Politics: The Less I Blog About It, The Better My Blogging Is
February 28, 2012, 11:36 pm
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Okay, so Mitt Romney has won Michigan (a pretty big state). Will that conclude the Santorum mini-freakout we’ve been going through ever since the Gingrich flirtation ended, or are we gonna have to pretend Santorum has a chance for a couple more states?

Either way, once again the Sonic Charmer benign-neglect method of political commentary, analysis, & prognostication (or rather, lack thereof) appears to be paying off. To remind you of the brief analysis/predictions I made early on and from which I haven’t wavered: Romney wins the nomination, Obama wins the election. But I have been a terrible blogger in actually blogging about all these things or even following them all that closely. Terrible like a fox. Because clearly the less attention I pay, the more accurate I am.

Wake me in Jan ’13 when President Obama is re-inaugurated.

Best Pictures – Postgame Wrapup
February 28, 2012, 8:57 pm
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First, just some stats for the back of my trading card. (handy reference)

  • Last Best Picture seen:  The Hurt Locker (2009)
  • Last Best Picture liked:  The Hurt Locker
  • Last Best Picture liked, pre-2009:  Lord of the Rings (2003)
  • Last Best Picture liked, pre-2003:  Gladiator (2000)
  • Current streak, consecutive number of years’ Best Pictures not seen & not likely to ever see:  2 (King’s Speech/2010 and The Artist/2011)
  • Previous 2+ year no-see streak:  In The Heat of the Night (1968) / Oliver! (1969)
  • Most recent 3+ year no-see streak:  1947-1950 (4 years).  Will my current streak eclipse this?
  • Longest streak of consecutive Best Pictures seen:  1990-2009 (20)
  • Best Pictures not seen, 1970-1989:  One Flew Over the Cuckoo’s Nest (1975), Terms of Endearment (1983), Out of Africa (1985), Driving Miss Daisy (1989).
  • Most-liked # of Best Pictures in a decade:  1970s (Patton, French Connection, Godfather 1 & 2, The Sting, Rocky, Deer Hunter)
  • Least-liked 60s-00s Best Pictures decade:  2000s I liked maybe 3 (Gladiator, LOTR, Hurt Locker)
  • Most recent Best Picture I  (a) haven’t yet seen and (b) think I might like to:  Cuckoo’s Nest (1975).
  • Before that:  Ben-Hur (1959).
  • # Best Pictures seen by decade:  2010s: 0, 2000s: 10, 1990s: 10, 1980s: 7, 1970s: 9, 1960s: 6, 1950s: 3, 1940s: 4, 1930s: 1 (Gone With the Wind)


  • The 70s really were a great decade for movies, but for all the ‘auteur theory’ talk of a golden age that was ruined by Jaws/Star Wars, it’s striking just how many of those Awesome, Artistic 70s Movies were basically just guy movies.  Soldiers, cops & robbers!
  • Recent (last 10-12 years) Best Pictures all seem to have a similar blah, technically-good-but-I-never-want-to-see-it-again flavor that I can’t quite put my finger on.  There’s a certain sameness even to the ones whose plots/settings are on the surface very different.  It’s as if they are all carefully constructed/reverse-engineered to be Oscar Winners.  I was tempted to write a longer post likening it to the CDO bubble – banks reverse-engineering rating-agency models to construct AAA securities vs. studios reverse-engineering the Academy’s implicit model of Best Picture taste to construct Best Picture winners, drawing the obvious parallel that in both cases the results often turn out to be inflated junk.
  • The 80s were a really weird decade for Best Pictures, sort of all over the place.  After the Guy Movies of the 70s, the decade rolls in getting a bunch of weepy family soap operas out of its system (Kramer vs Kramer (1979), Ordinary People (1980), Terms of Endearment (1983)), has a serious infatuation with high-prestige costume/historical/period dramas (Chariots of Fire, Gandhi, Amadeus, The Last Emperor), and by the end these are morphing into often semi-embarrassing Issue Movies (Platoon, Driving Miss Daisy, Dances With Wolves). 
  • Silence of the Lambs (1991) is such an outlier here.  Nice trick that was, people still don’t seem to realize it was a horror movie.  Going back, the biggest outlier before that looks to be Annie Hall (1977) – an actual comedy!
  • On the other hand I would say virtually everything post-2000 has been outliers.
  • The last 3 Best Picture titles all start with “The”.  This is the longest streak since 1971-74; will that streak be eclipsed?

I don’t have to tell you how excited I am to tune in next year to watch the entire Oscar ceremony in order to find out!  (Really.  I don’t.  Right?)

The Saddest Pieces Of Film
February 28, 2012, 12:06 am
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Is there anything sadder in motion picture entertainment than the little short film they tack onto the beginning of some standup comic’s HBO special or straight to DVD standup movie?

