Two Weesk Of Linsk
October 8, 2013, 7:15 pm
Filed under: Uncategorized

London Whale trading scandal legacy is requirement banks disclose their exposure details. I’m skeptical that ‘transparency’ as such is the solution (if there is a problem). Quick, it’s early 2012 in Alternative-Universe-With-Full-Bank-Transparency and you pick up the ‘Full Positions Of All The Banks’ section of the paper and read that JP Morgan has, oh, -$20mm dv01 exposure to IG9 10y. Ok, so what? Is that bad? Good? Do you sell their stock – or buy buy buy? All depends on whether you like that trade. (Some people evidently did!) So tell me, what was a priori wrong with that trade? If we can’t say in advance, then how does this lead to healthy pressure on JP Morgan exactly? We only know – or think we know – that it was a bad trade with hindsight. What made it a bad trade? Because it went against them. How/why did it go against them? Because they got squeezed. Squeezed by who? Squeezed by hedge funds leaking the position to their friends at Bloomberg News, thus publicizing the position – thereby making it, one might say, transparent – leading to (what I was the first & still only to identify as) a baptists-bootleggers dynamic. That’s why JP Morgan lost money on that trade. If that hadn’t happened, I’m pretty sure the trade would have actually just made them money over the longer term and we wouldn’t be talking about this. If you add that up you’ll see that in a way, ‘transparency’ in the form of everyone learning about a bank’s positioning was the problem, not the solution. So, more secrecy then!? Just saying.

Calculated Risk on Mortgages, Eminent domain and Richmond

Inflation is correlated with laughter at Fed meetings

The extrapolation fallacy in popular TV – if smart is good then GENIUS must be excellent

Ritholtz’s ideas for Investing Around ObamaCare.

Someone left a PhD program and wrote one of those self-important open letters, about how academics sucks.

Boudreaux explains how data on ‘health care costs’ can be misleading and leave things out. I’m looking at you, all the people who do cross-country comparisons and insist that ‘all other countries’ (=all Western countries, or something) do it cheaper.

No, the Fall of Lehman Didn’t Cause the Financial Crisis. Am I really linking favorably to not one but two Ritholtz posts here? It would seem so.

Tesla Motors and the Folly of Government Intervention

Health Insurance, Non-Linearity & Income Inequality

Kid Dynamite is (one of) the guy(s) getting screwed by ACA. What’s puzzling is why he ever thought there was a snowball’s chance in hell that he wouldn’t be (if that’s what he thought). I’m not saying he falls into this category, but there do seem to be a lot of people who assumed Obamacare would help them based on absolutely nothing. “It’s some sort of National Health Care Thing™, and Obama’s a nice lanky caring guy with a (D) after his name, so whatever the details exactly, it’ll totally help me!” thought a lot of people who are and always were intended to get screwed over from the get-go. I don’t get it. And a lot of those people are supposedly part of the ‘reality-based community’ too.

Ten states where Obamacare wipes out existing health care plans. Here’s what’s really perverse. Step 1: ACA gets people kicked off their health plans. Step 2: Those people, facing fines and not being insured otherwise, basically have to (not by choice) try their luck on the exchange website. Step 3: They get a least-bad quote and press OK. Step 4: Lefties go “Look how many have signed up for Obamacare! They love it! And you want to repeal it Rethugs? I guess you want those people go to without insurance!” Utter BS all around. On one level, it’s functioning as a protection racket.

The Lion goes to diversity training. Lists some silver linings.

Seth Roberts on failed predictions in finance and climate

Cockblocked by Redistribution. Seems to work against my sex-based theory of politics according to which the motive of socialists is to get easy sex. Or at least, it indicates that their strategy has backfired.

Related?: Obamacare Boils Down To More Free Shit For Women

I’m not sure there’s such a thing as ‘settled law’ or why everyone’s suddenly speaking as if there is (ok scratch that, I know why people are doing that), but even if there is, here’s a good argument as to why Obamacare ain’t it.

