[Still catching up]
Yes, they have been very good.
WELL DONE MATTHEW! Keep it up!
max
['How many weird technical news stories can I read in a day, I wonder?']
It's interesting to see Yggles veering from center-left respectability to center-right contrarianism to fairly liberal (if not quite left) polemics. It's hard to gauge how much of it is intellectual development, how much environment, and how much gut reaction to daily events.
I'm also amused by his frequent reference to the restrictions on his ability to comment about candidates.
Still don't give a shit about basketball, tho.
Matt seems to have developed a deep cynical and accurate understanding of the way his journalistic colleagues work, especially his seniors and superiors.
Saiselgy is doing ok. Last time I checked Ezz was all over this. Both have a clue based on gut instincts and lack of economic credentials. They can feel the lube. The major econbloggers, well some names to be named later, are already holding our shoulders down.
I guess this is a nasty and homophobic metaphor, and I apologize and ask for suggestions. Eating our livers & brains?
In any case, the ex-Chairman of Goldman Sachs is scaring the bejeesus out of Congress and rushing thru massive crazed legislation that will make Goldman Sachs profitable again at the sheeples expense. It won't work, will make everything much worse, but will get a lot of money to the right people to move to overseas bank accounts. We are impoverished & enslaved. DeLong prefers that to rich scum losing their heads.
Forget healthcare. Forget global warming and energy independence. There is no money, it has been given to the rich.
And when we reach bottom, and it may ger worse for a decade before we reach bottom, there will be war.
If you aren't feeling violent, you aren't paying attention.
Have a good day. I can't stand to watch.
And when we reach bottom, and it may ger worse for a decade before we reach bottom, there will be war.
Hey, it worked last time, bob. Who gets to be Hitler? Putin? The invasion of Ukraine as Poland, 1939. Works for me.
Could you guys update your link to his (Matthew Yglesias) new place?
7: No. We have strong tradition-based standards that forbid any updating of the blogroll. Try clicking on some of the other links, and see how many of them actually go anywhere.
Here is a commenter at Thoma's being nasty in solidarity with myself.
Bruce Wilder hangs in those Thoma thread: a brilliancy on the side of the angels, he is. and paine, too.
The critical question is what we the people pay for GS etc's garbage. If real value, they go under. If we overpay, we get poor forever. Pretty simple.
I am going to go throw dumbbells around til dinnertime.
I posted this on a different thread, but it fits here too:
I think someone should start scripting a movie about a gated community inhabited entirely by people who contributed to the financial meltdown, but succeeded in getting out in time with tons of money.
I see them hiring PhDs as house servants and gardeners.
No, I'm never heavy-handed.
8: Unfogged is nothing if not traditionally committed to its own obsolescence.
I am going to go throw dumbbells around til dinnertime.
For a brief moment, I thought one of bob's dogs might be named Dumbbells, and I couldn't figure out what the proposed activity consisted of.
8: You did take down the link to gummi blog. I was kinda sorry to see it go.
We have W-lfs-n has strong tradition-based standards neuroses that forbid any updating of the blogroll.
You did take down the link to gummi blog.
I did that (along with eliminating two dead links) before W-lfs-n could stop me. She had taken her blog invitation-only.
We have strong tradition-based standards that forbid any updating of the blogroll.
What is the history of this peculiar and annoying tradition? I'd guess Ogged's being a dick, then some laziness on the part of other front-page posters, followed by the emergence of a mildly funny rolling gag about Glenn Reynolds. Am I right? Or is it just rum, sodomy, and the lash?
10: Hey! I like to garden -- is a PhD absolutely essential?
She had taken her blog invitation-only.
How the hell does that work? Does she use the secret internet?
There's probably a good IDP address joke in here somewhere.
16: Quick! Someone delete 16. It's a troll!
17: What you have is, as I like to annoy my sister by pointing out, a doctoral degree. Surely it qualifies.
I imagine that a law degree will do. You understand that these people make exceptional demands on the help, IYKWAMAITYD.
