Shell Game

A problem I have with the whole “stimulus” debate:  I don’t believe those who favor “stimulus” are sincere.

Most of the left favors “stimulus” and most of the people who favor “stimulus” are on the left.  It will not escape anyone’s attention, of course, that “stimulus” in our current context is essentially a pseudonym for “giant government spending on stuff the left wanted to spend money on anyway”.

But you do get left-wing economists (Paul Krugman and the like) writing columns in favor of “stimulus” on supposedly logical and macroeconomic grounds, using concepts such as the ‘multiplier’ and whatnot.   Now, I could pay attention to and participate in this debate.  I could pore over their arguments, learn more about Keynesian thinking, study their notion of the ‘multiplier’ and decide whether or not I agree with it.  But you know what?

I don’t believe these people are sincere.   I think they just like it whenever the government spends money on (non-defense) stuff.  And, I think that (consciously or not) all these supposedly economics-based  ‘arguments’ in favor of supposed ‘stimulus’ are just disguised forms of advocacy for that sort of spending.  This includes (perhaps especially) guys like Paul Krugman.

Since this is what I think, there’s really no point in taking the argument seriously let alone participating in it.  This is a shell game being played out in the political arena, and it will either succeed in hoodwinking people into implementing this giant government spending, or it won’t.  I hope it won’t, but if people don’t see the game for what it is, pretending the argument is sincere and meeting it on those terms is not likely to help anything.

When you see a shell game on the street, a guy with a card-table who puts a pea under one shell and  and starts swooshing three shells around, the proper response is to call it what it is – a swindle.  You certainly don’t pretend the game is on the level, or carefully try to follow where the pea is going, or make arguments to those around you (especially not the shills in the audience) over where you think the pea is.   That’s called being a sucker.


I have limited access (and time) to browse the web from work – and no time or (probably) even ability to blog or email – as much as I might like.  (Which is, essentially, all day BTW.)  The best I can do is scan the zillion posts that come into my Google Reader view (which I can still access, thank goodness, at least till they shut that off too) from the metric-kajillion RSS feeds I subscribe to, and star the ones that look interesting (or NSFW or at least embarrassing to have up there on my screens next to the charts and spreadsheets) for potentially checking out later from the comforts of home.  (Where I usually have very little time/opportunity to do so anyway, but I digress.)

On that note, here are some recent posts/articles/links I’ve starred from work to check out later.

Neil Patrick Harris rocks the Doogie Howser theme song.  (I’ve really come to appreciate the talents of Neil Patrick Harris ever since Dr. Horrible.)

Pastorius on Bill Moyers and the Jew-hating sickness.

Fascinating article by, of all people, Richard Perle, making the interesting point that “For eight years George W. Bush pulled the levers of government—sometimes frantically—never realizing that they were disconnected from the machinery and the exertion was largely futile”.  To me this is almost the ‘missing link’ needed to explain the weirdness of the Bush Presidency:  the disconnect between his rhetoric and his administration’s actions.  It turns out, if you believe Perle, the answer is simply that a large chunk of the people who worked for him refused to do what he told them to do.

Nick Gillespie of Reason has two ideas to help the economy.  The second one is better IMHO.

Contra theme song on guitar.    I shudder to think how many hours of my life were wasted playing Nintendo games like Contra.  But then again, I guess I can think of it as an investment in getting cheap, Gen-Xish, weirdly nostalgic enjoyment out of Youtube posts like this.

One of the puzzles to me of this election season was why I wasn’t as scared of Obama winning as I’d expect to have been of a generic (D).  Well, Jennifer Rubin at Commentary captures my thoughts on Obama as closely as anyone has:  “…conservatives have essentially given up trying to divine what President Obama will do by what he says. The latter is so opaque and so evidently designed to please multiple voices that it is not revealing of his own. That will take concrete decisions. [...] What matters is what he will do when forced to make the tough choices.”     Exactly.  And he literally hasn’t made any choices or, for that matter, done anything yet.  All we have from Obama is rhetoric.  And since I don’t believe a single word of the rhetoric per se, there’s been nothing to get worked up over.  Yet.