You know the kind I mean: the hip, streetwise comedian is on his way to the theater, deep in his thoughts and observations. He stops – he’s there! – and turns to go inside. Pan up, and you see he’s the headliner. No way! You start to hear a clapping audience and whaddya know, it’s time for him to come out on stage. Seamless.

Or maybe, the short bit starts with him backstage in the dressing room, pacing or taking notes. He might be shown as nervous, or as engaging in some activity/conversation designed to exaggerate some negative stereotype he’s supposed to have. He’s so self-effacing! Right away you are informed: this is a funny guy.

These things are always like the into credits to Saturday Night Live, but focused on one guy, and stretched out to 3 minutes’ length. They might roll the credits during this thing but usually they don’t. Often it’s in black and white, grainy black and white – you know, because that lends so much verite and realism to the whole thing. Someone actually has to direct this little thing. They presumably have to plot it out – “how about we’ll get some footage of you in a leather jacket walking around New York City – it’ll be great!” Rent the cameras, key grip, multiple takes, the whole 9 yards.

When all anyone ever, ever, ever wants to see in a standup special is the actual standup portion – you know, with the actual jokes. It really makes me sad thinking about it.

Should Hate Crime Defendants Against Gays Be Allowed To Get Off Without Having Homosexual Sex?
February 27, 2012, 6:29 pm
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Jacob Sullum asks, can lesbians commit an anti-gay hate crime?

I didn’t have time to read the comments there (skimmed, mostly) but I think we can all agree that the answer is obviously not. A lesbian is of person-type {Gay} and a Hate Crime, by definition, is (and only is) a crime committed by person-type {X} against a person of person-type {Y} due to Person-Type Hatred for members of {Y}. It has to do with power asymmetry and intrinsic power structures among the mutually-disjoint but overlapping partitions of Person Types into which all of Humanity naturally and strictly decomposes. At least, if I am remembering my college freshman orientation accurately (as you can see I have mentally encoded all this into its equivalent quasi mathematical notation for ease of recall, strengthening my confidence that I’m remembering it correctly). Now admittedly there’s a problem with my trying to remember those all-important lessons gleaned from college freshman orientation which is that those memories are all mixed up with various dramas and embarrassments that I guess must have all occurred around the same time, hazily-remembered (or in some cases, suppressed) things such as a fateful game of Secret Santa, an infamous dare involving the eating of unorthodox mixtures of cafeteria food, the vomiting of same, etc., but I’m pretty sure I’ve got basically right.

In any event, it seems to follow quite incontrovertibly from orthodox lefty Smart People rhetoric that a lesbian cannot possibly, even in principle, be guilty of a Hate Crime against a gay person. Robbery, assault, murder, cannibalism – perhaps. But such an extreme offense as a Hate Crime? Surely not.

This fact is problematic if it becomes widely known, by the way; in a way it is irresponsible for Jacob Sullum to even have publicized the question. After all, it opens the possibility that someone accused of a Hate Crime against a Gay person could falsely claim to be Gay him/herself and thereby get off scot-free for the Hate Crime (!), only enduring whatever punishment/prison time accrues to the underlying crime itself. This is obviously an intolerable and potentially disastrous loophole in our Hate Crime legal/philosophical framework. Clearly care thus must be taken to ensure that such legal defense claims of Being Gay are not accepted by the Court willy nilly, merely on the say-so of the defendant; that way lies chaos.

The only logical solution, then, is that the Court in such cases must establish a legal framework whereby Hate Crime defendants can, as & when needed, objectively and legally prove their Gay status to the satisfaction of The People, and so that fraudulent claims of Gayness can be easily weeded out. Since (unfortunately!) (?) there is no genetic test for the irrefutably-inborn quality of Gayness, and certainly no other visual or cultural or lisp-based test, obviously the only judiciably-acceptable test for Gayness a Court could possibly implement would have to involve direct evidence of the homosexual act.

The Court could for example set up secure, comfortable, romantic hideaways in which Hate Crime defendants claiming to be Gay could prove it by engaging in homosexual acts with suitable Court officers under strict Court observation, say behind a one-way mirror or closed-circuit television. Alternatively, although less desirably, previously-created visual recordings of such acts (of sufficiently-high definition and quality) could be entered into evidence and viewed in court, in lieu of the (preferable) Court-mandated homosexual sex.

Obviously some details would have to be worked out. For example, would having sex just one time, with one person of the same sex, really prove a person Gay? Presumably the Court would have to work out some minimum number of acts and partners to truly establish Gayness beyond dispute. We wouldn’t want Heterosexual defendants to be holding their nose and engaging in one-time homosexual acts just to get out of Hate Crime raps. We’d want to be sure the defendant wanted and enjoyed the homosexual act before dropping charges. I don’t know if a system of brain scan monitoring, electrodes or other means of enjoyment discovery could be worked out; that is a question for the scientists, and likely to be a fruitful research area deserving of Federal funding in the years to come.

