I'm interested in buying a car, mostly because my car is not interested in staying alive. A reputable dealer priced repairs at around $5k for it to make inspection, which doesn't include an additional $2-2.5k that was recommended, but put on hold, when I went in last time. It sounds ridiculous, but I really do trust this shop.
For those of you who don't know or remember, I drive a 1993 Toyota Camry, V6 LE. So it's completely ridiculous that I will put in $7.5k into this car, especially since I put in $1.7k a few months ago... >:(
Anyway, Fatwallet, a site I genuinely love, has a great thread on buying a car in the present environment. I may just move to a place that will let me use the Metro, but I'll keep this in mind.
Tuesday, December 9, 2008
Saturday, December 6, 2008
Sometimes, I hate the media
Ok, I admit, I'm a media junkie. Every morning, I try to read Bloomberg, the NYTimes, the Financial Times, and the Washington Post. (The Wall Street Journal is still subscription based, so I'm hosed on that one.) I subscribe to breaking news from the FT, CNN, and MSNBC. I will occasionally read MSNBC articles, Seekingalpha, Minyanville, and a few financial blogs. I'm also reading blogs at the Council on Foreign Relations, and even watch C-Span whenever i want to see members of Congress go medieval on the whipping boy of the moment. (Maxine Waters v. Hank Paulson and Richard Shelby v. Mullaly/Wagoner/Nardelli were particularly brutal.)
And I realize that the media needs to sell - "If it bleeds, it leads" makes a whole lot more sense when I learned more about how journalism works in a flat-ish world. (Thanks go to Bruce Lewenstein of Cornell's Communications department for an excellent class - COMM 566: Science Communication.)
But goddamnit, it's not $7 trillion dollars!
Let me explain. Bloomberg ran a story on Nov 24* that the total federal outlays for the purpose of rescuing/repairing/bailing out the American financial system could total $7.76 trillion dollars. (By comparison, US GDP is about $13 trillion (2006), the US 2009 Federal Budget (pdf) is $3.1 trillion, total national debt is $10.64 trillion, and debt held by the public is $6.4 trillion.) Alternatively, it's equal to 155 trillion kg of nickels (1 nickel = 5.00 g), roughly equal to 40 times the total mass of all oil produced in 2001. (I love wikipedia... for some things.)
* Sorry, original article appears to be gone - copy comes from the oh-so-appropriately-titled Conspiracy Cafe.
Ever since Bloomberg ran the story about the $7.6 trillion, I've seen that figure splashed everywhere. And while expansionary fiscal policy (read: printing money) may be in the cards, there is nowhere near $7 trillion in expected liability to the American taxpayer.
If you read their analysis carefully, you see that the total reflects all of the funds deployed by the Fed and the Treasury, the vast majority lent against collateral. Now, we can speculate on what the collateral is worth, but it is most likely not zero. Forget mark-to-market; part of the reason some of these assets have been pledged is because the markets for them are illiquid at prices near to those listed on the banks' books. (You can get price discovery, as Merrill did when it unloaded some $30 bn in MBSs at 22 cents on the dollar. This, however, would probably lead to most large banks not being in compliance with Federal regulations on reequired Tier 1/Tier 2 capital ratios, and, more importantly, a complete collapse in faith in the banks.)
This bugs me because the political pressure to avoid further government action will increase. People are already pissed about the unfortunately-termed bailout, as well as Paulson's necessary but politically inept handling of the TARP program.
It makes for a great headline, but it's a huge distortion of the facts. And the more pressure is put to avoid ANY government countercyclical fiscal policy, the more likely we will have a long, protracted recession with ever-more job losses.
By all means, do your job and throw light on the stinking carcass of our financial system. Transparency will help. But don't you dare contribute to an implosion of confidence by writing misleading headline - you're putting jobs and livelihoods at risk.
And I realize that the media needs to sell - "If it bleeds, it leads" makes a whole lot more sense when I learned more about how journalism works in a flat-ish world. (Thanks go to Bruce Lewenstein of Cornell's Communications department for an excellent class - COMM 566: Science Communication.)
But goddamnit, it's not $7 trillion dollars!
Let me explain. Bloomberg ran a story on Nov 24* that the total federal outlays for the purpose of rescuing/repairing/bailing out the American financial system could total $7.76 trillion dollars. (By comparison, US GDP is about $13 trillion (2006), the US 2009 Federal Budget (pdf) is $3.1 trillion, total national debt is $10.64 trillion, and debt held by the public is $6.4 trillion.) Alternatively, it's equal to 155 trillion kg of nickels (1 nickel = 5.00 g), roughly equal to 40 times the total mass of all oil produced in 2001. (I love wikipedia... for some things.)
* Sorry, original article appears to be gone - copy comes from the oh-so-appropriately-titled Conspiracy Cafe.
Ever since Bloomberg ran the story about the $7.6 trillion, I've seen that figure splashed everywhere. And while expansionary fiscal policy (read: printing money) may be in the cards, there is nowhere near $7 trillion in expected liability to the American taxpayer.
If you read their analysis carefully, you see that the total reflects all of the funds deployed by the Fed and the Treasury, the vast majority lent against collateral. Now, we can speculate on what the collateral is worth, but it is most likely not zero. Forget mark-to-market; part of the reason some of these assets have been pledged is because the markets for them are illiquid at prices near to those listed on the banks' books. (You can get price discovery, as Merrill did when it unloaded some $30 bn in MBSs at 22 cents on the dollar. This, however, would probably lead to most large banks not being in compliance with Federal regulations on reequired Tier 1/Tier 2 capital ratios, and, more importantly, a complete collapse in faith in the banks.)
This bugs me because the political pressure to avoid further government action will increase. People are already pissed about the unfortunately-termed bailout, as well as Paulson's necessary but politically inept handling of the TARP program.