The lessons of House as applied to the financial crisis.  I’ve never watched House but many have recommended it, particularly when I worked in the medical field (I knew doctors who watched it).  The charge of misdiagnosis seems right on, though.  If I hear another self-educated amateur financial expert spout some nonsense about the whole thing stemming from “deregulation” or something Phil Gramm did vis-a-vis credit default swaps, I think I’m gonna puke.

Interesting post on the whole “multilateral versus unilateral” debate.  Seems a bit inside-baseball but in the blockquote there’s a statement I wish I would see people make more often:  “The core question is whether punishing general costs arise from unilateral policies regardless of their substance. The findings in this book provide no evidence for such costs, although scholars habitually write about them as if there were such evidence.”  For the past 8 years we were regaled with nonsense from, again, self-educated amateur geopolitical experts to the effect that “mulilateralism = good” and “unilateralism = bad”.  Regardless of the details.  Details didn’t matter.  Whatever it was, if you were being “unilateral”, that was bad, and to be “multilateral” would be better.  This is so self-evidently idiotic that I can’t believe it needs refutation but apparently it does.

Also see this article (linked from the preceding making the point that, whatever his rhetoric and whatever the ‘hopes’ of his followers, Obama has taken a “unilateral” position already.  Ha ha, ‘progressives’.  Maybe your beloved Obama is a “Neocon”!  ;-)

The context is Afghanistan, of course, and I suppose a more likely explanation is that the left wing’s 8 year campaign of pretending to be Afghanistan hawks and wanting to “get Osama” (is he still automatically supposed to be in Afghanistan by the way?) and fight the “real war on terror” – most of which rhetoric was spouted primarily, of course, as a way of downplaying and dodging the importance of Iraq -  is coming back to bite them.  Seems as if Obama now has to live up to that phony rhetoric, at least somewhat.

I’ve been entertaining the theory for a while that the U.S. (D) vs (R), good cop/bad cop dialectic often leads to a situation where the (D)s have to act like stereotypical (R)s, and vice versa.  Rhetorical doves end up having to be more hawkish just to prove they have stones, and hawks end up acting like ‘wimps’.  I wouldn’t be surprised to see the Obama Presidency follow this pattern on many issues.

Washington is the new Wall St., or: Mr. Gekko Goes To Washington

Arnold Kling reads my mind as to what’s likely in store for us the next 8 years:

If you thought it was unproductive for the best and brightest to go to Wall Street to become investment bankers to decide [how] to use other people’s money, watch what happens when the best and brightest come to Washington to decide how to use other people’s money.

Predicting where the next bubble and boom will be has been on my mind quite a bit recently, for obvious reasons. I came to the exact same conclusion he did.

Do you feel a bit of schadenfreude at what’s happened in the past year or two because you were disgusted by the overpaid, overpowerful Wall Street whiz kids being Masters of the Universe, flinging around billions of dollars and pulling the strings of other peoples’ lives? Well, just you wait until they’re all officially part of the government, you ‘progressive’ you.

Not A Kid Anymore

Rock songwriting, in Canadian.

The Case Of The Hot Prosecutor

Patterico links a weird story about a juror struck by the prosecutor for being obese.  Apparently the prosecutor claimed that “heavy-set people tend to be very sympathetic toward any defendant”.  The judge accepted this because he was “satisfied that is a race neutral explanation”.

So any crazy reasons for challenging a juror are ok as long as they’re “race neutral”?  There are just so many things wrong with this I don’t know where to start.  So I won’t.  My real reason for bringing this up is it reminds me of my experience with jury duty this past fall.

After the initial endless waiting with hundreds of people, I finally found myself among a smaller sub-pool selected to go to an actual court.  With a mixture of excitement and nervousness, we all marched toward the court – where we waited some more.  Our fate was now more clear: each of us would either become a part of that particular jury, or go home.  Like most people, I suppose, I looked around at the others and did some mental math.  For a final jury of 12 plus perhaps 4 alternates, they’d sent a good 60-65 of us to wait outside Trial Part 64 (or whatever it was).

I note in passing what a logistical pain in the ass it must be to assemble an actual working jury.  Count all the no-shows and the excuses and the juror challenges and you probably have to sift through a good 20 citizens, at least, just to get each actual real live juror.

