Is Sandra Fluke Still Able To Afford To Have Non-Reproductive Sex?
April 30, 2012, 10:39 pm
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Or is she, alternatively, having non-reproductive sex but starving to death as a direct result?

Just worried about our national contraception mascot.  No one seems to be talking about her.  We can’t lose sight of our priorities here.

Stiglitz On ‘Free Market’ And ‘Austerity’
April 28, 2012, 2:46 pm
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Joseph Stiglitz in this interview gives very articulate answers in the course of describing what I can only assume is some sort of fantasy-world or alternate universe. In Stiglitzia, you see, the financial crisis was caused by too much free market.

When I look back at the history, I see

  • a mortgage ‘market’ in which whether you can get a mortgage, and its size, and terms, is almost entirely determined by criteria set by two agencies, Fannie & Freddie
  • Fannie & Freddie exist. Note these are not private companies that sprung up organically in a ‘free market’, but rather, invented, quasi-private ‘government-sponsored enterprises’ that ended up being just basically, well, the government
  • as such they are also subject to all sorts of political pressure, Congressional meddling, ‘you should (must) loan more to this group of people’ diktats, etc.
  • if you stop paying your mortgage, Fannie/Freddie (i.e. taxpayers) guarantee investors they’ll make up the difference. Interest-rates are priced accordingly.
  • or, your mortgage is sold into a private-label pool that gets sliced into tranches with different ‘ratings’, which are these letters assigned to debt by basically three ‘rating agencies’ given quasi-government status
  • the main reason to do this is that the ‘rating’ of a piece of debt affects who can buy it, due to, like, laws and regulations. It also affects the capital charge based on made-up multipliers, centrally-determined by, like, the Basel Committee. This setup influences, if not dictates, what interest-rate you were able to get.
  • that mortgage tranche might then get combined with other tranches and put into a CDO meant to game the ‘ratings’ even more.
  • interest rates are all kept low because the U.S. central bank decided to keep the ‘discount rate’ low.
  • this machinery all worked for a while as a government-sanctioned and -encouraged way to funnel money from debt investors to U.S. and other home ‘buyers’

And then it all collapsed, taking a good chunk of the rest of the market down with it.

Now, sharp readers can easily observe that essentially none of the above bullet-points can fairly be described as ‘free market’ phenomena. So, that can’t be the reality Joseph Stiglitz is describing. There must be some other, I can only assume?

Stiglitz also berates policy makers for listening…too much to free market ideologues when crafting their responses:

Those faulty models then encouraged policy-makers to believe that the markets would solve all the problems.

How exactly the (supposedly widespread, and supposedly academic-encouraged) belief among policymakers that ‘the markets would solve all the problems’ informed and led to the policies we actually got, such as bailouts, forced mergers, forced restructurings favoring politically-favored creditors, TARP (and TARF and CRAP and whatever the hell), massive ‘stimulus’ packages, ‘Operation Twist’ and other Fed open-market operations, EFSF and its CDO^2-based structures in Europe – indeed, what any of these policies have to do with a ‘free market’, Stiglitz does not explain. I suppose the explanation would go over my head anyway, since I am not a Nobel Prize-winning economist.

In any event, clearly since the crisis was so obviously caused by too-much-free-market, and since its failed policy responses were so obviously influenced by absolutist pro-free-market sentiment, it goes without saying that as we look ruefully back on all these failures (of free-market thinking) there’s one group of people we (more in sorrow than in anger) recognize as needing to change their ways: free-market thinkers.

Within academia, those who believed in free markets before the crisis still do so today. A few people have shifted, and I want to give credit to them for saying: “We were wrong. We underestimated this or that aspect of our models.” But for the most part, the response was different. Believers in the free market have not revised their beliefs.

Idiots! After seeing the oh so free market mortgage market collapsed and the oh so free market TARP failed to fix it, don’t you free-marketeers realize your free-market ways just don’t work?

Anyhow, most of the interview is devoted to a critique of ‘austerity’ and that gets me thinking. Since clearly Stiglitz does not see the same reality that I see, it stands to reason that the same might be true when it comes to ‘austerity’. All of which is to say: a lot of ink & electrons are being spilled nowadays premised on the idea that a bunch of European countries, maybe even the U.S.?, are doing a whole bunch of belt-tightening ‘austerity’ stuff. Everyone seems to assume this (and then, criticize it).

What this here post of mine presupposes is: maybe they’re not? Why do we think anyone’s engaging in any meaningful ‘austerity’ at all? Because people like Joseph Stiglitz say they are? Yeah, you know what, looking at articles like this, that’s not really enough of a reason in my book.

Repellent Bridesmaids
April 28, 2012, 10:29 am
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Don’t know how/when but somehow I had gotten the idea that Bridesmaids was going to be a hilarious movie. This is doubly-weird because the main thing I’d heard about it was that it was the ‘female Hangover‘ and I didn’t even like that movie much in the first place, and found it mostly sad and strange.