Did anybody else notice that Saiselgy had a post dogging Christopher Dodd (for saying that the Dems wouldn't try to tie any other goodies onto a banker bailout bill) and now it's gone?
21: Hey! I like exce-- Oh, never mind.
The second post from the top at Yggle's right now uses an example that is supposed to be a bad bet, but is actually a good bet. It this the insightful post I should look at?
Does this back up Shearer's claim that we forgive Matt far more easily than Megan because he is on our side?
movie about a gated community .. servants
Another flaccid Hollywood remake
24: You could use it to do that, but I'd say that it's a completely different, and less severe, problem. Yglesias is a huge slob about that sort of thing. But the effect of that error is nil -- if you look at it, he's clearly intending to refer to a situation where a neutral return is overwhelmingly likely, and a big negative return is a small possibility. Someone skimming, or uninterested in the math, will take his meaning and miss the error. Someone who gets the math will catch the error. But there's not any available route for someone to be misled by it.
He could totally use an editor, though. As he gets more senior and statusier, surely whatever organization he works for this week could spare someone to eyeball his posts before they go up.
Like this.
Speaking of gated communities. Come the revolution....
Matt is screwing up the arithmetic for a perfectly good example he's posted about in the past - see here for a working version of the example. (I intend to make this an exam problem.) He really does need an editor.
Here's another version of the example, which may speak more to people who feel like mcmanus.
You wouldn't be still avoiding writing your teaching statement (or whatever it was), would you?
Am I right? Or is it just rum, sodomy, and the lash?
It's ALWAYS rum, sodomy and the lash.
max
['Is this the appreciation thread or is this the collapse of the world thread?']
Fine! Update the link his blog! See if I care!
And rob, you can reasonably infer that when I said "today" in the post, I meant those posts that had been written when I wrote the post, which means before 1pm DC time.
I also just read the thing about capital-gains taxes in the current TNR and found it "interesting and thought-provoking".
Does this back up Shearer's claim that we forgive Matt far more easily than Megan because he is on our side?
As in we nitpick McArdle and don't nitpick Matthew? That would probably be true if I read McArdle, except I would just fisk McArdle from end to end over and over again with a view towards crushing her thesis. Which is why I don't read her.
max
['Also, I get this blinding fucking headache...']
22:for saying that the Dems wouldn't try to tie any other goodies onto a banker bailout bill
I think that post needs to be described as populist in tone, in order to differentiate Saiselgy's position as oe of opposing earmarks & pork, for instance. Along the lines of "Why can't the poor people get some help, outa all these hundreds of billions?"
DeLong probably emailed MY, asking why Matt wanted to destroy civilization.
Appreciation? Yeah, Matt & Ezra have been pretty good since they got past their Sarah spasm. They both are in a group environment, with support & feedback, and I have felt a definite movement from pumping Obama to highlighting issues(and attacking McCain) Somehow I feel this is a strategy, although what MY can't openly endorse or support?
Anyhoo, Matt's talent for compaction and concision has been celebrated for decades. It feels like decades.
Personally, I read Matt, whippersnapper though he is, because his absolute inability to spell reminds me of my father.
Matt's ability to get in and out of a topic swiftly often impresses me. He writes fast, and it reads fast, but it's usually good. Hes sort of Voltairean.
Since this is what I aspire to myself, that's pretty high praise.
Sen. Dodd:
"What you heard last evening," he added, "is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly."
The democrats will do what they're told without quibbling, bargaining, or making demands. The Republicans will handle this situation. Charlie Brown abides.
Talking Points Memo
Bush officials have won quick acquiescence for a bailout costing taxpayers as much as $1 trillion. But neither Congress, nor the press -- let alone the public -- is privy to the details, which are not set.
This is too important for Congress to know about, and Bush doesn't want to know anything either. Probably Cheney is in the loop, though maybe he wants to keep his fingerprints off it.
"which are not set."
Sounds like they don't know what the hell they're going to do yet, not that they do and they're keeping it a secret.
It also sounds as though they have a free hand, up to a trillion or so, and no elected offical will be involved except maybe Cheney.