Anyway, everyone looked very solemn and serious.  A few made cellphone calls in to work to give updates.  (Myself included; I assured my boss that if I were selected, I would still be able to show up at work in the a.m. before trial and in the p.m. after trial, seeing as how trials are ‘only’ 9-5 at the very latest.  Ah, how I love my hours.)

Then we were called into the actual court.  The defendant, a nerdy/creepy looking character who could’ve worked at a video store, scanned us all.  Smiled, said hello.  Most said hi back.  The judge was pleasantly conversational, almost creepily so, as if he were lonely and anxious to meet new people and (he hoped) make friends.  I found myself marvelling at what an amazing process this is.  And what a solemn duty all these good citizens around me had undertaken.

And that’s when the excuses started.

We were in the period where the judge goes around and asks each potential juror a few things about themselves.  This was so the prosecutors and defense would have sufficient ammo to reject us if they wanted to, I assumed.  The judge had just gotten through describing the charges against the defendant.  Now we were supposed to say whether there was any reason why we could not serve.  How many of the initial 65 would survive this simple question?

Would you believe, about 1/3?

Firstly, the charges involved rape.  Almost immediately, this knocked out a good 10-15 women who raised their hands to claim they “felt” they “could not be objective” about a crime against women.  Now, ok, one wants to sympathize with these ladies (and one guy who “had daughters”.  The crime was disturbing and they felt emotional.  But, what are they saying?  That they could never serve on a jury involving any crime against any women?  If everyone took that stance how would we ever convict rapists?

We were also regaled with about a zillion different abuses of the concept of “objective”.  Yes, I get it, everyone has seen their Perry Mason and Law & Order and O.J. Trial and (therefore) is a big expert on the legal system.  Especially from seeing that third show I mentioned.  So, one thing almost everyone seems to know is that a juror has to be “objective”.  And what does “objective” seem to mean to most of these people?  Something like:  “doesn’t know a damn thing, and has no sense of judgment”.  Or even:  “will probably find the defendant guilty”.  When the ladies, or the guy with daughters, said they “couldn’t be objective” I take it they were saying something like, “rape repulses me and gives me bad feelings”.  But it is natural to feel this way!  I feel this way!  That doesn’t make me “not objective”, it makes me human.  If one didn’t feel this way, there would be something very wrong.  Yet half the people in that room seemed to think that feeling this way – being repulsed by rape – disqualified them from serving on a jury in a rape trial.

Once it became clear that “can’t be objective” was the currency with which one could buy their way to dismissal, though, the floodgates were open.  One guy pointed out that he lived in the actual building where the crimes take place – and the judge, reasonably enough, dismissed him.  But then a woman raised her hand to say she lives on the same street.  Others walk by the crime-scene building.  And so on.

The other way out, of course, was to raise hardship.  Sickness and chronic pain, these were clearly winners.  Being self-employed or a role in which jury duty would cause financial hardship was another.  But this seemed to carry a bit too far.  One guy said he was an equities analyst and his clients would “freak out” if they couldn’t talk to him during the day.  Dismissed.  The entire profession of being an overpaid Wall Street hot shot is automatically dismissed from jury duty, it appears.

As the jury pool dwindled one by one into the 40′s and 30′s, a strange new feeling began to come over me:  disgust.  Disgust at all these people who were grasping for any excuse, any excuse to get out of helping The People do their solemn duty to either punish a crime or exonerate the wrongfully-accused.  None of the excuses applied to me, of course.  I wasn’t female.  I wasn’t sick or in chronic pain.  Not self-employed and could do the jury without financial hardship.  I wasn’t a Wall Street equities analyst.  As people left and I remained, I began to feel…proud.  Haughty, even.  How great and brave I was to remain steadfast!

This is silly of course, jury service is something zillions of people have done and do, but actually there’s something to it.  The only thing standing between this rapist (if that’s what he was) and a slap on the wrist was that there were some people who would stay and judge his guilt or innocence.  So maybe I was right to be proud – and to be proud of the two dozen who stayed.  Because it turned out that after the Excuse Process, and with two dozen remaining in the pool, the defendant decided to plead guilty after all.  No trial.  Jurors dismissed.

I’ve still never sat on an actual jury, but in a tiny way I helped put that rapist behind bars.  We all did – those who remained, anyway.  Thank goodness for that fraction of society.

