Saturday, October 18, 2008

New economic bust indicator.

More from the annals of advanced academic research...

An enterprising academic who took it upon himself to study 40 years of Playboy-magazine pictorials found that bigger, more robust bunnies signal a bad economy.

The bare-market lovelies tend to be older, heavier, taller and have an overall more grown-up look, according to the research published in the Personality and Social Psychology Bulletin.

That's because worried guys subconsciously look for "a more able woman to take care of them and other people," said Terry Pettijohn II, an assistant professor of psychology who conducted the study... [NY Post].
My mother was right, I should've been a professor.

Friday, October 17, 2008

Happy 25th to the Cell Phone.

The first commercial cellphone call in the United States was made 25 years ago this week: Bob Barnett, then president of Ameritech Mobile Communications, called from a Chrysler convertible at Soldier Field in Chicago, to the grandson of Alexander Graham Bell, who was in Berlin, Germany.

The first cellphone on the market, the Motorola DynaTAC 8000x, weighed 28 ounces (thus its nickname, "the brick") and cost $3,995.

There are now more than 262 million wireless users in the country. [NY Post]
That $3,995 was worth $8,534 in 2008 dollars. Calls back then were like $10 a minute too.

Today when my wife can't find her phone buried under all the junk in her purse she has our 8-year-old call it from his.

Friday, October 10, 2008

My prescription for calming the world's financial markets.

Asian stock markets fell 10% last night as we Americans slept. Immediately after the NYSE opened this morning the Dow fell 800 points -- then rose 500 points in five minutes!

This panic and mania must stop! My remedy for calming world markets...

Now that the Treasury can buy damn near anything, it buys 3 billion six-month prescriptions of Zoloft (generic Sertraline) -- the anti-panic attack and anxiety drug -- and distributes them world-wide to everyone with a job and/or any kind of banking/investment account.

Shortly before doing so, it buys stock in all the pharmaceutical companies that make it.

The financial panic ends, tranquility envelops us all, US taxpayers make a profit. The world continues on its way.

Wednesday, October 08, 2008

Service Announcement

Due to the demands of real life -- work and family -- blogging here will be occassional and light when it occurs for some weeks. (And of the limited time available to spend on this site, a good part may go on fixing the "back end" that is now about four years out-of date.)

Real life can be dang annoying.

Catch you all later.

Monday, October 06, 2008

NFL game outcome of the season so far.

Pre-Game Coin Toss Makes Jacksonville Jaguars Realize Randomness Of Life

Sunday, October 05, 2008

NY Times obituary of the day.

For Stalin's favorite political cartoonist.

I don't remember any sympathetic Times obits for Nazi cartoonists or the like. (It sort of brings to mind how in Manhattan there is a KGB Bar that's become so popular with the literary set that it now has its own literary journal -- but there is as yet no Gestapo Bar).

But all that and the deceased's life work as a totalitarian propagandist aside, there is something to be said for living to 109 while enjoying vodka, cognac, beer and outliving your wives all the way.

Saturday, October 04, 2008

2008 Ig Nobel Prizes Awarded

And the winners are...

ECONOMICS PRIZE. Geoffrey Miller, Joshua Tybur and Brent Jordan of the University of New Mexico, USA, for discovering that a professional lap dancer's ovulatory cycle affects her tip earnings.

BIOLOGY PRIZE. Marie-Christine Cadiergues, Christel Joubert,, and Michel Franc of Ecole Nationale Veterinaire de Toulouse, France for discovering that the fleas that live on a dog can jump higher than the fleas that live on a cat.

MEDICINE PRIZE. Dan Ariely of Duke University, USA, for demonstrating that high-priced fake medicine is more effective than low-priced fake medicine.

NUTRITION PRIZE. Massimiliano Zampini of the University of Trento, Italy and Charles Spence of Oxford University, UK, for electronically modifying the sound of a potato chip to make the person chewing the chip believe it to be crisper and fresher than it really is.

PHYSICS PRIZE. Dorian Raymer of the Ocean Observatories Initiative at Scripps Institution of Oceanography, USA, and Douglas Smith of the University of California, San Diego, USA, for proving mathematically that heaps of string or hair or almost anything else will inevitably tangle themselves up in knots.

