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Tuesday, January 31, 2012

Notes from the Road |

Let Us Now Praise Private Equity - National Review Online

Let Us Now Praise Private Equity - National Review Online

And from the comments:
"I thought private equity was about taking fairly sound companies, buying them up by issuing huge debts in their names, gutting all the maintanence and staff, sucking out all the cash into your private equity fund, flipping them public and getting slick salesmen to pump it to $30/share only to have it crash to a $1/share a year after you unloaded your holdings when people realized how much long term damage was done to the company.
Or maybe that’s just my personal experience."

Are there any good arguments against the EMH?

Monday, January 30, 2012

A Better Proletariat for Charles Murray

Cogitamus: A Better Proletariat (and More Brandy Please**) for Charles Murray:

The area where one�sees�this disingenuousness in perpetually full flower is the treatment of the white working class by the intellectual right.� Time and again, one reads about the identification�of the Republican Party with working class whites -- a vital element of the base after all -- and yet one struggles in vain to think of a single policy advocated by the right which would have the practical effect of improving working class life.

CONVERSABLE ECONOMIST: Robert Kennedy on Shortcomings of GDP in 1968

CONVERSABLE ECONOMIST: Robert Kennedy on Shortcomings of GDP in 1968

A defense of Private Equity

So it is not all financial engineering?

The Epicurean Dealmaker: The Rape of Persephone

Wednesday, January 25, 2012

Redefining Action Hero: Bill Gates is Better Than Batman (Infographic) | Frugal Dad

research puzzle pix by tom brakke

Why I sold my farm.

research puzzle pix by tom brakke

Udacity and the future of online universities | Felix Salmon

I dropped out ;-(
But 170 of the 200 Stanford students also dropped.

The real story is growing equality

The growth of Chinese economy brought 100's of millions out of rural poverty. The American middle class suffered relatively as a byproduct of that growth, but the net gain to humanity is very positive.
On the other hand, this still does not address the issue of why the top 1% captures more than its share of growth, both pre and after tax.

TheMoneyIllusion � The real story is growing equality

No one knows nothing

EconomPic: Apples Numbers Were B-A-N-A-N-A-S:

Apple’s results highlight this simple fact: no one knows nothing.

The world’s hunger for public goods - FT.com

The key debate in the US now is what are the appropriate public goods. The one point of agreement is defense.

The world’s hunger for public goods - FT.com

Amid Attacks on Private Equity, Efforts to Study Its Value - NYTimes.com

Studies of Private Equity value creation have ambiguous results.
Studies of Private equity fund managers show huge value creation (for the managers).


Amid Attacks on Private Equity, Efforts to Study Its Value - NYTimes.com

Tuesday, January 24, 2012

Josh’s Twenty Common Sense Investing Rules | The Reformed Broker

New Reality Show: Real Economists of the Ivory Tower | The Big Picture

Robert Reich (The State of Our Disunion: A Globalizing Private Sector, A Government Overwhelmed by Corporate Money)

The private sector cannot lead the way to more and better jobs in the United States. The private sector is only interested in growth and profitability of the individual firm.

"The strategic responsibility for making Americans more globally competitive can’t be centered in the private sector because the private sector is rapidly going global, and it’s designed to make profits rather than good jobs. The core responsibility has to be in government because government is supposed to be looking out for the public, and investing in public schools, colleges, infrastructure, and basic R&D.  "



Robert Reich (The State of Our Disunion: A Globalizing Private Sector, A Government Overwhelmed by Corporate Money)

Mass Incarceration and Criminal Justice in America : The New Yorker

Monday, January 16, 2012

How Much of US Consumables Are Made in China? | The Big Picture

: Libertarian Illusions

Jeffrey Sachs: Libertarian Illusions:

Yet the error of libertarianism lies not in championing liberty, but in championing liberty to the exclusion of all other values. Libertarians hold that individual liberty should never be sacrificed in the pursuit of other values or causes. Compassion, justice, civic responsibility, honesty, decency, humility, respect, and even survival of the poor, weak, and vulnerable -- all are to take a back seat.

Friday, January 13, 2012

Private Equity is Financial Engineering

The re-branding of the industry from LBO to private equity was quite stunning. There are some success stories but it even those involve tax arbitrage.

An Interview with Josh Kosman on the Embeddedness of Private Equity in the Tax Code | Rortybomb

Inside the Fed in 2006 - A Coming Crisis, and Banter - NYTimes.com

Inside the Fed in 2006 - A Coming Crisis, and Banter - NYTimes.com:

This makes me feel a little better for getting it wrong. A lot of smarter guys were wrong.

" The transcripts of the 2006 meetings, released after a standard five-year delay, clearly show some of the nation’s pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding. The problem was not a lack of information; it was a lack of comprehension, born in part of their deep confidence in economic forecasting models that turned out to be broken.

Thursday, January 12, 2012

Brad DeLong: Understanding the Literature of Economics: Plumbing the Depths of Ignorance Blogging

The state of economics profession.