The True Meaning Of “Green Jobs”
February 27, 2012, 3:09 pm
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Apparently, President Obama has hit upon a distinctly 21st-century spin on the Holy Keynes’s brilliant suggestion to have the government pay people to dig holes and then fill them back up: have the government pay people to create a toxic waste dump and then clean it back up.

With all the left’s talk about so-called “green jobs”, bet you didn’t realize that this is what they had in mind!

I shall now hold my breath as I scour the web looking for consistent ‘environmentalist’ lefties who are willing to speak up in disapproval about this whole thing….

My Hero’s Journey
February 27, 2012, 11:46 am
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On permaloop in my head: the theme from the Star Trek reboot movie. One of the hazards of its being in heavy rotation on cable.

If you’ve heard that theme (it’s basically the first ~1 minute piece you hear here), then you know it goes something like:

1. mysterious/hopeful string overture/buildup
2. DUH DUH – DUH DUH DUH DUH with horns/strings/timpany etc
3. sweeping, spacey multi-chord-change Hero Theme

In the movie, it’s used in basically 2 places – the beginning, right after Baby Kirk is born and the opening title is revealed, and then about 20 minutes later when the Kirk and Bones first get a glimpse of the full, completed Enterprise in spacedock. String overture/DUH DUH – DUH DUH DUH DUH/Spacey Hero Theme.

In reality, with it on permaloop in my head, the way I use it is that I’ll be, say, approaching a crosswalk where I can see I’ll need to Push Button To Cross. In my head as I do: String overture, DUH DUH, Hero Theme!

Paying for my coffee and muttering ‘thanks’ to the purple haired coffee girl: String overture, DUH DUH, Hero Theme!

Stepping up to a urinal, start to unzip: Strings, DUH DUH, Hero Theme!

Pulling up my socks, as they had started to sag, leading to slight discomfort: Strings, DUH DUH, Hero Theme…

Just about any task in life becomes more heroic with the 2009 Michael Giacchino Star Trek (reboot) main theme. Now I just need to hit the Publish button. DUH DUH – DUH DUH DUH DUH!

How Retarded?
February 24, 2012, 3:03 pm
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The latest bee in Ezra Klein’s bonnet is the idea that ‘conservatives’ have switched all their views simply due to Obama’s having espoused them.

The two biggies are an individual mandate for health insurance, which was conceived by conservatives at the Heritage Foundation as a way to get (nearly) universal coverage while maintaining the private insurance system; and a cap-and-trade system for reducing harmful emissions, which was conceived as a way to use market forces instead of government regulations to achieve an environmental good.

Can I just state for the record that I have never been in favor of either a mandate to buy health insurance or a ‘cap-and-trade’ system? What do I win for my noble, Klein-approved consistency? Nothing? Shucks.

But actually, that’s kind of the point. If conservatives were really running around proposing a ‘mandate’ system in the 90s-00s, which I doubt by the way, is it possible that this was simply tactical? You know, for the purpose of trying to hold the line on something, not lose too many political battles (and elections), etc.? After all, conservatives were faced with a lefty opposition that wanted to overtly socialize (rather than fascistize, as they have now done) health care. If they came up with a mandate as a we-have-a-health-reform-idea-too measure, where’s the dishonor in that?

Again, I happen to think it’s a stupid and bad idea. But I don’t understand the point of singling it out for special disdain. After all, it cuts both ways too: apparently, the left and Obama now think that a mandate is a fine idea. So why didn’t they just team up with the Heritage Foundation and pass it back then? Hmm, Ezra?

Anyway, so what we’ve proved is that Ezra Klein’s point is pretty shallow. Yawn.

The real subject of his post though is how stupid Republicans are being for ‘opposing contraception’. Which raises the more important question, is Ezra Klein really this stupid?

Seriously, does the left genuinely not understand the difference between (a) opposing government-forces-insurance-to-cover-X and (b) ‘opposing X’? Or are they faking it for political reasons? I guess what I’m asking is, how retarded are they?

Answer in comments!

Just When I Was Wondering That Very Thing
February 24, 2012, 10:20 am
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I know the odds seem small and you’re probably not going to believe me, but just the other day I was thinking about how I didn’t know where that whole ‘dingo ate my baby’ quote came from.    For example, Elaine says it on a Seinfeld episode, and it seemed funny to me, and it seemed as if it was a reference to something I was supposed to recognize, and I felt like I sorta did, but I couldn’t quite place it.  A few days ago, I made a mental note to Wiki it.  (Which I didn’t.)

Anyway, now I know.  Thanks, dingos!

Banking & Collateral
February 24, 2012, 9:22 am
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Synthetic Assets has a couple of great posts on what banks do and why the conventional-wisdom push for increased collateral among them is a bad idea.  The latter is something I had dropped a comment over there asking about earlier, and (whether consciously directed at my query or not) she’s given a great answer & explanation that has convinced me.