Bridesmaids is, I guess, like The Hangover in that way. This is because, although on paper it seems like a pretty formulaic comedy of the sort that might have starred Julia Roberts in the ’90s – there’s a main character who we follow along on a pat story arc involving first a lot of bad but ‘funny’ stuff and then a resolution, with both her friends and a gentle love interest – they made a very interesting and perhaps daring choice, in that they made the main character completely and totally unlikable and unsympathetic in every possible way.

I hated Kristen Wiig’s lead character. Despised. She has no redeeming qualities. There is nothing to like about her. Am I getting through here? The rival, gorgeous, refined, nice ‘enemy’ character played by Rose Byrne, who for most of the movie (I gather) we were supposed to dislike, was far more likeable (but then, I would think so…)

What this means (if you agreed with me about the character) is that you sit and watch this movie ostensibly constructed around ‘will the main character find happiness and get to a better place with her friends and romances?’ and you don’t care if she does, or even actively do not want her to. This makes it something of a surreal experience. Because while Bridesmaids has all the trappings of a movie starring A Character We’re Supposed To Like And Want To Succeed, they mixed things up and (seemingly intentionally) didn’t put that character in the lead, they put an annoying, self-centered, repellent character there instead.

Which, is an interesting choice.

What happened then? One possibility is that the writers don’t know she is repellent, or at least don’t see her as repellent as I did. No accounting for taste and all that. The explanation I favor though is that Bridesmaids is a sort of cultural agit-prop, meant to change views and tastes as to what is acceptable and attractive and likeable. A feature-length infomerical meant to portray inherently-unlikeable, atrociously-self-centered and obnoxious girls as likeable in the hopes that this will trick people, or even change aesthetics along the way. Sort of like movies/TV shows instructing us that ‘big beautiful (=fat) women’ are attractive. Yes, I understand they’d certainly like to think so. The problem is they might find that not everyone is playing along.

The New Bosses
April 28, 2012, 10:04 am
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My daily ‘Volcker’ search has brought me the latest piece by Suzy Khimm. Let me get my silly-definition-of-prop-trading complaint out of the way:

…the Volcker Rule — a provision of President Obama’s Wall Street overhaul that would restrict commercial banks from making speculative investments that do not benefit their customers

That’s what the Volcker Rule bans? Wait, so banks are, under the Volcker Rule, allowed to make speculative investments as long as those investments ‘benefit their customers’? But wait. Suppose a bank makes a speculative investment. And then makes a lot of money. And then (in large part because of that) is able to offer their customers more loans/better prices. That would totally benefit customers, I would think! But that applies to anything a bank does, ‘prop trading’ or not. So I guess the Volcker Rule doesn’t really ban anything at all. Nevermind then.

Why oh why can’t anyway give a coherent account of what the Volcker Rule is meant to do? It’s almost as if it tries to ban something that has no clear definition, or something!

Anyway, the rest of the piece is interesting more for its cultural reporting on the sorts of people still sticking around with that ‘Occupy’ thing (remember that?). Khimm brings us former traders and risk managers and quants, all ‘fighting the man’, she says – only, when you look really closely at what’s going on, it sounds more like they are the man:

But the meeting is a glimpse into one of the most surprising iterations of the free-wheeling, anarchic movement: fighting the man through the tedious and Byzantine regulatory process. [...] Many of the Occupy wonks once worked on Wall Street, and some of them still do. [...] Now they’re trekking to Washington to present their 325-page treatise before federal regulators in official meetings with the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency, and, yes, the SEC.

Last week, they met with 60-odd congressional staffers, including some Republicans, to give them a closed-door briefing on the regulation. And at the end April, the group is slated to sit down with Paul Volcker himself, the former Federal Reserve chair and namesake of the regulation.

Wow! Anarchist outsiders, the whole lot of ‘em!

In the peak of ‘Occupy!’ (<—I definitely hope that's what the Green-Day-scored Broadway musical version will be called when it comes out, BTW) I wrote many times that this was not a movement of 'the 99%' against 'the 1%', it was a movement of disillusioned young gifted people of privilege trying to get the sinecures they felt they had coming to them, but hadn't found yet. Well, the subjects of Khimm's piece appear well on their way to finding them. I also predicted that some of the 'occupiers' were destined to become very powerful and wealthy. I wouldn't be surprised if Khimm has found us a few of those.

One of them is certainly thinking along the same lines, as he is planning to start a bank (!), waxing poetic about its 'market potential':

…the Occupy Bank would offer a full range of banking services to all customers; unlike community banks, it would ultimately have a national reach. “I personally think there is enormous market potential for a bank of the kind we described,” Ross says. “If you get it right, it could potentially change the system, which is not only politically but commercially ripe for revolution.”

Anarchy! Smash the state! Um…’enormous market potential’ to create a ‘commercial’ revolution by starting a new bank and becoming a filthy rich banker myself!