Brad DeLong: Understanding the Literature of Economics: Plumbing the Depths of Ignorance Blogging

The behavioural economist's dilemma: induction versus deduction

Worthwhile Canadian Initiative: The behavioural economist's dilemma: induction versus deduction:


Economics, he said, is basically a deductive discipline.�Psychology, on the other hand, is inductive.�

It's a caricature, a gross over-simplification. But it has an element of truth.

Economists like to begin with a general model, work out its implications, and then go to the data to test the theory. Yes, there are applied economists who spend their lives trying to find out facts about the world. But facts in and of themselves are uninteresting unless they illuminate economists' view of the world, and can be explained in economic language.

Psychologists begin by observing people's behaviour, looking for generalizable patterns. For example, if people are observed acting as if they are averse to losses, psychologists infer that loss aversion exists. Yes, psychologists have conceptual explanatory frameworks, such as prospect theory, to explain such phenomena,but these theories are not the elegant mathematical creations favoured by economists. And where is the status and prestige? �Look at the psychology journal rankings. There isn't a top-ranked�journal with "theory" in the title.

Why Is Inequality Higher in America?

Why Is Inequality Higher in America? — The Monkey Cage:


There are more avenues to corrupt the system, therefore the system is more corrupt.

When we examine our set of 23 long-standing democracies in advanced economies, we find that slightly more than half of these countries (12.5) actually have only one electorally generated veto player … There are 7.5 countries with two veto players, two countries (Switzerland and Australia) with three veto players, and only one country, the United States of America, with four electorally generated veto players

Nature Conservancy hijinks, yet again

It is not about tax rates. It is about how smart lawyers manipulate the tax code.

ataxingmatter: Nature Conservancy hijinks, yet again

The Missing 'Humanity Clause' at Bain

Financial engineering. Not business.

RealClearPolitics - The Missing 'Humanity Clause' at Bain

Wednesday, January 11, 2012

Are Private Equity Firms Evil Doers?

Not clear they are evil. But they are financial engineers, not business experts.

Are Private Equity Firms Evil Doers? Washington Post Edition | Beat the Press

Insider-Trading Mole Praised by Prosecutors - WSJ.com

Lost in Tokyo on Vimeo

Let’s talk about the market economy - FT.com

Let’s talk about the market economy - FT.com:

Modern "capitalists"

So the business leaders of today are not capitalists in the sense in which Arkwright and Rockefeller were capitalists. Modern titans derive their authority and influence from their position in a hierarchy, not their ownership of capital. They have obtained these positions through their skills in organisational politics, in the traditional ways bishops and generals acquired positions in an ecclesiastical or military hierarchy.

The Spoils of War

The Spoils of War: Huntsman, Paul and Santorum each represents a distinct wing of the party, and their most cherished causes conflict with one another. (Gingrich represents less a wing than a foul mood.)

Give Guant�namo Back to Cuba

Give Guant�namo Back to Cuba - NYTimes.com

Tuesday, January 10, 2012

A few suggestions on peer review–ctd. | The Incidental Economist

The Career Of The Future Doesn't Include A 20-Year Plan. It's More Like Four. | Fast Company

Eureka! Economic Illiteracy as Mental Substitution, Bryan Caplan | EconLog | Library of Economics and Liberty

Buying the Body of Christ

Slow Growth In Health Spending

Trends continue until they can't. Why the worry about us spending all of our gdp on healthcare is unfounded.


Slow Growth In Health Spending And Utilization Continues – Health Affairs Blog

Monday, January 09, 2012

The Venn of Paul

Why Paul is so perplexing.

The Venn of Paul | The Big Picture

Blue on Blue

Republican Super Pacs attack Mitt Romney. 

All Of Area Man's Hard Work Finally Pays Off For Employer | The Onion - America's Finest News Source

All Of Area Man's Hard Work Finally Pays Off For Employer | The Onion - America's Finest News Source

All Of Area Man's Hard Work Finally Pays Off For Employer | The Onion - America's Finest News Source

All Of Area Man's Hard Work Finally Pays Off For Employer | The Onion - America's Finest News Source

Goal of the Fed

Indeed, the monetary authorities seem to be following the 2008 playbook: bail out the banks, but by no means stimulate nominal GDP.

Mark's Monetary Matters, Arnold Kling | EconLog | Library of Economics and Liberty:

Current woes call for smart reinvention not destruction - FT.com

America’s Unlevel Field

At the most selective, “Tier 1” schools, 74 percent of the entering class comes from the quarter of households that have the highest “socioeconomic status”; only 3 percent comes from the bottom quarter.

America’s Unlevel Field - NYTimes.com:

Saturday, January 07, 2012

Christmas songs

tradition.png (740�518)

A Hidden Cost of Military Cuts Could Be Invention and Its Industries - NYTimes.com

So government spending is stimulus only if it is defense spending?