Both posts enlightening & highly recommended.

February 23, 2012, 10:08 am
Filed under: Uncategorized

Remember way back to a couple days ago when Virginia was going to require an invasive (‘transvaginal’) ultrasound before abortion? This, you’ll recall, was basically the sole reason that Jim Henley staunchly and logically refuses to live in a hellish backwater like Fairfax County, Virginia rather than a place that is totally and completely different in every way such as Montgomery County, Maryland. Merely the prospect of it happening (remember, he must have made this principled no-Virginia decision well before the proposed law even came up, but at the same time it was enough that he knew it – or something like it – was coming, which is why he chose Maryland and spurned Virginia you see) singlehandedly threatened to affect the experience of living in Fairfax County –  for people like Jim Henley (bloggers, accounting analysts) –  that much.

Well, now they’re not going to require a transvaginal ultrasound before abortion. Does this mean Jim Henley would now be free to move from Silver Spring to, like, McLean if he felt like it, got a decent enough bid on his current place from a French diplomat, noticed a bigger place on the market in a better school district,  or whatever? I mean what I’m wondering is:  does this signal the all-clear for Virginia as a safe place for the Jim Henleys of the world to consider residing in?  The internet waits with bated breath.

P.S. For the record, I was against the proposal too.

Amber Waves Has Spoken
February 22, 2012, 2:53 pm
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As you all know, actress Julianne Moore is a noted world-renowned expert in (AT LEAST) two fields of endeavor:

  1. Appearing on large silver screens for an extended length of time walking around with no pants on, as she did to wide acclaim in Robert Altman’s Short Cuts and, as far as I know, something like 50% of all the other movies she’s appeared in, also to wide acclaim
  2. The qualifications necessary for the various positions in the United States government.

It is presumably in her guise as an Expert of Type 2 – although we can’t rule out that she was wearing no pants at the time – that she informed us, about Sarah Palin, that:

“She wasn’t qualified to be vice president.”

I hate to belabor this point but you people must understand: the reason this (Palin being not ‘qualified’) is all so worth emphasizing, and an important fact to learn from our betters such as Expert On Qualifications/Lower-Body Nudity Julianne Moore, is that Vice President Of The United States is a totally-real executive position with such a mind-bogglingly long list of important, crucial and pivotal official duties and responsibilities, that, like, I mean, I just totally don’t even want to go into it okay?

But of course that was precisely why the fact that someone ‘wasn’t qualified’ to do it (the totally-real and tangible job of Vice Presidentizing) was so worthy of a national freakout, at the very least in and of itself enough of a reason to vote for the other guy in 2008. By whom I mean, of course, Joseph Biden (who, thankfully, is our current Vice President now) and whatever other guy was also on the Biden ’08 ticket.

WWTT (Why Was Tebow Tebow?)
February 22, 2012, 9:52 am
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So Jeremy Lin is being spoken of in some circles as ‘the next Tebow’.

Can anyone explain why Tim Tebow was the previous Tebow?

From context what people appear to mean by calling Lin a ‘Tebow’ is, ‘another phenom who comes out of nowhere and makes a splash’. Now, I don’t follow either NFL or college football (let alone the NBA) that closely, but wiki tells me that Tim Tebow, quarterback, won the Heisman Trophy and won two college football championships, before coming to the NFL and becoming ‘Tebow’. Correct me if I’m wrong but I think the Heisman Trophy is supposed to be a big thing, and Florida is a big football powerhouse, and winning championships is pretty good too. All of this probably explains why the name ‘Tim Tebow’ wasn’t at all new to me – I had totally heard of him before he reached the Broncos. This should tell you something, because – for comparison – here is a full and complete list of college football players I can name from the most recent season:

1. Andrew Luck

(No, I can’t remember the name of the guy who beat out Luck for the Heisman.)

So, to summarize, in Tim Tebow we have a college football star who played for a big-time program, won some championships, won the Heisman, was drafted in (as far as I can tell) the first round, then became an NFL starter and won some games, getting his team into the playoffs.

How exactly is any of this like Jeremy Lin? An analogous basketball-version of a description of Jeremy Lin basically involves negating everything in the previous paragraph.

All we are ever told in articles about the ‘Tebow phenomenon’ is that Tebow, like, ‘wasn’t expected to do well in the NFL’, or somesuch. I don’t know who these non-expecters are supposed to be exactly, but it’s hard to see why I’m supposed to compare (a) a 1st-round Heisman winner’s NFL performance (=pretty good) to (b) the inexplicably-low ‘expectations’ of [some unnamed people], and conclude that Tim Tebow is some sort of Inexplicable Surprise Phenom, a football version of a Jeremy Lin.