CHEMISTRY PRIZE. Sharee A. Umpierre of the University of Puerto Rico, Joseph A. Hill of The Fertility Centers of New England (USA), Deborah J. Anderson of Boston University School of Medicine and Harvard Medical School (USA), for discovering that Coca-Cola is an effective spermicide, and to Chuang-Ye Hong of Taipei Medical University (Taiwan), C.C. Shieh, P. Wu, and B.N. Chiang (all of Taiwan) for discovering that it is not.

COGNITIVE SCIENCE PRIZE. Toshiyuki Nakagaki of Hokkaido University, Japan, Hiroyasu Yamada of Nagoya, Japan, Ryo Kobayashi of Hiroshima University, Atsushi Tero of Presto JST, Akio Ishiguro of Tohoku University, and Ágotá Tóth of the University of Szeged, Hungary, for discovering that slime molds can solve puzzles.

ARCHAEOLOGY PRIZE. Astolfo G. Mello Araujo and José Carlos Marcelino of Universidade de São Paulo, Brazil, for measuring how the course of history, or at least the contents of an archaeological dig site, can be scrambled by the actions of a live armadillo.

PEACE PRIZE. The Swiss Federal Ethics Committee on Non-Human Biotechnology (ECNH) and the citizens of Switzerland for adopting the legal principle that plants have dignity.

LITERATURE PRIZE. David Sims of Cass Business School. London, UK, for his lovingly written study "You Bastard: A Narrative Exploration of the Experience of Indignation within Organizations."

Nobel Laureate William Lipscomb (left) and Benoit Mandelbrot, the inventor of the mathematical concept of fractals, join the audience in drinking Coca-Cola to toast the winners of the Ig Nobel Prize in Chemistry.

All from the Journal of Improbable Research

Friday, October 03, 2008

What it takes to enact urgent new law in the national interest


Here, little piggies!

Congressional deal-brokers yesterday slopped a mess of pork into the $700 billion financial rescue bill passed by the Senate last night -- including a tax break for makers of kids' wooden arrows -- in a bid to lure reluctant lawmakers into voting for the package

Stuffed into the 451-page bill are more than $1.7 billion worth of targeted tax breaks to be doled out for a sty full of eyebrow-raising purposes over the next decade.

"This is how Washington works," said Keith Ashdown of Taxpayers for Common Sense, a Washington research group. "A big pot of pork is their recipe for final passage."

The special provisions include tax breaks for:

* Manufacturers of kids' wooden arrows - $6 million.

* Puerto Rican and Virgin Is- lands rum producers - $192 million.

* Wool research.

* Auto-racing tracks - $128 million.

* Corporations operating in American Samoa - $33 million.

* Small-to-medium-budget film and television productions - $10 million.

Another measure inserted into the bill appears to be a bald-faced bid aimed at winning the support of Rep. Don Young (R-Alaska), who voted against the original version when it went down in flames in the House on Monday.

That provision - a $223 million package of tax benefits for fishermen and others whose livelihoods suffered as a result of the 1989 Exxon Valdez oil spill - has been the subject of fervent lobbying by Alaska's congressional delegation.

Some of the pork-barrel measures buried in the financial rescue package had been contained in a bill that previously passed the Senate, but died in the House.

The Congressional Budget Office said the package of breaks - including obvious pork and some more defensible tax-relief measures - will add about $112 billion to budget deficits over the next five years because the bill doesn't contain enough offsetting revenue hikes to keep the budget balanced.

The legislative lard annoyed Tom Schatz, president of the watchdog group Citizens Against Government Waste.

"There's always something that goes on at the end where the last dozen members are trying to get something for themselves or for a special interest rather than what might be good for the country"... [NY Post]

Now we see the payoff from having the marginal vote.

"I'm not sure ... I'm thinking about it ... This decision is too important to be made lightly ..."

Thursday, October 02, 2008

Economists battle over the bailout plan

[Sept. 26] Yesterday's White House meeting didn't go according to plan. Senator Richard Shelby (R-AL), the ranking Republican on Senate Banking, emerged a little after 5 p.m. to declare "There is no agreement" and that the Paulson Plan wouldn't work. He waived objections signed by 192 prominent economists.... [CG&G]
If the danger posed by the financial crisis is so clear and present, why can't the economists of the world agree on what to do about it?

Bruce Bartlett explains how the financial sector is fundamentally different than the other sectors of the economy, critical to the functioning of the rest, and says it must be saved rather than risk that it collapse like "a house of cards" and bring the rest of the economy down with it. It's the 1930s all over again. "Failure of this plan risks another Great Depression. Really."