A Hidden Cost of Military Cuts Could Be Invention and Its Industries - NYTimes.com

The case of the missing gas mileage - MIT News Office

How Austerity Is Killing Europe

How Austerity Is Killing Europe by Jeff Madrick | NYRblog | The New York Review of Books:


Germany has the financial wherewithal to lead this rescue. But it is blocking the fiscal union from acting like a single nation with compassion for all Eurozone citizens. It is also refusing to underwrite a substantial new fiscal stimulus—good-old fashioned Keynesianism. Is this a new national arrogance? I hope not. So far, Germany is benefitting from the crisis as investors buy German bonds as safe havens from the turmoil. In fact, the failure to act will soon affect the German economy. It will take financial losses on its banks’ loans to the peripheral nations and its export markets will weaken. The bond buyers who are now gobbling up German debt, thus keeping rates low while they rise in Italy, Greece, Portugal, and Spain, will likely stop doing so.

The EU leaders must get over their obsession with eliminating deficits. They now want to reduce every country’s deficit to less than 0.5 percent. This is disaster. It will lead to very slow growth for a long time. Instead, they must use temporary deficits to restart growth. Rarely has policymaking been this poor. Sooner than later, the citizens of these nations will say, No more!, and political instability will result.

The Myth of Japan’s Failure

If an alien visited NY, London, Shanghai and Tokyo, they might pick Japan as the most successful economy of the last decade.

The Myth of Japan’s Failure - NYTimes.com

And a couple of counter arguments.
http://togetrichisglorious.blogspot.com/2012/01/truth-about-japan.html

From Krugman and Yglesias

Friday, January 06, 2012

S.E.C. Changes Its Policy on Firms’ Admissions of Guilt - NYTimes.com



S.E.C. Changes Its Policy on Firms’ Admissions of Guilt - NYTimes.com

From The Annals Of Chutzpah

From The Annals Of Chutzpah - The Dish | By Andrew Sullivan - The Daily Beast

Seeing the United States | The Incidental Economist

Seeing the United States | The Incidental Economist

Devaluations do not always work

And for every Iceland, where devaluation helped, there is a Hungary, where it does not seem to be producing riches.

The Grumpy Economist: Should Greece Devalue?:

Corporate Profits Have Rebounded To Pre-Recession Levels, But Corporate Tax Revenue Hasn't

Is Joblessness a Skills Problem or an FOMC Problem?

How Yoga Can Wreck Your Body

Tuesday, January 03, 2012

What Finland Shows China, U.S

What Finland Shows China, U.S. | China Power:

Many Ivy Leaguers became so because they’re motivated by short-term rewards, and so they naturally believe that everyone is motivated to perform their best if offered short-term rewards.�

The Finish experience. 

Kahneman, Greed and Success,

It isn't hard to make a lot of money, if all you do is want to make a lot of money.


Kahneman, Greed and Success, Bryan Caplan | EconLog | Library of Economics and Liberty:

Kahneman highlights an important, neglected reason why some people are rich and others are poor: some people care about money more than the rest of us.� People who want to be rich make the choices and sacrifices conducive to that end - and on average they succeed.�

Monday, January 02, 2012

Los Angeles Police Arrest Suspect



Los Angeles Police Arrest Suspect in Car Arsons - NYTimes.com:

NYC's schadenfreude

For all its considerable delights, Southern California always seems faintly on the cusp of an apocalypse. There are palm trees, year-round gardens and splendid weather — it was 81 degrees and sunny on Sunday — but there are also mudslides, gang shootings, wildfires and earthquakes.

The Distorted View from Capitol Hill

Reality distortion in D.C.

The Distorted View from Capitol Hill - NYTimes.com

Sunday, January 01, 2012

Contractors' role grows in drone missions, worrying some in the military

We outside the military should be worried as well.

Contractors' role grows in drone missions, worrying some in the military | McClatchy

Way to start off the year.

Mark Ames: Ezra Klein’s shine job on the Kochs � naked capitalism:

What do you really think about Ezra Klein?

Really, the problem isn’t so much Ezra–after all, he’s a former roommate of Megan [McArdle]’s and a longtime friend of hers, Weigel’s, and every other corrupt libertard scavenger in DC–the problem is that the Washington Post must have known what they were doing when they zeroed in on this gullible, star-fucking pipsqueak to represent the so-called liberal consensus. The Fred Hiatts and Charles Lanes chose Ezra Klein for the same reason Roger Ailes chose Alan Colmes to sit next to Hannity.

Old Goalie Steals Show

Playing Five Minutes, Old Goalie Steals Show - NYTimes.com: “You’re never too old to go after your passion,” said Parent, who lives on a houseboat in Wildwood, N.J. “There’s a message there for a lot of people. You have to prepare for it. Will you perform the same as you did 30 years ago? Of course not, but you don’t quit. It brings a quality of life. So my message here to the people tonight is: Don’t give up. I’m 66 years old, I get on the ice five minutes, but I did it.”

Questions for Business Success

How Samuel Palmisano of I.B.M. Stayed a Step Ahead - Unboxed - NYTimes.com:

• “Why would someone spend their money with you — so what is unique about you?”

• “Why would somebody work for you?”

• “Why would society allow you to operate in their defined geography — their country?”

• “And why would somebody invest their money with you?”