People have told me that Tebow’s skills are subpar, unorthodox, don’t work for the NFL, etc., and so that’s why he’s such a Surprise Phenom. Well ok to all that, but if he sucks so much why did he win the Heisman and all that. I mean, at most what I can imagine that adding up to is that he’s one of those QBs whose skills worked in college (or perhaps, in his particular program/system) but not so much the NFL, like a Ty Detmer or a Vinny Testaverde or a Rodney Peete or someone. So, we’re seeing a storyline wherein a guy who was expected to be like a Rodney Peete at best seems to have turned out to be a little better than Rodney Peete, at least for one season? And that’s such a ‘huge surprise’ that we’re supposed to treat him as if he ‘came out of nowhere’? Would people have been reacting this way if Rodney Peete had had a pretty good season as a starter with some comeback wins and a playoff berth? I doubt it. So what is it?

Is it all just because Tebow does that, like, praying thing he does or whatever? (I don’t know how to describe it as I’ve never seen it. As I said, I don’t follow NFL that closely.) And that’s why he ‘wasn’t expected to do well’ to such a degree? Because of the praying? ‘Yeah, he won the Heisman, but he does this praying thing, you’ve gotta see it, I can’t imagine him going anywhere in the NFL’? Is there anything else, because if there is, I have never understood what (from reading articles about him).

Anyway, obviously since I never understood why Tebow was some kind of football pre-Lin, I now struggle to understand why Lin is the ‘next Tebow’. Or rather, Lin may be a Tebow, but objectively, it doesn’t seem to me that Tebow is a Tebow. Am I wrong?

Answer in comments.

P.S. I think I’m going to end all posts with ‘Answer in comments’ from now on…

Cracks In The Standard Model (Of Trading)
February 21, 2012, 2:13 pm
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Maybe this is just wishful thinking, yet slowly but surely, almost imperceptibly, I feel as though the Smart Commentariat may finally be showing signs of – well, not coming around, exactly – coming within shouting distance of my lonely, annoying refrain that there’s no such thing as “prop trading”. At the very least, the cracks in the Standard Economist Model Of Trading are starting to show, and people are starting to notice, or at least show signs of cognitive dissonance.

To make this definitive, let me lay out what (I am now convinced) appears to be the Standard Economist Model Of Trading (SEMOT):

  1. The traditional form of banking (take deposits, make loans) is a riskless operation. Nothing bad ever came from it and no banks ever failed doing it. It’s just ‘intermediation’ (which is a synonym for riskless). It certainly does not count as any sort of ‘trade’ or bet (to, um, rent money from one guy and then loan most of it out, locked up for a longer time, to some other guy, to try to earn a profit on the spread hoping the first guy doesn’t come back too soon) and thus it is a totally different animal from ‘trading’. It entails no risk, or at least no risk that isn’t as well understood and managed as Newton’s laws. (This pillar suggests that ‘get banking back to basics’ and ‘banks shouldn’t make bets!’ are reasonable views.)
  2. Market-making is riskless. In market-making you are like a switchboard operator who matches buyers and sellers, and you take a fee in the middle. Market makers never, ever have an actual position of in the thing that they trade. If they do, they hedge instantaneously, with perfect hedges. They never buy without having someone to instantaneously sell/hedge-perfectly to, and they never sell without having someone to instantaneously buy/hedge-perfectly from. (Belief in this pillar of SEMOT helps explain why some people are so puzzled that market-making even needs to exist.)
  3. Therefore, if a bank is observed to have had some risks on its balance sheet – by, for example, losing a lot of money during, say, a “The Financial Crisis™” – those risks must have gotten there via “proprietary trading”. Because “proprietary trading” – we are told – is any instance where a bank enters some risk or ‘bet’ for its own account, i.e. that it would profit from if the risk went their way. Per #1 and #2, that actually never happens, neither in the normal course of banking nor in the normal course of market-making. Thus if/when it does happen, that was “prop trading”.

Now, there is a neat thing with SEMOT, and an unfortunate thing. The neat thing is that it is logical and internally-consistent: #3 logically follows from #1 and #2, and that fact is what allows you to quickly and easily mentally categorize the various sorts of Trading (and to propose or endorse regulation of same, such as the ‘Volcker Rule’) that you, as the Economist, imagine take place within a broker-dealer. I am sure this comes in handy, particularly for those Economists who have never in their life set foot inside one. The unfortunate thing however is that each of #1 and #2 are false.

For a good long time, many Economists and/or most Smart Commentators seemed wholly unaware that #1 and #2 were false. On #1 I seem to still have an uphill climb, for example I had to remind (as far as I can tell) the entire rest of the internet that loans are risky. But some may be starting to notice problems with #2; they may not have fully come around to my no-such-thing stance on “prop trading”, but they are certainly struggling with some of the undeniable contradictions. And it is in that regard that this piece by Felix Salmon that I have belatedly noticed is a useful specimen.