It makes for a great headline, but it's a huge distortion of the facts. And the more pressure is put to avoid ANY government countercyclical fiscal policy, the more likely we will have a long, protracted recession with ever-more job losses.
By all means, do your job and throw light on the stinking carcass of our financial system. Transparency will help. But don't you dare contribute to an implosion of confidence by writing misleading headline - you're putting jobs and livelihoods at risk.
Thursday, December 4, 2008
Mumbai
It should be no surprise that we stand with the people of India and Pakistan during this crisis. Good and decent individuals everywhere were horrified. And for all our faults, I believe the people of the United States still believe, and will yet sacrifice, for the right of individuals everywhere to be free and safe from tyranny. To our friends in the most distant parts of the globe, we offer our prayers, and our support.
But we must not substitute passion for policy, and bold words for substance. Both are needed. Though diminished by policy blunders foreign and domestic, the word, confidence, support, and - it is true - military might of the United States still speaks strongly, if not always convincingly, across the wide world. Yet it is precisely now, when the need for multilateral coordination of policy is greatest, that we find ourselves most vulnerable and least able to play a strong role.
This is not to say that the United States should or will retreat into isolation. The temptation is great, but the dangers are greater. We hope that the current necessary process of deleveraging, recapitalization, and rectifying trade imbalances will provide a more stable and transparent international financial system. In the meantime, balancing moral hazard, limited resources, and systemic risk, and mindful of the politically possible, we labor to manage expectations of many, many stakeholders. The time has not come for the United States to cede its leadership in many of the international institutions that it created and dominated in the post-WWII era; but it is long overdue for us to begin transmuting these institutions into something that can work in a multipolar world, a world where we welcome a stronger, richer, and ever more democratic India. Our experience teaches us the value of a democratic nation endowed with the talents of its people, its rich cultural heritage, its natural beauty, and, most importantly, good relations with stable neighbors. We wish the same destiny for India, distinct and improved by attention to history and its own distinctive heritage and values.
We stand with the people who grieve in Mumbai and every corner of the world. But we also pray, fervently, that the desire to do good does not lead us to settle for doing something. The goal may well be deteriorating relations between India and Pakistan. The emotional backlash and subsequent actions taken by all parties may result in just that.
Those in positions of power need no lecture from people like me; as is usually the case, those who know better need no reminder, and those who don't need no responsibility. For the rest of us, we must have the courage to read, think, and analyze, as we respect and appreciate the honesty and right for high emotions from all concerned. We should never deny the validity of emotions - but we must always, always question the judgment that comes from acting solely on them.
shantih
shantih
shantih
But we must not substitute passion for policy, and bold words for substance. Both are needed. Though diminished by policy blunders foreign and domestic, the word, confidence, support, and - it is true - military might of the United States still speaks strongly, if not always convincingly, across the wide world. Yet it is precisely now, when the need for multilateral coordination of policy is greatest, that we find ourselves most vulnerable and least able to play a strong role.
This is not to say that the United States should or will retreat into isolation. The temptation is great, but the dangers are greater. We hope that the current necessary process of deleveraging, recapitalization, and rectifying trade imbalances will provide a more stable and transparent international financial system. In the meantime, balancing moral hazard, limited resources, and systemic risk, and mindful of the politically possible, we labor to manage expectations of many, many stakeholders. The time has not come for the United States to cede its leadership in many of the international institutions that it created and dominated in the post-WWII era; but it is long overdue for us to begin transmuting these institutions into something that can work in a multipolar world, a world where we welcome a stronger, richer, and ever more democratic India. Our experience teaches us the value of a democratic nation endowed with the talents of its people, its rich cultural heritage, its natural beauty, and, most importantly, good relations with stable neighbors. We wish the same destiny for India, distinct and improved by attention to history and its own distinctive heritage and values.
We stand with the people who grieve in Mumbai and every corner of the world. But we also pray, fervently, that the desire to do good does not lead us to settle for doing something. The goal may well be deteriorating relations between India and Pakistan. The emotional backlash and subsequent actions taken by all parties may result in just that.
Those in positions of power need no lecture from people like me; as is usually the case, those who know better need no reminder, and those who don't need no responsibility. For the rest of us, we must have the courage to read, think, and analyze, as we respect and appreciate the honesty and right for high emotions from all concerned. We should never deny the validity of emotions - but we must always, always question the judgment that comes from acting solely on them.
shantih
shantih
shantih
Wednesday, December 3, 2008
Roland Fryer on the Colbert Report
Roland Fryer, economist at Harvard, talks with Stephen Colbert about cash incentives for good grades in schools.
It's a hilarious interview - unlike a lot of people who come on this show, he is absolutely ready for Stephen's antics. He's too cool for school (Harvard, anyway). I'm starting to believe the observation that Harvard never tenures its assistant professors, thereby preserving its competitive advantage in stodginess and ossification. (Not really - I'm just mad they rejected me twice.)
More seriously, the question of incentives for good grades touches upon the idea of incentives in general in areas where the primary social structure is based on norms and not free-market capitalism (at least on the face of it). It's an interesting idea, and I hope it works. I'll be writing more about this later - in particular, when you attempt to create a bonus incentive scheme, there is a presupposition that the principal-agent relation is limited by motivation on the part of the agent. Is this an issue of motivation, or of capacity? To what extent can the added motivator effectively change capacity over any reasonable time period? What are the lessons to be learned from areas in the service sector where financial incentives are applied in situations where actors may be governed by social-welfare utility functions? And finally, what are the potential implications for the parent-child relationship - if external actors are seen as providers of material well-being, will this further erode the family, or simply offer a superior alternative and success model for children in families with failed parents?
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