Casey Mulligan tell us just the opposite. He says in substance that the rest of the economy today is hugely larger and more productive relative to "Wall Street" than it was in the 1930s, that its performance today is largely independent of Wall Street's. He says that if Wall Street goes down it will go down alone, and the government bailing it out will only make matters worse. "The Treasury and the Fed should let Wall Street drown alone, to be replaced by new financial service providers who can swim as robustly as non-financial American businesses."

Bartlett's piece gives a very good, plain-English explanation of what actually happened in the 1930s, and is well worth reading whatever your opinion of the bailout proposal to understand the thinking (and fears) behind it.

But Mulligan is saying that an awful lot has changed since the early 1930s -- and he has a point too.

The bailout has been protested by those 192 petition-signing economists -- but that doesn't mean as many or more who haven't put a petition together don't support it. (Petition signers usually are a mobilizing minority.) The economists on my blogroll in the left column of this page are pretty much split over it, some taking strident positions.

The problems are insufficient information and lack of time. Thing are happening rapidly -- huge unexpected events literally in a day. Nobody knows the true extent of the risk in an extremely complex situation, and nobody has the time to perform a comprehensive analysis to figure it out.

The two people who undoubtedly know more than anyone else about what's going on are Bernanke at the Fed and Paulson at Treasury. When they let Lehman Brothers go into normal bankruptcy and then wagged their fingers at everybody saying "That's it, you all, there'll be no more government money for anybody else!", they pretty clearly thought they had the situation contained. Well, that lasted a little more than one day until they saw AIG about to go down. So even they don't really know what's going on, which means nobody does.

Since nobody knows who's right, that leaves us in the position of having to compare the relative cost of being wrong.

If we follow Bartlett's advice and he's wrong, we needlessly force taxpayers to pony up money (how much, a little or a lot, remains very uncertain) and get a financial sector made less efficient by the government's regulators and Congress pushing their fingers through it and politically manipulating it in countless assorted ways, while financial firms that deserved to die on the merits live on at the expense of the rest of us.

If we follow Mulligan's advice and he's wrong, we needlessly get millions of people unemployed, and the other financially vulnerable losing their savings and many of their homes and being pushed into financial hardship en masse.

Pick your poison.

Wednesday, October 01, 2008

OK ... Who screwed up on the bailout bill?

Let's make a list....

But first, note well: The big problem with Monday's Congressional fiasco was not that a bill that may or may not have been particularly good at addressing the problems of the financial system didn't pass.

The big problem is that in the midst of a world-wide financial crisis, in a "the entire world is watching moment", America's leaders -- yes, the political leaders of the free world, and economic leaders of the world capitalist system -- showed both that they had no idea what the hell they were doing, and could be counted upon to screw up doing it.

As a direct result of the unhappy surprise they produced, in the middle of Monday night, when I started writing this, all around the world there were markets falling and banks failing -- to the great personal and financial discomfort and cost of governmental and business leaders around the globe.

What effect will this have on the willingness of the rest of world to trust and follow the US's leaders in the future? This is no small issue!

Consider how the US now relies on the rest of the world to finance its perpetual fiscal deficit (on course to soon rise to alarming proportions) and perpetual trade deficit. The only reason the rest of the world is willing to do this is because it has faith in the value of the ever-growing number of dollars and dollar-denominated investments it receives in the process -- that value being protected by the sound judgment of America's political and economic leaders.

Should the rest of the world come to a new opinion about this -- come to think that the value of its dollar holdings and investments is being placed at jeopardy by inept American political Bozos interested only in highly-partisan, short-term, local political advantage ... the result could prove very unhappy for everyone world-wide, for the US most of all.

But enough of that. Let's look at who screwed up -- and who we hope will find a way to publicly make amends soon. Here's a list running down the length of my clipboard....

#1 with a bullet!) Paulson, Bernanke and Bush -- for their "$700 Billion Bailout at Taxpayer Expense". How the heck was that supposed to play to the citizenry? Especially in conservative "read my lips, no tax increase ever" Republican electoral districts?

Over and over we can read news reports and polls of how this "taxpayer funded bailout" is so unpopular with voting taxpayers. Which of course means that every Congressman facing a close election next month would vote against it.