First note he is praising a letter of comment from ‘Occupy SEC’ on the Volcker Rule as ‘amazing’ – so right away we see he is suffering from confusion and cognitive dissonance. Haha. Anyway, let’s look in detail at some his comments on this ‘absolutely astonishing’1 letter:

And then there’s the even bigger market-making loophole, which, unlike the repo loophole, actually exists in the original statute. [...] In the proposed rule, banks can claim to be “making a market” in illiquid instruments when they’re only on one side: buying and not selling, or selling and not bying [sic].

The fact that he calls this a ‘market-making loophole’, and not just market-making, means he still has some work to do. The fact that he subsequently complains that market-makers might be “unwilling to provide executable bids or offers at all” is pretty rich (um Felix, you’re the one that thinks market-makers should never buy without selling or vice versa and it’s a ‘loophole’ if they do – so in your version of market-making how could anyone provide an ‘executable’ bid/offer unless he happened to have the other side already?).

But encouragingly, although the gears may grind slowly in Salmon’s head on this issue, grind they do. One can almost hear him reasoning it out in his head: “You mean…that market makers…don’t just match buyers and sellers instantaneously 100% of the time? But that means…I mean prop trading is when a bank has nonzero risk…and if a market maker buys without selling, why….” So I’m optimistic, and am pretty sure that if we give Felix Salmon enough time to think this all through, say months, he’ll get to where I am: ‘prop trading’ per se does not exist.

In the meantime, it’s enough to observe that what Salmon is noticing and reacting to is simply the fact that Pillar #2 of SEMOT is false. Hence we get this:

It’s pretty easy to see how a market-maker’s inventory can morph into a proprietary trade, under such circumstances.

Why yes! It’s almost as if, on the relevant margins there is no meaningful economic distinction between the two. (Indeed, how can Salmon even speak of a market-maker’s “inventory” without cognitive dissonance? How can they get an “inventory” if all they ever do is buy-sell simultaneously?)

As the letter says, “an unfortunate consequence of the generalized language throughout the Proposed Rule may be the shift of risky practices out of liquid and transparent markets into the less regulated illiquid and OTC products” — there’s a real risk, here, that the Volcker rule could actually make bank trading more risky, rather than less.

Correct. As I said somewhere downthread here, Volcker Rule proponents are, in effect, seeking to enlarge the ‘shadow banking’ sector, without quite realizing it (presumably). So they are fixing a non-problem (The Financial Crisis™ was not caused by ‘prop trading’) by potentially, perhaps inevitably, introducing new ones.

But this is entirely predictable for people who are operating from a fatally flawed and ignorant understanding of how these markets work (the SEMOT). It may be too much to hope for that everyone suddenly sees that the SEMOT is wrong, but that so many are noticing that something doesn’t quite add up is, at the very least, encouraging.

1I was delighted to learn, from this ‘whip-smart’ letter, that there are institutions I had not previously suspected to exist called ‘inter-broker dealers’!

The Henley Metric
February 21, 2012, 10:39 am
Filed under: Uncategorized

Jim Henley has come up with a fascinatingly new cherry-picked metric for deciding which side is the Bad Side (hint: conservatives) and which is the Good Side (hint: the left):

Let me stress, the question is not, “Are there bad ‘liberal-inspired’ laws and regulations?” Of course there are. The question is whether there are any such whose aim is to dissuade you by making you feel terrible – physically and/or emotionally – about an otherwise legal course of action.

See what he did there? If bad lefty policies outnumber bad conservative policies in general by 1000-to-1, that wouldn’t count. All that counts for the Henley Metric – all you’re supposed to pay attention to – are whether a policy’s ‘aim is to dissuade you by making you feel terrible’ about doing something legal. Henley scores this a 1-to-nothing win for the left, and so, QED I guess.

Now, maybe he’s right. Maybe the left doesn’t propose policies whose specific form of badness involves ‘making me feel terrible’ about doing something. I didn’t spend a lot of time trying to come up with examples either way. But if not, I submit that could be because they are too busy with their day job scribbling their yearly flood of policies which add up to steal half my f**king property from me year in year out. Hell, in that light I’d love it if they’d switch to a focus on this making-me-feel-terrible thing, if it meant they’d only steal, oh I dunno, a quarter of my property? I’d do that trade all day long in a heartbeat.

For me the highlight of Henley’s post however came at the beginning with the assertion that this – and this, in particular – is ‘why, though [he works] in Virginia, I insist on living in Maryland.’ Both states ‘answered the question’, you see, because the Maryland legislature legalized same-sex marriage whereas Virginia pushed through that mandatory-MRI-for-abortion thing.

Yeah, I’m real sure that that’s why Jim Henley lives in Maryland not Virginia. Because after all the experience of living in Montgomery County (in Maryland) must be like night-and-day for Jim Henley compared if he were to instead live in some redneck theocratic backwater such as, like, Fairfax County (in Virginia). Totally different experiences.