Not that I’m knocking it, by the way. Good for them. But can we please finally drop the romance everyone constructed at the time about how ‘occupy’ was all about downtrodden lower-class folks who had no opportunities in life? People, seriously, the guy is talking about starting a freaking bank. I mean come on.

Coolness Dynamics
April 28, 2012, 9:15 am
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Musing on what I like to think will become known to posterity as Coolnessgate made me realize that Coolness has some very intriguing and surprising properties. We start from self-proclaimed cool person Paul Waldman’s (highly accurate I have to presume?) observation that Coolness was invented in the 1960s as a property held by the hairy guys who smoked weak 1960s pot and had hippie girlfriends who wore (let me go look this up in Paul Waldman’s guide to coolness) ‘sheer peasant blouses’. Whatever those are (but whatever they are, we know they excite Paul Waldman).

Now one thing we know about those 1960s from the approximately 2.7 kajillion movies and TV shows that have celebrated the greatness of that decade (which saw the Baby Boomers invent sex, freaky white-people dancing, Indian music, trees, and so many other things) is that – back then – the cool kids didn’t like old people. Remember ‘don’t trust anyone over 30’? Okay, me neither, but I’m pretty sure I saw it in a movie or one of those PBS telethon specials about The 60xties that would constantly be interrupted by some short-white-haired old lady with gigantic earrings begging for money. Point being, young people were cool and (this is key) old people were not, almost by definition. Coolness, back then (when – hey wouldn’t you know it – Baby Boomers happened to be young), coincidentally attached to those very same young, and could not attach to an old person.

But what has happened to coolness since then? It seems to have (coincidentally!) followed that particular wave of young people forward. Because at least by the Clinton administration (at a time when Baby Boomers started to become 50+ years old), I guess scientists discovered that apparently suddenly miraculously 50+ year-olds can be ‘cool’ after all. Play Fleetwood Mac at their inaugurations and everything.

This illustrates the broader theme of the relationship of ‘coolness’ to the establishment. Back then, the establishment was decidedly not cool. Young people today probably scratch their heads when being taught that those cool ’60s rioters were rioting against the Democratic National Convention. Say what? Because now one political party in particular, in particular the Democratic Party, is way super-cool. Again coincidentally no doubt, this change in coolness occurred over a time when Baby Boomers happened to find themselves able to rise in the ranks and assuming leadership of political parties and indeed of the country itself. 60s: surely a President, an old powerful dude in a suit, can not be cool. LBJ? Nixon?? Get real. Even the sickly JFK – sure he could womanize, and was ‘inspiring’, but he wasn’t ‘cool’. But now: Clinton played a saxophone! Obama is Obama! So coolness has followed Baby Boomers to the Presidency itself.

Or how about wealth. In the 60s: It was cool to eschew possessions and materialism (at a time when Baby Boomers were too young to have possessions or, um, materials). Those materialistic parents with their plastic-fantastic world, giving Dustin Hoffman a SCUBA outfit for his birthday, I mean how uncool they all were (as they came back from a war to supply Baby Boomers with an unprecedentedly coddled and privileged existence). But as those Baby Boomers grew up, bought houses of their own, made a killing in real estate, made it big in stocks in the ’80s, maybe bought a second house or got their real estate license and started flipping houses, maybe (like Hillary) got into commodity futures, etc., bought tech stocks, guess what? Suddenly all that stuff is just fine. It’s now cool to be wealthy as hell and even tax young people more to maintain the system. Doesn’t hurt your coolness at all.

So everywhere we look we see this property of coolness recur again and again: it happens to follow Baby Boomers through their life arc. Coincidentally.

And if you don’t believe me, just ask a Baby Boomer. Because clearly they’ll be perfectly happy to tell you how cool they are and how coolness is defined by…well, by whatever they happen to be doing.

Squaresville Delenda Est
April 27, 2012, 12:26 pm
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Paul Waldman has clearly done some very important journalistic and literary work in writing this piece stating that President Obama is “cool” – cooler than Mitt Romney – and that he needs to be re-elected because he is so “cool”. After all, the cool kids have been downtrodden and beset upon enough already, it’s time they had a victory for once:

So once again, we have to wage a campaign of the cool kids versus the squares.

Yes, once again. The self-proclaimed “cool” people (like Paul Waldman, whoever that is) “have to”, “once again”, beat back those squares. Reluctantly!, Waldman would no doubt add with a sigh, sad-eyed at the thought of having to repeat this campaign that, the cool kids all thought, had been won definitively in the 1960s when Jimi set his guitar on fire or Abbey Hoffman did (um, whatever he did) or something. Nevertheless. Squaresville delenda est.

It’s pathetic enough that after three and a half years of President Obama’s administration the best argument to be mustered in his favor is the exact same one upon which his entire election was based in the first place. Literally, nothing he has done or hasn’t done in the intervening time has mattered one iota; he was ipso facto cool then (and this is why it was important to elect him) and he is still cool now (and this is why it is important to re-elect him). You could have been stranded on a desert island all this time and easily pick up with this ‘analysis’ right where you left off, without a hitch.