This has the potential to be another looting of the treasury, but if that happens the thieves will find the loot worthless, and I think all the players know this. I've been wrong before.
Someone should track the rentals of apocalyptic "Road Warrior" type videos. Probably a few people here and there are creaming their shorts waiting for the shit to hit the fan. And of course, renting a video is the best way to prepare for violent action.
Probably a few people here and there are creaming their shorts waiting for the shit to hit the fan
This describes with stunning accuracy two of my roommates, the married couple. Self-described anarchists or leftists (depending on the day), who nonetheless supported Ron Paul, they are active cheerleaders for worldwide political economic and political collapse and to some extent "prepare" for how things will be. (E.g., they have how-to-survive type books around the house.) Their reaction to the banking crisis this week has been a puzzling wild-eyed amazement.
It's really fucking weird, because they're otherwise very nice people.
It also sounds as though they have a free hand.
So here's the thing. The SEC banned shorting in something like 800 financial stocks this morning. To most people who pay some degree of attention, banning shorting doesn't do jack shit and doing so is a complete banana republic maneuver that really threatens the reputation and integrity of financial markets.
Why did Chris Cox (and the other directors) do this? Option A is that he's under serious political pressure by elected officials who don't understand what's going on. This is not very reassuring - independent regulatory institutions are important. Option B is that he's an idiot who is frantically grasping at straws and didn't think out the consequences. This is even less reassuring - ideally the people in charge of regulatory agencies would not be idiots. Option C is that he's a competent regulator and the situation is so bad that banning shorts is actually better than the alternatives. That is very scary indeed.
I think I am going to go get $200 in cash, a bunch of groceries, and maybe ammunition.
Hey, my link there got a nofollow.
People get very scared/thrilled by the prospect of Armageddon, to the point of developing lurid fantasies about it. Me, I figure that if civilization suddenly collapses, I'm in Manhattan, so I'm pretty much gonna die. And if it doesn't absolutely collapse, I'm in Manhattan, so if normalcy is going to be maintained anyplace, it'll be here. So either way, there's not much for me to productively worry about.
49: Doesn't Option B seem by far the likeliest? "I haven't got any productive ideas, so I'll do something harmless but pointless?"
He's just looking for an excuse to go to the grocery store, LB.
Admittedly, I've never liked grocery shopping either.
Actually, I rather like grocery shopping.
49: Doesn't Option B seem by far the likeliest? "I haven't got any productive ideas, so I'll do something harmless but pointless?"
Well, it's not harmless. Short selling is widely considered by those above a certain level of sophistication to be a good thing, and people who blame short sellers for problems are widely considered to be trying to distract attention from their own fuckups (either consciously or not). Doing it on a market-wide level is the sort of thing you expect from Russia or Malaysia or Ecuador or something, not the US.
Don't get me wrong, Option B is still a strong leader in my mind. But even having to consider Option C is really not making me happy.
doing so is a complete banana republic maneuver that really threatens the reputation and integrity of financial markets
I think you're underrating the importance of the US being the biggest guy in the room.
I think I am going to go get $200 in cash, a bunch of groceries, and maybe ammunition.
If civilization collapses, what good would cash do you? There not even pretty pictures.
I've never liked grocery shopping either.
I generally do, but last night I bought 4 lbs. of rice from the bulk department and didn't see until I got home that I was charged for almonds instead (checker keyed in the wrong 4-digit code). You'd think there would be a little flag in the software that would yelp when a person rang up FIFTY-EIGHT DOLLARS in almonds.
Option C is that he's a competent regulator and the situation is so bad that banning shorts is actually better than the alternatives.
According to Dodd, when the Fed people made their report to Congress, nobody could believe how bad things were.
The Democrats' immediate response, of course, was submissive wetting. The Republicans are presumably consulting with Rove, DeLay, and Gingrich (and Bernanke) right now to figure out how to best take advantage of the situation.
So here's the thing. The SEC banned shorting in something like 800 financial stocks this morning. To most people who pay some degree of attention, banning shorting doesn't do jack shit and doing so is a complete banana republic maneuver that really threatens the reputation and integrity of financial markets.