Unintended consequences of ‘green energy’ programs. Unintended, perhaps, but entirely predictable.

How the Debt Ceiling Will be Resolved. Can neither endorse nor refute that scenario.

About the crisis: The GOP is right. So is Obama. That’s why it’s a crisis.

Four Reasons Debt Ceiling Breach Means Default. Actually, almost none of those are reasons that a debt ceiling breach means default. One of them is ‘it’s illegal’ (so?). Another one boils down to saying that it would mean having to juggle cashflows and balances around (as if they don’t do this on a regular basis). Sigh. I’m getting tired of this; can I just say Yglesias doesn’t know what he’s talking about & move on? Oh wait, not before I comment on this:

Yes, bondholders would still get their money. But nobody in the future could seriously treat U.S. government debt as a risk-free information-insensitive asset. It would become just another speculative play whose odds of working out would depend on your assessment of the ups and downs of American politics.

Hmm. “Yes, bondholders would still get their money”?? – the article just imploded. And forgive me but why is it automatically supposed to be a good thing to have people treat U.S. government debt as ‘risk-free information-insensitive assets’? What would be so horrible about buyers of this asset, like buyers of any other, having to evaluate for themselves the risk-reward? It’s never been more clear that some commentators just mean something very different by ‘default’ than, well, what the word actually means.

11 Comments so far
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The “default” whining has the same psychological basis that my infant daughter has when she screams at the bottle of warm milk just beyond her grasp.

Comment by Dave

Your Hayek link doesn’t have a lot of hard data refuting the assertion. Just a bunch of speculation and the claims that healthcare is like the 70s gas price controls. And more stuff about wait lists, which we already know about but it doesn’t affect outcomes.

Making assertions with nothing to back them up is your entire healthcare stance.

Comment by asdf

…he asserted.

Look, that link offers an explanation how and why sometimes what you call ‘hard data’ can be flawed. To complain that it itself lacks ‘hard data’ seems to miss the point. Agree or disagree all you like, but ‘price data can be flawed and here are some mechanisms/channels by which that can happen’ is just not an ’empirical’ claim as such that it would even be *appropriate* to ‘prove’ via Big Data and regressions.

In any event, this is a blog, and you are a commenter in its comments section. Can we just stipulate that neither you nor I are going to be flinging spreadsheets full of ‘hard data’ at each other? It has not happened to date (no more so from you than from me) and will not happen.

Nor am I even interested in that. It should be possible to make your arguments using words.

Comment by Crimsonic


Saying that data can be flawed is a broad enough statement to be worthless. Yes, data can be flawed. That doesn’t make data so flawed as to not be useful for analysis and policy making in all situations. Some data is and some data isn’t. The data in this case seems to be overwhelming and certainly passes my test for usefulness. That’s the case for most people. I presumed that your link would offer a legit counter to this argument (costs aren’t really lower in other countries because of XYZ data, outcomes aren’t really as good because of ABC data). However, we didn’t get that.

I presume I don’t need to fling hard data on the health outcomes of other countries at you because its widely available and you already know most of it.


It should be obvious that the way the market for healthcare and the way the market for oil work are very different. Standard eco 101 price theory involves assumptions that are much more present in globalized high volume high transparency commodity markets then in low transparency low volume specialized markets like healthcare. The link didn’t even consider these differences in drawing a parallel to a very different market.

In addition, he likes to cite the empirical result of gas lines, but why not actually look at the results in other countries. Many countries have been very successful controlling costs via price controls while keeping healthcare access and quality high. If price controls have been successful in the healthcare field isn’t that the more relevant area to look at.

Comment by asdf

I must be missing your point. You don’t control “costs via price controls while keeping healthcare access and quality high” — you must simply account for the unseen balance of the true cost in a different way. Perhaps by collecting at a ~65% national income tax rate with some percentage of that allocated to the health care program. Or perhaps by free-riding off the R&D costs paid in some other country. TANSTAAFL.