But the genuinely interesting point is the one Glenn Reynolds raises: what exactly about President Obama makes him ‘cool’ at this point? A corollary here is what’s so ‘uncool’ about Mitt Romney? Looks sort of cool to me though my tastes are admittedly not up to date, and may reflect different priorities to those of Paul Waldman:

How is this not cool?

Anyway, in search of answers, from very early on I had perceptively and astutely identified these factors in Obama’s favor:

  • tall and sort of skinny, looks svelte in a suit
  • kinda-black but not too black, if you know what I mean
  • can read prepared text in a ‘sonorous’ tone of voice; good for sound bytes, music videos

RWCG can now reveal the previously-sealed findings of an exclusive, in-depth investigation commissioned by RWCG, Inc.: it turns out that President Barack Obama still possesses the preceding three qualities which (they and they alone) are what made everyone love him so much in the first place. Hence: cool, Smart People (such as Paul Waldman) think he should continue to be President-guy.

And I for one think that’s as good an argument as any. Because if there’s one group of people whose priorities I find to have been in the right place lo these many decades, it’s self-absorbed Baby Boomers who think (and say!) they’re so “cool”.

UPDATE 4/27: Waldman clarifies. Shorter: ‘You guyyys, you just don’t understand, when I said Obama was cool I just meant he was way way super-cool’. Or something (I mostly skimmed). Thanks Paul Waldman for that and I for one pledge to take you at your word that you’re as cool as you claim to think you are.

Volcker Rule Adjectives
April 26, 2012, 6:09 pm
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Today in Volcker Rule news, legislators (=people who write and agree on laws) have asked regulators to fill in all the, like, well, actual details of the law they ‘wrote’, in such a way that once it is actually written the result is, well, perfect.

In a letter to five federal agencies on Thursday, a group of 22 senators called for regulators to adopt a final rule free from loopholes and concessions to Wall Street.

Got that?  When the unnamed/unelected regulators finish filling in all the details of the law, it needs to be completely ‘free from loopholes and concessions’.  That’s all they ask.  I think legislators should ask regulators to square the circle and create a perpetual motion machine while they’re at it.  Legislating!  It’s fun and easy!

Somehow I don’t remember any of this being the process, but admittedly it’s been a while since I’ve seen that ‘I’m just a bill on Capitol Hill’ episode of Schoolhouse Rock.  I mostly know the words to ‘Unpack Your Adjectives’.

Which may explain why I always end up unpacking ‘frustrating’ first, and then I reach in and find the word ‘worst’.  Like when I read this description of the Volcker Rule:

Under the rule, banks can no longer place speculative bets with their own money.

There are two ways to read this by my count.  One is to observe that the notion of banks having something called ‘their own money’, as if firewalled off from the ‘other money’ (?) they do stuff with, is nonsense on stilts, and infer that the author is a financial ignoramus.  The other is to assume for the sake of argument that the above is an accurate description of the Volcker Rule, from which we conclude that the Volcker Rule bans precisely this: modern banking.  So as a description of the Volcker Rule this is either dumb or insane.

Adjectives are words you use to really describe things.  Handy words to carry around.

The Fair Jonathan Chait
April 26, 2012, 7:46 am
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I’ve written before that Romney’s critics invariably come up with critiques that only end up making me like Romney more than previously did – which admittedly is a bar that didn’t start out very high, and still isn’t.  But anyway, on that note here’s Jonathan Chait with the latest entry:

He believes that fairness is defined by market outcomes. If Romney earns a thousand times as much as a nurse in Topeka, it is solely because his character, education, or hard work entitle him to that. To the extent that unfairness exists, it is solely the doing of government: clean energy, laws permitting union dues, overpaid government employees, and so on. Aside from unfairness imposed by government, poverty is attributable to the bad choices or deficient character or upbringing of poor people.

Wow!  That’s actually what Romney believes?  Sign me up!  This guy just keeps getting better and better.

Alas, Chait backs away in the very next paragraph:

Now I doubt that Romney actually believes the full implications of this, even though many Republicans certainly do.

Argh!  Talk about a bait and switch.  

Sonic’s Razor
April 25, 2012, 4:24 pm
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Sonic's Razor: Any law, rule or regulation that is (formally or informally) named after (a) some individual* adult** human, or (b) via an acronym that makes a dictionary-word, is presumptively a bad law that can be opposed without further information.

Examples: “Volcker Rule”, PATRIOT Act, “Buffett Rule”, DREAM Act, “Obamacare”

*Excluding laws named after two or more people b/c of how common it is nowadays to refer to a bill by the bill’s split-partisan co-sponsors. Although in reality it’s probably the case that most of these laws (McCain-Feingold, Dodd-Frank) are terrible too.

**Allowing exceptions for laws named after children due to some atrocity/accident, e.g. ‘Megan’s Law’, although those may be bad as well; I don’t have the knowledge let alone the stomach to look into it.