Check. I've been bitching about it since last night on other blogs.
Why did Chris Cox (and the other directors) do this? Option A is that he's under serious political pressure by elected officials who don't understand what's going on. This is not very reassuring - independent regulatory institutions are important. Option B is that he's an idiot who is frantically grasping at straws and didn't think out the consequences. This is even less reassuring - ideally the people in charge of regulatory agencies would not be idiots. Option C is that he's a competent regulator and the situation is so bad that banning shorts is actually better than the alternatives. That is very scary indeed.
Option D) it's his damn money in stocks and goddammit, he wants the money, because E) Dubai (or Arabs or terrorists) are conducting bear raids on financial stocks. And he'll be damned if he'll let Al-Queda destroy the economy. [*]
I think I am going to go get $200 in cash, a bunch of groceries, and maybe ammunition.
H'ok! Have a good time!
max
['Don't forget the distilled water.']
[*] No. Not a joke. That's apparently what someone believes.
they have how-to-survive type books around the house
Hey! I have some of those around the house. They don't involve guns or anything. More like how to preserve foods, how to grow them, how to make a root cellar (yes), how to do companion planting to combat pests, wild foods you can eat and how to do so without killing yourself. Some of the Foxfire books, which are just way cool, and of course How to Survive in the Woods, because who doesn't have that, you dorks.
I think you're underrating the importance of the US being the biggest guy banana republic in the room world.
$58 is as nothing to Witt. She advises McCain on economic matters.
FWIW, the UK has instituted a short-term ban on shorting financial stocks.
So, you aren't the only ones at it.
62: Yeah, it's that plus the actively having a plan for what they're gonna do, whom with, where they'll go, etc. And practically drooling when they tell me things like "The stock market closed down 400 points today!" That's the part that weirds me out. It's like apocalypse porn or something.
Come to think of it, my movie about the financial collapse profiteers with the PhD gardeners and sex slavs should probably be set in Dubai.
Some people have been living on apocalypse porn for literally decades.
The Survivalist novels back in the early 80s were straightforward apocalypse porn -- it's an old genre.
http://en.wikipedia.org/wiki/The_Survivalist
The word "slave", in fact, is derived from the word "slav". The trade in European slaves lasted at least until 1500, and it wasn't purely Muslim.
Some people just like almonds, Witt. I know I do.
The link in #70 is pitch-perfect for my roommates. No fucking way I'm telling 'em about that series.
To most people who pay some degree of attention read stock market blogs, banning shorting doesn't do jack shit and doing so is a complete banana republic maneuver that really threatens the reputation and integrity of financial markets
Fixed. It's a lot more complicated than that.
No. Not a joke. That's apparently what someone believes.
Yeah, you can find people to believe anything. I hope that's not what Cox and/or Congress believe.
If civilization collapses, what good would cash do you? There not even pretty pictures.
I guess I'm not really worried about civilization collapsing. But I am worried about a temporary financial sector meltdown that might affect credit card processing for a week or two.
I think you're underrating the importance of the US being the biggest guy in the room.
Well, yeah, but the US didn't get to be the biggest guy in the room by bullshit "stocks can only go up" measures.
I find that genre of stuff, whether fiction or purportedly non, very entertaining. I just can't work up much of a fantasy life about the collapse of civilization that has me in it; the total unlikelihood of my survival in a world without grocery stores is something of which I am completely, thoroughly convinced.
68: Etymologically it's the same word. My varangian ancestors sold so slavs to western europeans, that it became synonymous with thrall.
73: Oh, come on. Bring some joy into their lives. That totally looks like you could find all 27 on half.com at about a dollar a book.
66: I know regular people who are exhibiting peculiarly shining eyes, almost like relish, when they report these things to me. Exciting! I suspect it's one response to something dire that's completely out of your control and is only faintly understood.
79: I should do just that, and then tell them I paid for it (dun dun dun!) with my credit card.
I knew one of us would be pwned, but I didn't think it would be me.