This brings me to the reason I was reminded of all this.  One of the excuses made everyone in the courtroom (even the defendant) burst out laughing.  After hearing dozens of near-tearful exclamations as to why this or that juror couldn’t be objective in a heinous crime against women, one young dude raised his hand:

“The lady prosecutor looks a lot like a woman I’m dating.  I just think it would be distracting.”

The judge said it was the most unusual excuse he’d ever heard.  But he accepted it.  I guess that prosecutor was kinda hot, now that I think about it.  So, good for that lazy-ass excuse-spouting guy, in a way.  You had to hand it to him for originality anyway.  Of course, as I left the court building to get back on the subway to go back to work, my jury service completed, I happened to run across a film crew.   I could see they were filming an episode of Law & Order because Sam Waterston was out there, wearing one of those hats only TV characters wear now.  It was an outdoor scene and he was supposed to be getting a hot dog at a hot dog cart.  Some young hottie actress in heavy makeup – I guess the latest version of Angie Harmon or Jill Hennessy or.. – was next to him.  Much hotter than the real-life prosecutor.  She reminded me of a girl I used to date, and I found it distracting.

Just kidding.

What if the impossible were to occur?

I’ve been trying to make the point for a long time that our views about warfare seem to have shifted since World War II.  Pluck a person from 100 years ago, transport him to 2003, show him what occurred in Iraq – U.S. Army invades, occupies the capital, captures Iraq’s leader – and he would have said “ah yes, I see, there was a war and the U.S. won”.

But most modern people – especially enlightened, educated, beautiful people – don’t think the U.S. won the war.  They still don’t think so, even today.

This goes hand in hand with a widely-held attitude that, if taken seriously, usually implies that winning a war isn’t even possible – at least for Western countries.  (I think if two, say, African countries fight, one of them is allowed to win.)  According to some sort of unwritten rule, you almost always have to put the word “winning” in quotes because “winning” isn’t possible.  We see this attitude most frequently in reactions to whatever is the latest event or skirmish in the Israel-Palestinian conflict. Intelligentsia opinion may be varied and conflicting but one thing all enlightened people seem to agree on is that it’s impossible for Israel to “win”.  Indeed, discussion seems to proceed as a starting point from the assumption that, whatever happens, Israel won’t “win” at the end of it, and so when the pointless violence ebbs, and the smoke temporarily clears, there were still be a conflict to resolve (i.e. for enlightened Westerners to resolve, using the same brilliant techniques that have been working so well for the past 40 years).  And Israel will still need to make concessions, of course.

But today Israel and Hamastan are at war, and although the outcome is uncertain and I can’t claim to have followed it all that closely, Israel appears to be doing pretty well.  And it’s lasting a bit longer than the usual minor, ineffectual wars we see over there.  This got me to thinking – could Israel be trying to actually (gulp) win, this time?  Is that possible?  And what would that even look like?  And if it happened, would Western intelligentsia heads explode?

I don’t know the answers to these questions.  But I do know that “win-is-always-in-quotes” is a lefty fantasy that is long past due for a cold hard encounter with reality.  And I can think of few countries I’d enjoy seeing deliver that reality besides Israel.

Uninvited Comment VII: Black Swan My Ass

For whatever reason I made the following comment at Economist’s View. Sometimes I wonder why I bother. It’s about VaR and the whole Taleb “Black Swan” theory of what-went-wrong that has sadly swept our nation, if you’re interested (which you’re probably not), and it goes a little something like this:

well, exactly like this:

I have a slightly different critique than most here: when popular accounts of Taleb’s ‘brilliant’ insights describe VaR as a “risk management technique”, I think they are out of their minds. VaR is among a batch of numbers that must be spit out usually for regulatory or related purposes. (Right?) Everyone knows it’s GIGO and no one with half a brain seriously believes otherwise. So I do not believe – and my experience bears this out – that VaR is seriously “used” in practice to actually manage risk in the first place. It could be described as being among a basket of tools and flag-setting filters, of course, but the idea of anyone actually using VaR to manage their risk makes me laugh. Trust me, business heads do not think about VaR unless they have to (i.e. someone bugs them that they’re up against some limit, which is often due to some spurious artifact of the calculation or of the organizational structure). Traders? Don’t make me laugh – they think about VaR even less, if they even know what it is.