Suzy Khimm Gets It On “Prop Trading”
February 20, 2012, 6:51 pm
Filed under: Uncategorized

On the Volcker Rule. She appears to be citing Craig Pirrong, who also seems worth a read:

The problem is, even if you agreed with Posner and Weyl in principle [to have a 'financial FDA' to 'vet' financial products], distinguishing between “hedging” and “speculation” is no easy task. That’s essentially what the Volcker Rule is trying to do, and it’s spawned a mind-bogglingly complex 300-page regulation.

Wow! Sounds familiar. In fact I distinctly recall a great blogger who wrote something along these very lines:

Where do you cross the line from an intelligent “macro hedge” into a “prop trade”?

For the life of me, I still do not know. Feel free to answer in comments!

UPDATE: Fixed Craig Pirrong’s name. Here is a relevant post; impossible to excerpt as too many points are right on the money so just RTWT.

Periodic Reminder Of Who The “Vice President” Is
February 20, 2012, 6:44 pm
Filed under: Uncategorized

The “Vice President” [sic] is someone named Joseph Biden. That is all.

(Ed. note: This is a periodic reminder I provide as a service to my readers, to remind them of our nation’s good fortune that we averted the Palin Crisis Of 2008 that threatened to make Sarah Palin the Vice President, which – obviously – would have been such an unspeakable disaster for the country that I don’t even want to go into the specifics of how it would have harmed us all, which it totally would have, tangibly.)

(URGENT) Is Warren Buffet’s Secretary Okay?
February 20, 2012, 6:41 pm
Filed under: Uncategorized

I haven’t heard about her in a while. Is she making her rent? Does she have hot food? Please post any info you may have on the plight of this poor woman. I am considering taking up a collection. If we don’t help this destitute woman who is employed by a multibillionaire, who on earth will?

Who Perpetuates Secret Societies In The Internet Era?
February 20, 2012, 11:41 am
Filed under: Uncategorized

Who keeps up and maintains all the secret societies nowadays?

I’m not really talking about the secret societies that are just about power and connections. You know, the one George W. Bush is in and which made him President (I forget its name). Or the ones that are about big money (i.e. that one the Hollywood actors are all into). Those, ok, I understand.

I’m talking about all the boringly local, weird, grassroots and esoteric secret societies. Like, the Rosicrucians or whatever. And any that are more esoteric than that. Anything that claims to have some ‘secret knowledge’, and a ladder of ranks you can rise, to get that secret knowledge. My point is, who – under the age of 60, anyway – is going to be interested in any of that? It’s not like secret books/knowledge mean all that much anymore. You can pretty much just google it all.

Imagine you’re the Rosicrucians (sorry, I don’t know why I’m picking on the Rosicrucians, nothing against them, bear with me) trying to recruit new members. New 25-year-olds. (Without new 25-year-olds, how will the society continue?) Well, whatever 25-year-olds you make your sales pitch to, they will just go home and wiki all the stuff on Rosicrucians they can find. They’ll post to their Facebook wall ‘just got back from rosicrucian mtg, should i join lol?’ Some of it might sound intriguing but they will also very quickly discover (a) there’s not much ‘there’ there and (b) there are a zillion things just like it, or similar to it, and (c) it all seems pretty made-up and fake. And they’ll see that they could just as easily learn about those things by clicking through some webpages some bored evening rather than doing the whole actually-join-the-secret-society jazz and spending years of their lives hanging out with the actual people. At the very least they’ll see just how much ridicule out there awaits people who actually believe in all that malarkey (whereas in times past, maybe the full extent and weight of said ridicule could be more easily avoided and denied).

The point is that in the age of full and easy access to information (or at least, to other peoples’ rumors, hearsay, and ridicule), secret societies have got to have an uphill climb, and their traditional transmission mechanism – meetings, books, codes, uniforms, promises of the ‘next level’ of secret info – doesn’t seem as likely to work.

So what sort of person would actually go through with it and get into the whole secret society thing? I can imagine two broad types:

1) the very, very sheltered and strange; folks with massive personality defects, i.e. paranoia or near-sociopathy
2) young bored hipsters, doing it ‘ironically’, just to ‘see what it’s all about’, but always with a wink, tweeting about it later

Obviously 2) can supply these societies with occasional waves of new recruits for a while, but it’s hard to see them forming the core of any next generation willing/able to perpetuate the secret society faithfully into the future. Likely, they’ll bore quickly and leave to do other stuff. Too much turnover, when what secret societies really need are true-believers to pass on the canon. So these societies would presumably be left with 1) as the core of new recruits. On the one hand, that sounds awful, and raises the question, do we need to keep a closer eye on these secret societies. On the other hand, fortunately there aren’t that many people in category 1) in the first place, and someone serious enough about their secret society would probably at least try to keep such people out anyway, to the extent they are genuinely dangerous (rather than just the near-autistic or hopelessly-introverted, either of which is probably fine for a secret society).