So *many* slavs, etc. And strike that comma.
Ibn Fadlan described the Varangians. They exactly resembled an outlaw bike gang -- tall, blond, muscular, filthy, tattooed, heavily armed guys organized as a violent pecking order.
Ibn Fadlan totally gave us a bad rap. The varangians he saw were filthy and disgusting, but the norse upper class was the cleanest in Europe.
cleanest in Europe
Damning with faint praise.
Ah, some of my ancestors!
max
['Although I think most of my Scandinavian ancestors were tall, blond, muscular, filthy, tattooed, heavily armed guys that invaded places like Ireland.']
64: And here I was just about to say we were M.F.E.O., Emerson, based on congeniality of grocery-shopping patterns alone. But no, you had to go and be snarky.
It was a stocking-up grocery trip, dude. I was expecting to spend a ton of money. I had literally seven edible items in the house.* Remember, I just moved.
*Plus a truly remarkable number of spices. Good heavens, who knew one box could hold so many little glass jars?
80: I totally get the appeal. If civilization collapses, all of your currently annoying problems go away, and you have fun new problems like protecting your cave from looters. If your currently annoying problems are annoying enough, and you can suspend your disbelief about how protecting your cave would be likely to work out for you hard enough, it's got a loony kind of appeal.
Incidentally, Sweden and Denmark have been lousy with biker gangs the last 15 years.
re: 74
Dsquared: I've posted a comment on the Stoa re: your Dalek thing, btw.
My one published academic paper is actually on this topic [not daleks, but social construction and disease/disability].
Witt, don't touch that bag of rice! It constitutes proof that the exact weight of yon bag of rice matches the weight of these alleged "almonds" showing on the register receipt. Your friendly coop-style place will see, they will see.
Biker gangs survive here in Minnesota. They tend to be pretty respectable now, though. Bikers and heavy metal have a sort of glum, sullen anger and violence that strikes me as especially Nordic or Teutonic.
Though of course, many Teutons are very fine people and we shouldn't stereotype them.
One of the sagas has two brothers named "Grim" and "Glum" who come to bad ends. Their names mean, respectively, "grim" and "glum". More or less.
fun new problems like protecting your cave from looters
I would bet that this would be harder than initially imagined. Like hunting for your own food, a concept that seems simple, but is very, very difficult. I suspect that the ad for Carl's Jr. is right, without them, some guys would starve.
Speaking of hunting for your own food, on my most recent bike ride I saw 20 wild turkeys, over a hundred ducks, and a deer within half a mile. It was right outside a tiny but extant farm town (po. ~100 with a nice tavern).
fun new problems like protecting your cave from looters
I think it's fair to say that come the Apocalypse most/all Unfogged readers (including myself) would be toast. Maybe a few lucky ones would find some role as hanger-on.
27
... But the effect of that error is nil ...
That's not really true. If you don't know what he is trying to say this sort of Yglesias post is pretty incomprehensible. As shown by considerable confusion in the comments.
Actually, this is reminding me that I need to do a major stocking trip to the health food store w/ the multifarious bulk bins soon. For everything. That place is so fun, and it's totally lame to only have two types of beans in the house. What is this, eating by the seat of your pants?
Yglesias's commentators are congenitally confused, and they have no sense of humor either. It seems to be an overlapping mix of tunnel-vision careerist Ivy kids and complete idiots.
re: 94
Yeah, I have deer, rabbits, uncountable numbers of wild ducks and geese and a lot of edible wild plants within a few hundred metres of my house, and I'm not exactly in the sticks. I'm sure I could feed myself for a while.
Maybe a few lucky ones would find some role as hanger-on.
My survivalist roommate has told me he'd probably want me with him when the shit hits the fan, since I speak Spanish.
Uh, thanks, amigo.
I would bet that this would be harder than initially imagined.
I'd expect you'd be right about that.
I'm in the psychologically unseemly position of thinking that a 1929-class depression probably wouldn't work out all that badly for me. I don't have a lot of financial assets to lose, I'm way above water on my apartment, and I have a fairly secure job. What my grandparents on both sides said about the Depression was that it wasn't a bad time at all if you were one of the ones who had a job.