You Get What You Vote For
April 24, 2012, 9:24 pm
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I don’t understand people like Jon Lovitz.

“This whole thing with Obama saying the rich don’t pay their taxes is f**king bullsh**. And I voted for the guy, and I’m a Democrat. What a f**king a**hole. The rich don’t pay their taxes? Let me tell you something, right. First they say to you, you’re dead broke, ‘the United States of America, you can do anything you want, go for it.’ So then you go for it and then you make it, and everyone’s like ‘f**k you.'”


He went on to say, “If I make a dollar and out of every dollar I’m taxed at 50, half, at 50 cents, I have to give, isn’t that like enough? It’s half. HALF!”

In our system, the Democratic Party (or rather the left, of which the Democratic Party is the major-party vehicle) is, more or less, the faction that, by and large, thinks it isn’t enough (and will never think it’s enough). It is precisely the vehicle for people who wish to go ‘fuck you’ to people who have made it. So what is he complaining about? Jon Lovitz by his own words ‘is a Democrat’, and he voted for Obama. ‘Half is not enough’ is precisely what he voted for. So I don’t get it.

Is President Obama not living up to something Jon Lovitz made up about him in his head?

Don’t Blame Me, I Voted For Mendacious ’12
April 23, 2012, 12:26 pm
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I don’t have a lot to say about this post (which I basically skimmed) other than to point out it’s the first emergence I’ve seen of ‘mendacious’ in this election cycle. Boy, that takes me back.

For those who haven’t noticed this, or don’t recall the Bush years, when lefties want to say their political opponents are dishonest or lie, they love to use the word ‘mendacious’ or its cognates, even though it’s a more complicated word that means the exact same thing.

I assume it makes them feel Smart.

P.S. Almost makes me wish there were a major war going on, so we could be regaled with endless monologues decrying how much ‘treasure’ (=money) we were spending on it. Hey, I said almost.

Parking Lot Layouts – A Friendly Reminder
April 23, 2012, 7:59 am
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My parking-lot ‘lanche continues apace with no end in sight. I’m not sure I made something clear in the previous discussion, so let me lay it out explicitly here:

If you design or have any part in creating a parking-lot or parking structure in which the parking spaces are at right-angles to the direction of driving, then I HATE YOUR GUTS, you are at best an unthinking drone contributing to a system of pure evil (similar to – nay, just like Nazis!), and I consider you emblematic of everything that is wrong with society today.

So that’s the tradeoff you face as you weigh whether to make all right-angles and narrow lanes to squeeze, like, four more parking spaces into the new Chipotle/Panera/etc. strip mall where the roller-skating rink used to be.

That’s all. Good luck designing and congrats on the gig!

2016: Looking Ahead
April 23, 2012, 7:34 am
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I’m kinda looking forward to that moment (which we know is coming) in late 2016 when President Obama, finishing up his second term, in the course of a speech considered to be perhaps his last big one that sums up his Presidency and tries to cement his legacy, explains once and for all how everything that you think may be bad about the state of affairs in the United States is due to some decisions made by a prior President named Bush in, like, 2003. I bet when he does, I’ll get a lump in my throat due to nostalgia for all the other times he explained this to us. Because by then it might be, like, the last time we ever hear that. In fact even right now, as we speak, I’m getting chills due to anticipatory premonition of that forthcoming nostalgia that I bet I’ll feel at that time.

Headline ‘They’re Wrong’, Paragraph 9 ‘By The Way, They’re Right’
April 22, 2012, 7:50 am
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Peter Eavis makes the case that there’s evidence the ‘Volcker Rule’ won’t have the bad effects its critics charge. His point is that (1) banks have already done a lot of the inventory-shrinkage that Volcker would make them do (which is true), and (2) companies are still ‘able to issue debt’.

I’m not sure I agree that ‘able to issue debt’ is the right metric. Okay so companies are able to borrow money, in this particular environment of 0 interest rates, and relative market calm (compared to Q3 last year). But what does that prove? Not a whole lot. People just don’t have much of anywhere else to direct their fixed-income money. The mere ‘ability’ to borrow money doesn’t tell the whole story. Spain also had a ‘successful’ debt issuance last week (at relatively giant interest rates). I don’t think this proves that Spain is healthy or will have no debt troubles.

The broader point is that mere ability to issue debt was never the claim, the claim was liquidity. A symptom of bad liquidity is bid-offer. Yet Eavis seems to concede that bid-offer has gotten worse, which (as he also points out) makes it harder/more expensive for companies to issue debt; although he buries this lede:

Critics of the Volcker Rule may be right about one thing, though. The cost of issuing and buying debt has effectively gone up as inventories have fallen. This is measured by the bid-ask spread, which is the gap between the price at which banks will buy a bond and the price at which they offer to sell it. When markets become less liquid, this spread can widen. From 2007 to 2011, the bid-ask spread on investment-grade corporate bonds widened by 40 percent, according to BlackRock.

