a reliable performance metric, US bank CEOs would have had a watertight defence back in 2007. Instead, of course, we had ludicrously leveraged banks that were too big to fail and brought the economy down with them. [...] Imagine if the CEOs of the seven largest US banks had in 1989 agreed to index their salaries not to ROE, but to ROA. By 2007, their compensation would not have grown tenfold. Instead, it would have risen from $2.8 million to $3.4 million. Rather than rising to 500 times median household income, it would have fallen to around 68 times."
Apparently Beranke has learned nothing, despite what he says in his speech yesterday in Boston. This is moral hazard at the highest level. ML is moving risk from an uninsured entity to an insured one, after the fact. Who will lose? You guessed it, you, not the ML traders or BAC bondholders.
Listen, my wife is a very good cook. And we have a housekeeper, who is an even better cook. It’s a weird situation, but I think my housekeeper is a better cook than any restaurant in Washington. She is a simple woman with no education, from Chile, and she just happens to have a superhuman talent. She being such a good cook, she achieves wonderful effects with very strange ingredients, and strange combinations of ingredients. Israel’s success as a state has been made possible by Arab threats of different kinds. Arab violence or threats of violence are part of the Israeli soup. There are certain levels of violence that are so high that they’re damaging, and there are also levels that are so low they are damaging. There is an optimum level of the Arab threat. I would say for about nine days of the 1973 war, the level of violence was much too high. Even when Israelis were successful, the level of violence was destroying the tissue of the state. Most of the time, the violence is positive.
Five agencies have to weigh in on the Volker rule. This is part of the problem. There are too many agencies regulating financial transactions. Too much room for regulatory arbitrage. Lobbyists for the banksters know how to divide and conquer.
Currency devaluation is an easy political call and the evidence for it seems strong. However:
"I wonder if we’ll ever learn. We kept pressuring countries like Japan, Germany and Switzerland to appreciate their currencies. And then their currencies do appreciate very sharply. But the current account surpluses remain very large, because currency appreciation doesn’t address the root cause of those surpluses. Now we are engaged in the same fruitless quest with China. What a waste of time."
The problem is demand, not regulatory or tax uncertainty. The argument matters because of the policy implications. If the demand problem is not acknowledged then all the Republicans try to do is reduce taxes and do away with regulations.
This has become a very partisan argument. Republicans blame the GSE's and CRA for the sub-prime disaster and the liberal Democrats feel obliged to defend them. The defense is weak. Even though they were late to the game, the GSEs certainly poured oil on the sub-prime fire and made a bad situation much worse. Much more than any Wall Street bank, the GSEs are an example of privatization of profits and the socialization of risk. How much of their bonuses have Johnson and Raines returned?
How tax havens work: UK edition. All but two of 100 companies have tax haven subs. The tax (avoidance) department of most multinationals is seen as a revenue center. Providing tax avoidance products is also a large part of the product line of investment banks.
Obama was wrong. There were many illegal acts by banks and bank executives during the crisis. The charges have just not been filed. This is the first charge that I have seen.
“Today’s charges reflect an all too familiar pattern – corporate executives once seen as rising stars embrace deception to avoid losses and conceal negative news, with investors and the FDIC insurance fund left to pick up the pieces,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “But accountability for these executives begins today.”
But when will John Mack of Morgan Stanley or Dick Fuld of Lehman be charged?
"Now notice: doing what you love, and never settling until you find it, is a costly signal of your career prospects. Since following this advice tends to go better for really capable people, they pay a smaller price for following it. So endorsing this strategy in a way that makes you more likely to follow it is a way to signal your status."
"Reconcile yourself to the limits of your talent and temperament and find the most satisfactory compromise between what you love to do and what you need to do feed your children" is rather less stirring, "
And from the comments: "The advice is more traditionally given in relation to marriage. If you go into a relationship thinking that you’re settling, you’ve undermined it from the start. Of course you’re settling and making compromises – but the brain has a wonderful capacity to ignore this fact if you let it. Some people honestly believe they have the perfect partner,
And I think there’s an analogy here to be drawn with careers."