It'd be a terrible thing generally, and I hope it doesn't happen, but that doesn't particularly worry me personally.
During famines the wild beasts disappear quickly, though, even the rats and snails.
Regarding caves, I idly flipped open a volume of "Clan of the Cave Bear" and came to the page where one cavewife stopped by at a new neighbor's cave and did a quick critique of her interior decorating and housekeeping.
95: Maybe a few lucky ones would find some role as hanger-on.
It was ever thus, ttaM. You don't survive by doing things single-handedly. The he-men might protect the cave from looters, but do they know how to stitch a moccasin? I think not.
96: The point is that it's not misleading. If you have enough background to fix his sloppiness, you know what he's trying to say. If you don't, it's incomprehensible (although I read his comments, and while I remember people being stunned by his screw-up, I don't recall any actual mystification about what he meant to say.) It's not something clearly comprehensible that would lead you to form false beliefs if you took it seriously.
It's not an apocalypse porn without nubile sex slaves.
Raedawn Chong did not capitalize on her sex slave / lunch meat role and went on to a career woman life.
The lovely, exotic Marpessa Dawn in "Black Orpheus" was an American born in Pittsburgh.
Thank you.
102: Those books are so great: she invents archery, the sports bra, corn-rows, and feminism, while taming horses and lions, interrupted only by thoughtful moments where she looks at herself in ponds and regrets that she's not beautiful, with a heavy brow ridge, sloping forehead, and protruding jaw, but is instead stuck with these dang sparklingly limpid blue eyes and perky little nose.
106: Your confession is moderately safe with me, LB.
My downstairs neighbour is home from the pub with his friends.
It's like living above a bunch of fucking Morlocks. Unfortunately our society frowns on extra-judicial murder.
I thought Scotland was a free country.
Oh, you wouldn't believe the tripe I read and enjoy. I restrained myself from recommending an author who I'm sure Stanley's roommates would adore out of raw shame.
Home already? What is this, some kind of namby-pamby milquetoast pub? You tell those louts to get back out there and drink!
108: You could explain that come the apocalypse, you'd be coming downstairs for their canned goods and weapons, and they'd be out on the cold streets of Oxford with the gangs of feral professors.
My bet is that the Neanderthals fetishized brow ridges.
Inuit reportedly think that the most beautiful girl is the one with such a tiny nose that it can't be seen when she turns her face sideways.
the multifarious bulk bins
Yay bulk bins! No, it is fun to stand there and consider all of the grains, beans, varieties of oatmeal etc. that one doesn't always purchase.
Vaguely, to the survivalist thing -- I often think about how annoyingly trapped modern conveniences make it. I work in an office where the windows are painted shut, with electricity-saving lights that shut off every 10 minutes.* The stairwells have doors that lock behind you, so I couldn't even use them to go between floors if I wanted to. God forbid we even have a power outage, much less any actual meltdown; the place becomes impossible to work in.
*Which is a pain, let me tell you. At present I am stuck waving my arms around like some kind of demented chicken to get them on again. Colleagues are considering purchasing a remote-controlled car, although I'm a bit worried what the landlord would say about the woodwork.
92: The Swedish biker gangs I'm thinking of aren't really, due to their tendency to do stuff like blow up cars with people in them in the middle of crowded city squares.
re: 109
I live in England. Although my neighbour is a 'fake' Scot. He moved to England when he was a baby and yet, mysteriously, affects a grunting troglodytic west of scotland accent* which can't be anything other than a pathetic attempt to make himself sound hard.
* the only Scots I know who really speak like he does are aging alcoholics and he's about 25.
electricity-saving lights that shut off every 10 minutes
Hate those. I sit very still when I'm working, and the motion detector in my old office never knew I was there. I developed an unsightly twitch in my neck as the lowest effort way of getting them back on.
Colleagues are considering purchasing a remote-controlled car
You guys should get a pendulum.
due to their tendency to do stuff like blow up cars with people in them in the middle of crowded city squares.