If you need to impose price controls, then by definition you are camouflaging the true “free” market price for the product or service, i.e., what a voluntary buyer will pay to a voluntary seller of a product or service, or vice versa. It doesn’t matter what industry it may be. It could be real estate, ethanol, bread, health care, or whatever.

All Boudreaux is saying is that reliance on controlled pricing on the one hand, when comparing to un- or lesser-controlled pricing on the other hand, will give you a false and misleading comparison with respect to the true cost of a product or service.

Also, with respect to comparison of health outcomes, I’ve read in multiple places that France, for one example among several discrepancies, does not count as infant death a stillborn baby. But that in the U.S., that baby that never took a breath would count as an infant death statistic. And that, therefore, the UN study that is cited everywhere for infant mortality includes statistics that do not compare data that is compiled under identical parameters. Canada has the same complaint. See here:

I believe I’ve also read that UN study significantly weighted countries’ national (i.e., tax) support of its citizens health care. Since the U.S. health policy is not designed (at least, not so far) as a European type of national health care program, the U.S. is penalized in that classification.

Comment by ColoComment

If you need to impose price controls, then by definition you are camouflaging the true “free” market price for the product or service … All Boudreaux is saying is that reliance on controlled pricing on the one hand, when comparing to un- or lesser-controlled pricing on the other hand, will give you a false and misleading comparison with respect to the true cost of a product or service.


Let me boldly predict the asdf response: ‘but health care is different’…

Comment by Crimsonic

Further about the inter-country comparisons & subsidized costs & how countries allocate the costs of health care spending, today Linda Gorman over at John Goodman’s health care blog notes that “And social spending like nursing homes is frequently not included in the health spending accounts of European countries. It is instead classified as social spending.”

If we call it “health care” spending & count it in our 17% healthcare portion of the economy, but another country calls it “social spending” and hides it in a national subsidy, any comparison is worthless unless those differences are accounted for (pardon the pun.)

– See more at:

Comment by ColoComment

Many countries have been very successful controlling costs via price controls while keeping healthcare access and quality high.

If you believe that statement, you have not traveled very far or are unobservant.

Comment by Mike

You are criticizing Crimsonic for posting a link to an econ blog that he supports but that offers an opinion with which you disagree. I thought Boudreax was simply applying to the provision of health care well-recognized economic principles regarding price ceilings and floors, and how, as a result of those principles & using the 70s price controls as an example, the visible effects of cost controls in inter-country health care comparisons can be misleading. But, perhaps I am wrong about that. I am often wrong, but strive to learn from my errors. If you can, please enlighten me as to where Boudreaux’s post is in error?

I quite enjoy reading Crimsonic’s posts and “linsks,” but obviously you don’t. Why do you come here? Perhaps you should simply start your own blog so that you can post links to only those blogs with which you agree. Or, here’s a novel thought, send Mr. Boudreax an email wtih your criticisms of his post. He’s a nice guy & may respond (he has to me, anyway, when I’ve sent him a question.) If you’re really lucky, he’ll reply online to your criticism for the education of all his readers.

I check his blog daily, so I’ll be on the lookout for that post.

Comment by ColoComment

When I go off the rails, I hope you’ll send me a private e-mail early on in the process. You know, before the mania really takes hold and when I’ll still be cogent enough to recognize your effort to help.

I’ve seen a lot of this lately. Commenters coming into web sites and demanding the blogger do work for them by researching the answers to their questions. What might have once been a lively conversation quickly devolves into a silly back and forth with the blogger getting increasingly exasperated by the commenters demands. The commenter is, naturally, clueless.

I appreciate the entertainment you provide. I also like the price that you provide it for. I do my best to not drive the price negative for you, beyond the time you already spend on the blog.

You should search WordPress for the Replicator plug-in. If you were to install that on your blog you could then provide me with free beer over there in the right hand margin.

Comment by Mike

Cockblocked: I met several Danes in my travels. Among the most normal people I had the pleasure of meeting. Maybe that whole predatory PUA thing doesn’t work with well adjusted people? Not just socialists.

Comment by Mike

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