‘Right about one thing’? No actually, they’re right about the thing. In a post supposedly saying the critics are wrong, the words Eavis actually typed have just spelled out the case that the critics are right.

Now as I’ve said before, one can reasonably argue over how much liquidity matters, and over how to balance the trade-off between liquidity and some other value (‘stability’, or whatever you think the Volcker Rule is promoting). But I’ve also said that the basic fact that liquidity will suffer can’t be disputed – and now I can point to Peter Eavis’s post to back me up.

On Not Wanting Americans
April 21, 2012, 11:26 am
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Steve Sailer, in a recent post about “leapfrogging loyalties”:

In contrast, modern liberals’ defining trait is making a public spectacle of how their loyalties leapfrog over some unworthy folks relatively close to them in favor of other people they barely know

This is one of those truths that I think is so obvious and ubiquitous – we’re all a little steeped in leapfrog-think – that it may actually be in danger of being overlooked, and so I think it needs emphasizing, but in doing so I risk having everyone just say Duh that’s so obvious. 

But historically it is actually pretty weird for an entire society and value system to essentially be built upon the concept of having your loyalties leapfrog over whoever’s nearby but not in your cool inner circle.  Isn’t it?

Let me just point out a recent example because I found this noteworthy for how weird it was.  The World Bank recently had to get a new President (or whatever they call it).  They chose, via whatever the process is for choosing the whatever of the World Bank, a guy named something Kim, who is an American.  And, um, that’s that.

As you can see, I would have extremely high credibility if I were to claim that I Don’t Give A Rat’s Ass About Who Heads The World Bank.

However, if you scan your RSS feeds from a few weeks ago (I’m not going to bother digging up links), you’ll find A LOT of commentary about it from certain circles.  And what did that commentary consist of?  Well there were a few distinguishable factions ranging from (1) this guy Kim, he’s a great choice, because of such-and-such ideology that I agree with!, to (from a smaller and slightly persecuted faction (2) Kim’s a terrible choice, because his ideology is dumb and I don’t agree with it.

However, the most vocal faction of the Who-Heads-The-World-Bank-Carers was, without any doubt, this one:

(3) I don’t know who will get picked to head the World Bank, but I sure hope it’s not an American!

Needless to say, faction #3 was very popular among…Americans.  And (for the most part) these were Americans who, as far as I can tell, didn’t really know anything in particular about what the World Bank even does.  No more so than me, anyway.  What it does, why it matters, what its “President” does, why his qualifications matter, what in particular he would actually be doing per se, why/how whether he’s American would affect his ability or lack thereof to do it – very little discussion was devoted to any of that.

But a lot of discussion – by and among Americans! – was devoted to hoping they don’t pick an American.  For no apparent tangible reason (no I’m not going to count mumbling vague niceties about ‘it’ll make The World like us better’ as a tangible reason) over and above simply not wanting it to be an American, and wanting to make sure everyone knew that the person saying this didn’t want it to be an American.

Then when Kim (an American) was chosen, there were some slight lamentations from the same people.  ‘He’s a pretty good choice but I would have preferred if they’d have gone with a non-American this time round, maybe next time’ seems to have been the popular consensus.

I didn’t comment on any of this discussion because (again) I Don’t Give A Rat’s Ass.  But I do find it to be a remarkable example of leapfrogging loyalties.  I’m just saying that when you’re an American who knows diddly-squat about an institution but you nevertheless find yourself Wanting Them Not To Pick An American, it might be healthy to examine your feelings/motives there just for a second.  Because in the grand scheme of things, that’s pretty fricking weird when you stop to think about it.

The Notion Of Hedging Things One By One Is So Bizarre I Have To Assume It Was Cooked Up By An Economist
April 20, 2012, 11:01 am
Filed under: Uncategorized

Jesse Eisinger, in a post calling one of mine cynical – cynical! ME! – raised the issue of whether the Volcker Rule prohibits portfolio hedging, or whether portfolio hedging is being used as a dodge.  I had found the notion of ‘banning portfolio hedging’ so preposterous, indeed incomprehensible, that I didn’t have the strength to react to it.  But it’s not as if I don’t already think the rest of the Volcker Rule is ridiculous, so what do I know, maybe it does ban portfolio hedging.  And round circles while we’re at it.  Drinking liquids.  Speaking words.  Walking with legs.  Why the heck not?  It’s not like I’ve read the text of Dodd-Frank, maybe all that stuff is in there.

That’s why I was relieved to see this post at Economics of Contempt debunking the whole thing.  Banks can rest easy, I guess they don’t have to individually hedge every single line item on their books separately after all.  How would that even work….

“Hi yes can you quote 30-year CDS on Joe Schmoe’s mortgage of 123 Maple Lane, Sarasota, Florida?  Where is that trading on the broker screens at the moment?  Notional is $273k.  Uh huh.  Uh huh.  Ok that is done.”  Hey boss great news, I’ve hedged the default risk of Joe Schmoe’s mortgage!  Yes I got a decent level, it’s a very liquid market since all the big fast-money hedge funds are quite active trading Joe Schmoe 123 Maple CDS.  