VaR is simply not what these accounts say it is.

But even if VaR were what the Time Magazine version of Taleb said it were (mind you I have not read Taleb and, God willing, never will), and it were somehow used (by whom exactly? the group charged with calculating it? hahaha) as the primary risk management technique, the criticisms still get it wrong. There is nothing inherent about VaR that assumes anything has a normal distribution. Nor lognormal. Banks don’t ever, necessarily, make any normality assumption about anything whatsoever. Maybe they use time series. Monte Carlo.

The broader criticism that to compute VaR one must make *some* assumption about distribution is of course absolutely correct (and this is part and parcel of why people don’t actually “use” VaR the way these accounts would have you believe), but toss out the bogus implication that virtually all VaR calculations assume normality in everything and you lose the power of the whole ‘Black Swan’/underweighted-tail-event charge. Tail events will, if anything, be overweighted if your time series happens to include a huge market blowup….it all depends on the distribution. And the critique above is completely correct about that. But everyone already knows this about VaR…or should.

If I never have to read any more of these self-congratulatory pop-econ accounts of Taleb, VaR, or “black swans” I’ll be happy. None of this has very much to do with reality, except in the sense that Taleb becoming a bestselling sage author of Gladwellian proportions is now, regrettably, part of our reality.

Ideologies As Sex Fantasies

Not sure if I’ve posted it here yet, but the following is my pet theory about what the big three socio-political ideologies boil down to, sexually:

  • Islam/Theocratic Fascism:  Make sure any chicks I have sex with only have sex with me.  Except the prostitutes of course.
  • Socialism/Communism:  Make sure there’s always a large pool of chicks out there willing to have sex with whoever.  Except my daughter(s) of course.
  • Conservatism/(Classical) Liberalism:  Make sure people who have too much sex, suffer, and that meanwhile I don’t have to think about other peoples’ sex that much.

Notice that the first two can actually coexist side by side, as long as society is divided into the chaste and the promiscuous.  The third, by contrast, has trouble with each of the first two.  And using my it-all-boils-down-to-sex theory, it’s pretty easy to see why.

Open Physical Chemistry Problem: Research/Publishing Opportunity

When chewing-gum decides to disintegrate in your mouth, it does so all at once. But why? I see a big opportunity for scientists to score big grant money here.

I have discovered this little-known fact by occasionally chewing the same piece of gum for so long, like if I’m too caught up in what I’m working on (today for example). All of a sudden I’ll start to feel that the gum is about to lose its structural integrity, or undergo a phase transition, or something. And then at some apparently critical moment, smoooosh, it starts to dissolve into a yucky gritty wet-powdery mess right there in my mouth.

Maybe it’s not so surprising that a piece of gum chewn (is that a word?) for 10 hours straight would do that. But it’s the fact that it does this all at once that gives me the jibblies.

How do all the gum molecules simultaneously know it’s that time??

Government: The Main Economic Player

The guys in my group at the bank set up a pool for Predictions 2009 – predicting where various economic indicators will be on Dec. 31st 2009: the Dow, oil, our bank’s stock price, 2s/10s, various others.

I think of myself as pretty pessimistic about the economy and the market. But the scary part is that my predictions were the most bullish. Everyone else is near-suicidal.

One understands why. The projections and trends don’t look good. If you try to do a fundamental analysis of where, say, commercial real estate prices are headed based on what’s going on now, you end up with a big downard-pointing arrow.

Here’s the reason I ended up more bullish: what fundamental analysis doesn’t take into account is government actions, because no one really knows or can predict what the government’s going to do. And yet if recent history is any indication, government actions – often haphazard, hastily-thrown-together, ill-thought-out, politically-driven governnment actions – have the largest effect on the economy of anything else.

Ignore the effect of government actions and you end up very bearish. But the probability of giant government actions messing everything up one way or another, is almost 1. So the straightforward, very bearish point of view is clearly wrong. As a result one either has to become even more bearish – which at this point would be like predicting a new Dark Ages – or, on the other hand, to predict something like a slight, government-induced Dow recovery (for example). I chose the latter.

In a way my real prediction is high volatility caused by government.


curi asks the timeless question Does Trying Not To Hurt Kids Spoil Them?

The answer, it turns out, is no.

Read the whole thing.


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