Most lawmakers had been deluged with calls and e-mail from voters angry that, as they see it, taxpayer dollars would be used to bail out Wall Street fat cats. [CSM]
Eighteen of the 21 most vulnerable Republicans up for re-election, and 10 of the 15 Democrats in the closest races, voted against the $700 billion financial rescue, illustrating the political hazards of bailing out Wall Street without offering an equally generous hand to taxpayers.

Wisconsin first-term Democratic Rep. Steve Kagen was among the dissenters... Mr. Kagen's Republican challenger, John Gard, had already begun running ads calling the plan a "bailout to Wall Street billionaires." The ad said: "They break the rules and Congress hands them your money."

Democratic aides acknowledged that, in many cases, members who voted against the legislation were swayed by a popular outcry that the plan would help wealthy, sophisticated people at the expense of regular taxpayers... [WSJ]
The bulk of which was the result of Paulson/Bernanke/Bush public relations bungling. Most of this perception was totally avoidable, even while being honest about things!

First, the plan had no tax cost up front, and not necessarily any taxpayer expense in the long run. The "bailout" actually was an asset purchase -- an investment. CBO stated the actual effect on the deficit would be far less than whatever nominal "bailout" amount was spent, because of the value of the securities received in return. The Treasury might even have made a profit on them in the end. Or perhaps not, but with 90+% of mortgages paying off normally even now, there was no way that anything close to the full amount spent on them, $700 billion or whatever, ever would have been a loss to taxpayers.

Second, that "$700 billion" wasn't even a real number. "We just wanted to choose a really large number," the Treasury told Forbes, you know, to impress that they meant business. Well, they succeeded!

Politicians usually deceitfully hide and diminish the cost to taxpayers of whatever they are doing. Paulson and Bernanke exaggerated it -- and let voters believe all that cost they were going to collect would go to the fat cat rich as well.

Hey, the auto industry knows how to sell a bailout as "an investment by the government that saves American jobs" -- so convincingly that right now each party is competing to give it more than the other! One would think the designers of the financial bailout might have consulted with such experts.

Perhaps it is understandable that Paulson, as a Wall Street semi-billionaire, and Bernanke, an Ivy League professor, would have political tin ears as to how a "$700 billion taxpayer-funded bailout" would play among the working-class masses -- not forgivable, considering their jobs, but understandable.

But what excuse is there for Bush and all the political mavens on the White House staff? Shouldn't somebody there have told Paulson and Bernanke, "If that's your plan, OK -- but try not make it sound like you're sending out a $700 billion tax bill for it." Eh?

Yes, the Bush presidency is in the doldrum days of lame-duckism, and most of its competent people may already have left for home. But couldn't Bush himself have told them this?

(Why does presidential leadership have to pass straight from the like of "Too-slick-by-half Willie" to that of "Sand-in-the-gears Dubya"? Is there no happy median?)

#2) The Joint Congressional Leadership -- for not being able to count. The first rule of holding a parliamentary vote -- whether it's of an apartment building co-op board, PTA, or chess club -- is that you don't call a vote until after you know both what the result will be and what you will do immediately after the result is announced.

It wouldn't particularly have mattered to the world if this vote had been delayed, and the proposal been held up for a while for re-working while more votes for it were collected. Nor even if the vote had been held and the plan defeated, with the White House and Congressional leaders promptly then announcing that they were moving right along to a prepared and credible Plan B.

But to have the whole thing blow up in their collective face as a surprise, with them all standing around afterward dazed, clearly having no idea what to do next (other than blame each other) ... the whole world wonders, "WTF?"

Now, to consider the separate party leaderships ... gee, who to mention first?

#2A) The Democratic leadership -- because they control the House and can pass whatever they want. And when you are the Speaker of the House, you have final responsibility for what happens in it.

As Speaker, Nancy Pelosi could have put the arm on her members to pass the bill all by themselves because it was, you know, the right thing to do, good for the country, which is why she voted for it herself personally, as she'll tell you.

But instead she decided to play the old political game of letting as many of her own members as possible vote against it (see "all motions of no confidence fail by one vote") because it was so unpopular.

Stacey Farnen Bernards, a spokeswoman for House Majority Leader Steny H. Hoyer, D-Md., said he and Pelosi did not press harder because they viewed the issue as a "vote of conscience," not a matter of party discipline. "They weren't going to aggressively twist arms on such and important vote," she said. [LAT]
Yes, because it was so important, she didn't twist arms. That makes sense! If the important thing is to save your own members the discomfort of making an unpopular vote by making up the difference in votes needed to pass the bill with just enough votes from the other party.