Repeat 100000x?

Sorry, I don’t get it.  But maybe that’s just me being cynical again…

First World Problems? White People Problems? Well, Problems Of Some Sort, Clearly
April 19, 2012, 6:44 pm
Filed under: Uncategorized

Don’t you hate it when you’re reading an interview with James Franco (manfully) complaining about his time on your favorite movie in the whole wide world, namely Tristan & Isolde, and he casually mentions practicing swordfighting in the backyard of an ex-girlfriend to train for it, which training was (tragically) wasted when the director of Tristan & Isolde (foolishly) cut its Braveheart-like scenes, and that girlfriend’s name rings a bell, making you wonder ‘is she that one obscure actress from that Whit Stillman movie?**’, so you go to Wiki that Whit Stillman movie to find out, but at first you mess up and Wiki the wrong Whit Stillman movie, so you have to do the Wiki all over again, but on the second try you Wiki yet another wrong Whit Stillman movie from the one you were thinking of, meaning you had to do 3 Wikis in all just to get the answer?

**Not her at all. Totally different person.

Your Democracy At Work
April 19, 2012, 6:32 pm
Filed under: Uncategorized

Speaking of the Volcker Rule, it’s being reported the Fed has ‘clarified’ that, they’ve decided that banks won’t have to abide by it for another 2 years. This is coming as news because apparently the actual bill of law that Congress wrote that contains the thing everyone is calling the Volcker Rule, seems to have left this part (=when it takes effect) somewhat vague. The Fed has decided: 2014. So that’s good to know hey?

The other thing being noted in this article is that the actual tangible content of this dumb-ass ‘Rule’ that Congress wrote and passed hasn’t quite been figured out yet:

The rule, one of the most contentious provisions of Dodd-Frank, takes effect on July 21, even though regulators have yet to put the finishing touches on the draft.

Well, I’m sure they’ll get around to it.

I wonder if anyone will notify Congress when this brilliant, highly-informed and necessary law that they wrote, debated and passed will take effect, and what it will consist of precisely. Surely there’s gotta be some process for that, like someone posts it to a Sharepoint site, that members of Congress can access if they wanna. Or maybe it gets sent to their emails as a PDF attachment that their assistants have set up a filter to save to a special folder called ‘Laws/Content-Timing-Implementation’, that Congressmen can later peruse at their leisure. I guess it’s not that important really.


Will Someone Please Get Better Wi-Fi To These Guys Pronto?
April 19, 2012, 5:28 pm
Filed under: Uncategorized

It’s been quite a kick to watch Matthew Yglesiases’s discussion of wi-fi on Amtrak.

For those readers who may not be as experienced in analyzing the writing stylings of Matthew Yglesias, let me bring you up to speed: Matthew Yglesias, a professional blogger who lives in the Washington, DC area but is from, covers (nominally) an industry/sector centered in, and thus (presumably/reading between the lines) has occasion to travel often to, the New York area, has done some in-depth sophisticated financial analysis and discovered the highly liberal, generous political-economic principle that Amtrak, a train ‘company’ kinda sorta owned/run by the U.S. government i.e. you and me, should find a way to supply better and more reliable wi-fi internet service on its trains, including but not necessarily limited to (but most prominently mentioned nevertheless) the Acela and Northeast Regional lines that, coincidentally, would be the exact same trains that, lo and behold, one Mr. Matthew Yglesias would find himself sitting on with his Slate-supplied iPad 3 as part of his present work-life routine.

Now in fairness, he appears to be responding to a (somehow) even more obnoxiously solipsistic article by Tom Friedman, (apparently) one-time Acela rider, making the same ‘liberal’ point about the country’s urgent need to supply better wi-fi to people like Tom Friedman wherever they are. As I have noted before back during the great DC-Sidewalks-That-Matthew-Yglesias-Walks-On-Have-Cracks-In-Them-And-Not-Enough-Beautiful-Plant-Features Crisis of 2009-11 (or is it still ongoing?), and then later during the DC-Area-Zoning-Doesn’t-Improve-The-Housing-Value-Of-DC-Condo-Buyer-Matthew-Yglesias Crisis of late 2011, it’s striking how often ‘liberal’ political-economic priorities manage to coincide with, Things that would make the life and environment of that ‘liberal’ more comfortable and pleasant.

Actually, in double fairness, I lied when I said Matthew had come to this conclusion via sophisticated financial analysis. He makes no such strong claim; rather, he simply ‘wonder[s] why it’s not worthwhile’ for Amtrak to invest the funds necessary’ to do this thing that would (coincidentally) make being Matthew Yglesias more convenient. Because he, by contrast, essentially wouldthink it would make sense. And so that’s what he wanted to tell us in that post.