If you follow the preceding then you quickly come to the conclusion that many secret societies must be aging rather quickly nowadays, and starving for new twenty/thirtysomethings to hand off the legacy to. Meanwhile some of these things do have assets (buildings, little bookstores; the Rosicrucians do have a museum); as the societies dwindle these things will either have to be divested and sold off altogether, or at least (as has probably already happened to some extent) handed over to nonmembers to run the day-to-day operations. This means that to the extent these trappings of secret societies exist at all, they will be perpetuated in part by salaried staff who think the whole thing is stupid but need a paycheck. Now on the one hand, perhaps that makes them no different than an institution like (say) Chuck E. Cheese, Best Buy, or the DMV. On the other hand if this is how secret societies are surviving, it’s hardly the image of secret societies we know and love.

Are we losing our rich and diverse legacy of secret societies? Will government decide it needs to step in and lovingly preserve them as historical artifacts, like they had to with octagonal buildings? I wonder.

The Hansel & Gretel Solution
February 20, 2012, 10:40 am
Filed under: Uncategorized

What lessons do the story of Hansel and Gretel hold for our current fiscal troubles? Glad you asked.

As you recall, Hansel and Gretel tells the story of a troubled family (allegorically, a nation) that is starving, due to a ‘famine’. We are told the father is a woodcutter, clearly indicating a misallocation of resources (who needs woodcutting during a famine?). He has no explicit ideas to deal with the famine; they will all just eat less. The stepmother, meanwhile, obsesses on one idea – let’s kill the children, then there will be more food for the rest of us.

Allegorically, the father and stepmother represent two factions of a divided government. The father, who clearly had been shunted into a bubble logging/woodcutting industry (presumably due to government ‘stimulus’ and loose money policies), even to the point of moving his whole family into the middle of a forest, is now implicitly, and impotently, advocating austerity. The stepmother (usurper government?) meanwhile is focused on Malthusian population control and, allegorically, contraception. That the children first escape her attempt to strand them in the woods by laying a trail of ‘white pebbles’ that shine in the ‘moonlight’ may hint at the reproductive symbolism at play here.

Predictably, the step-mother’s easy-way-out left-wing policies initially win the day as the second attempt to get rid of the children is successful, with the help of forest birds who eat their bread-crumb trail. Subtextually, some of the blame for their exile here is now their own: failing to plan for and preserve their trail home (e.g., straying from the constitutional path). Cast out like Noah, they are shown the way by the white bird of peace to their next test: the candy house in the woods.

This is the witch’s house. And although it is disavowed in the text, the is clearly meant to be their grandmother, who not only has wastefully stored and saved up the family’s (nation’s) wealth in the construction and maintenance of a frivolous candy house, but – we later learn – has all manner of jewels and riches stored up inside. And is she done? No, for she wants to fatten and eat Hansel as well. Other readings suggest the witch is the stepmother herself; perhaps she represents the stepmother at a later phase of life. Either way, she represents the elderly generation, plump with savings, still wanting to live off the young. The parallels with Social Security here are undeniable.

Despite the sinister light it casts upon the left, however, right-wingers looking for solace in this story will be disappointed. For what is the ultimate salvation for Hansel and Gretel? They trick the witch into thinking Hansel isn’t plump enough to eat (tax avoidance), kill her and take her treasure (savings). This is euthanasia, but on a lesser scale it is, perhaps, inflation, as the nation’s salvation. We are clearly meant to think of the witch’s (grandmother’s) savings as entirely ill-gotten and fair game for Hansel and Gretel (the nation) to re-appropriate and bring back home. This they do, riding back across the lake on a white swan (love? transcendence?), back home to discover their stepmother had died – lending credence to the stepmother=witch theory, and their father had been lost with sorrow at succumbing to the stepmother’s advice. With the witch’s treasure, they go on to live happily ever after.

This story therefore clearly illustrates that prior societies have already grappled with many of the same issues we now face. And the solution they hit upon was simply to stick it to the elderly. Now, I don’t necessarily advocate, mind you, I just analyze.

The Definition of ‘Progressive’
February 19, 2012, 4:29 pm
Filed under: Uncategorized

Is homeschooling ‘progressive’? That is the question that plagues Dana Goldstein:

“Homeschoolers of all stripes believe that they alone should decide how their children are educated.”

Could such a go-it-alone ideology ever be truly progressive—by which I mean, does homeschooling serve the interests not just of those who are doing it, but of society as a whole?

This supplies us with a useful and informative definition of ‘progressive':

progressive (n.): A political philosophy according to which individual human choices and behavior are only allowed if they ‘serve the interests of society as a whole’.

Of course, this requires a further definition:

the interests of society as a whole: stuff that people like Dana Goldstein likes and wants to happen.

We can finally simplify all this further by creating the associated thesaurus entry:

progressive: fascist


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