"... we were supposed to deliver 125 votes, They were supposed to deliver 100 votes." -- Democratic caucus leader Rahm Emanuel. [WSJ]
OK, that's a time-honored legislative ploy. But then Pelosi added her own unique twist to it. Before the vote she stood up and gave a speech gratutiously savaging the other party and its very voters upon whom she was counting, blaming them for the whole mess. And golly gee, a few of them -- who didn't want to vote for this bill any more than did Nancy's people who were getting a "pass" -- got peeved and reconsidered the deal.

Smart tactical move, Nancy. Make a deal with the other side for them to deliver votes, then attack them over it before they deliver!

And a sterling example of national political leadership too. The virtues of political bipartisanship often are exaggerated (typically by the "out" party that's not getting enough from the "in".) But if there ever is a time for bipartisan behavior -- if only to the extent of restraining oneself momentarily from indulging in nasty partisan shots at every opportunity -- it is when trying to pass what in fact is a bipartisan bill while acting on an international stage.

Just as healthy families put aside their internal rifts and arguments to deal "as family" with outsiders, a healthy and effective national leadership will put aside its internal divisions -- or at least not go out of its way to highlight them! -- when performing before the eyes of rest of the world. To give at least the impression that there really is "effective national leadership". Which we just don't have.

#2B) The Republican leadership -- for delivering a 65-133 vote against their own Administration's urgent emergency policy. In front of the whole world. 'Nuff said right there ... except that then they went on to whine about how they lost votes because of those mean things Pelosi said about them.

"I do believe that we could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House," House Minority Leader John Boehner (R-Ohio) said, adding that Pelosi "poisoned" the GOP conference.
So ... Republican party leaders now lose Republican votes because of things Democrats say in speeches. That's a formula for future political success!

As Barney Frank said afterward: "Because somebody hurt their feelings, they decided to punish the country?"

Barney has half a point in that, though it's a weak defense of Pelosi. This is a case of "a pox on both their houses". Pelosi showed no brains and little character in attacking the Republicans before the vote, at the risk of provoking them into bolting into changing their votes. The Republicans showed less character by being provoked and bolting.

(And, you know, considering Barney's personal record, I'd bet that conservative Republicans could speechify a few things about him that would 'hurt his feelings' sufficiently to have him storm out and cost them his vote in a bipartisan motion. Don't you think?)

#3) The Congressional rank-and-file membership of both parties -- for being weasel, game-playing hypocrites. I mentioned that this legislation was unpopular (point #1), right? Well, Norm Schieber put it this way....

"My sense of what happened is this: There were a healthy majority of congressmen who wanted the bill to pass, but many of them (most of them?) also wanted to be on record voting against it, for obvious political reasons.

So you got a classic prisoners' dilemma situation: Everyone's best-case scenario was to vote against the bill and have everyone else vote for it. Unfortunately, as anyone who's taken introductory micro knows, that usually leads to the worst-case scenario, where everyone defects and the whole venture collapses.

That's not mere theorizing. To quote Representative Paul Ryan (R-WI):

"We're all worried about losing our jobs. Most of us say, 'I want this thing to pass, but I want you to vote for it — not me.' " [NYT]
Perhaps you still believe the "profiles in courage" model of representative government they teach in junior high? That we elect responsible representatives to act on our behalf who sit, collect the facts, ponder, and then vote for what they believe to be the best policy for the nation. If so, fuhgetaboutit.

This is all another fine example of's "First Law of Elective Politics": that every elected politician truly and sincerely, deep in his or her heart, desires to do what is best for the national welfare as a second priority -- the first priority being to get oneself elected and one's party in power, whatever hypocritical or scabrous behavior is required, the second priority be damned. Because after all, if one doesn't get elected and gain power, one can't do anything at all to improve the national welfare. QED.

4) Greedy rank-and-file politicians who see a political Christmas tree in every emergency. Republicans tried to attach a capital gains tax cut to the bailout, supposedly to encourage banks to sell mortgage securities (on which they have losses!) ... Sen. Bernie Sanders of Vermont wanted to add a 10% surtax on "the rich" ... Members of the Congressional Black Caucus complained the legislation didn't include sufficient help for people struggling to pay for food and health care... [WSJ]

I could go on and on....

5) The average Amercian voter ... No, this is too much, I'm depressed.

That's a lot of amends to make.

Better luck next try.