Poor Matthew, endlessly doomed to ‘wonder’ about (and wouldthink) such things. It’s just a shame that Slate doesn’t employ a full-time, say, business and economics correspondent who knew stuff about stuff and on that basis could and would do the actual job of finding out the answer and then reporting it back to us – and to Matthew Yglesias. Ah well.

Posted via Amtrak wi-fi internet connection, Northeast Regional Line

I’d Rather Ask Paris
April 19, 2012, 12:18 pm
Filed under: Uncategorized

I had a whole thesis-length Pulitzer-worthy post laid out trying to follow up with the more recent speculation/guesstimation/made-up theories? regarding what JP Morgan’s Volcker-impure “London whale” trade is for, then I noticed that my like-minded but funnier/more widely-read alter ego Matt Levine at Dealbreaker had already written two posts on the subject. Which launched me into a deep existential depression because, what’s the point of me then? Anyway just go read them if you care about the details of the discussion cuz he more or less says everything I would have said and nothing I wouldn’t have said. We clearly think along the same lines, just with different sarcasm-approach-vectors. Me and him made friends, I like the way he talks and he likes the way I talk. Or something.

I did have one point to expand upon though (sorry you’re not off the hook yet). To follow along with below all you really need to know is (1) JP Morgan has put on some large trade (and – this is a key point because it doesn’t usually happen – it got publicized), (2) certain people in the press and blogosphere and whatnot are complaining and wondering if they should be allowed to do that, in particular because (3) they think it might violate new financial regulations meant to control risk (the Volcker Rule). But to make that case, in part because the Volcker Rule is a stupid-ass rule, they have to (4) analyze and theorize (and make stuff up) about what they think might be the purpose and intent of the trade. So that’s what everyone’s doing.

Much to my annoyance.

Why? Because: If I had to draw up a list of people I’d want to consult to understand the purpose of that trade and determine whether it made sense, as all this Volcker Rule stuff seems to force us to do, it would look something like – in order –

  • The guy putting on the trade (whose name has been publicized in the news, Bruno Iksil). You know, the trader.
  • His supervisor/boss/whatever. Also probably gets what they’re doing.
  • His junior guy(s). They’d know the nuts and bolts.
  • …[skipping a few]
  • Maybe some sharp middle office guy who books his trades and understands what’s going on.
  • His sharpest ‘risk manager’ or ‘product controller’
  • The CEO of JP Morgan.
  • Felix Salmon the “econoblogger”
  • Paris Hilton*
  • John Carney of CNBC
  • My childhood best friend who’s now a forest-firefighter in Sonoma. Or am I thinking of the kid whose dad knew Sammy Hagar for some reason? Wait neither of those sound right. Anyway, that guy.
  • [insert any random regulator here]
  • [insert any random non-Maxine Waters Congressman here]
  • An inanimate carbon rod
  • Maxine Waters.

The point is that if I concede (which I don’t!) that Figuring Out Whether JP Morgan’s Trade Is Kosher is something we all should be busily engaged in doing, well maybe that’s fine, but it necessarily involves analyzing the risks of JP Morgan’s books, understanding the financial instruments in question, ideally knowing something about the market dynamics and flows in that space, and having sound judgments about which risks stand out as needing hedging so as not to take undue risk, and so forth. Guess what! As it happens JP Morgan already has a guy on staff whose job it is to do that, it’s even an actual job function there – and that job is called: ‘trader’.

Now, could that guy be doing a poor job, making bad decisions? Of course. But (a) we have no particular indication of that (sorry, ‘hedge funds are complaining’ doesn’t count), and (b) if you (or Senator Merkley of Oregon, or whoever), think you know better which undue risks JP Morgan has taken on and whether they make sense and whether alterations need to be made to its position, I’d invite and encourage you to go ahead and send your resume on over JP Morgan’s HR department; you’re making your case to the wrong people.

Some will retort ‘but moral hazard!’ because after all, why should the banking system be allowed to pay some guy for taking risks with money that was (essentially) printed up by and in the name of The People and then loaned to that guy, with a capped downside, for him to play with, with no input from anyone else? Two answers. (1) It’s not true that he has no input or control from anyone else, JP Morgan like all other banks is already (Volcker or no Volcker) massively regulated and capital-constrained and inspected in what they can do by the Fed and FSA and whatever other regulators apply to it, and they also have internal risk controls and manager types who (hard as it is to believe, and yes I’m aware this didn’t prevent 2008) don’t want JP Morgan to lose money. (2) More broadly, while I understand the moral-hazard concern in theory, sort of, the problem is that if you’re genuinely freaked out about ‘individuals at private institutions taking risks with Fed-printed/FDIC-guaranteed money in a way that leads to their personal gain if it works out well’, I’m afraid you’re going to need to go ahead and ban fractional-reserve banking with a central-bank lender of last resort and an FDIC, because friend, I’m sorry to break this to you, but that’s what it is.

So unless they plan on banning modern banking, people should ideally make their peace with the idea. Loans are risky; get used to it.

*I have always suspected Ms. Hilton is underestimated.


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