Those would the black metal bikers then.
max
['Do they like Hawkwind?']
Wow, 118 is gorgeous. How on earth could I get that in the budget (never mind the office)...? Hmm.
104
... I don't recall any actual mystification about what he meant to say. ...
There are lots of ways of changing the example to something that makes sense and it is unclear which he intended. Which makes it difficult to discuss. This is true of a lot of his posts, it is obvious that something is fouled up but less obvious what. And if you are hostile this sort of thing can easily be cited as evidence that he is an idiot. Or that he is too lazy to proof read.
No, they're basically blue eyed mobsters with funny leather jackets. Not Marlon Brando type bikers. Drug trafficking, extortion, lots of murders, and shooting at people in public...
Yay bulk bins! No, it is fun to stand there and consider all of the grains, beans, varieties of oatmeal etc. that one doesn't always purchase.
100% true fact: "multifarious" was originally applied to the Roman equivalent of coöperative stores with bulk bins, to describe the many varieties of grain (far) they offered.
Is that a Foucault pendulum? Looks like it to me.
Don't rush to judgment, David. Maybe they have good reasons.
IIRC Quebec has a nasty biker scene too. Perhaps one of our designated Canadians can report on that.
117: My office has them. But I'm an enormous spazz so the motion detector definitely knows I am there.
To most people who pay some degree of attention read stock market blogs, banning shorting doesn't do jack shit and doing so is a complete banana republic maneuver that really threatens the reputation and integrity of financial markets
Fixed. It's a lot more complicated than that.
Hmm. Sounds familiar.
Bear Stearns going kablooie, on the other hand, could be the sign of bad things to come. If you're a betting man, it might not be a bad time to short Lehman Brothers. Unfogged: born to pay list price. Posted by: derauqsd | Link to this comment | 03-17-08 5:11 AM
Yes, it's a bit more complicated than "banning shorting doesn't do jack shit". Banning shorting may delay the failing of companies that are going to fail anyway, and it may save some that are very close to failing but might recover. I still maintain that it is very confidence uninspiring.
West Coast bikers became meth gangsters too, as I understand.
This is true of a lot of his posts, it is obvious that something is fouled up but less obvious what.
I'd say most of his errors are pretty easily fixable in context, but the point is that they're obvious. I've never seen (that I could recall) a Yglesias post with errors that would have left a competent but ignorant reader believing something that was importantly untrue. It's not risky to trust what he's saying if he's making sense on a topic you don't know about.
s that a Foucault pendulum?
According to wikipedia, yes.
123: 100% true fact: "multifarious" was originally applied to the Roman equivalent of coöperative stores with bulk bins, to describe the many varieties of grain (far) they offered.
I knew that, ben.
Whoa. 130 was me. What the hell happened to my remembered info?
Just recently I read the gangs are increasingly getting into conflicts with not only each other but our large number of ethnic mobs: Albanians, Assyrians...
130: that's interesting, because I actually just made it up and it isn't true.
133: Yeah, thanks, tell me that after I Google it.
"Schwartz" isn't a Persian name, is it?
Must-see photo. And it was much less than $120,000!
I've never seen (that I could recall) a Yglesias post with errors that would have left a competent but ignorant reader believing something that was importantly untrue.
I have. Not all that often, but a few times. IIRC, he usually corrects them.
And if you are hostile this sort of thing can easily be cited as evidence that he is an idiot. Or that he is too lazy to proof read.
Well, I"m a fan of his stuff, but he pretty clearly is too lazy to proofread. I don't comment over there often, but in his first few days at CAP, I remarked on the fact that he'd obviously gotten a copy editor. Apparently not - looks like newbie enthusiasm aided his work ethic, and the newbie enthusiasm has since worn off.
136: Admittedly, I was giving him credit for corrections.
IIRC, he once claimed that he always proofreads.
139: Oh, yeah. Thanks. Apparently I need a copy editor, too.
133: Funnily, as I was putting my dinner on a plate just now, I suddenly knew that too. You're so transparent, young ben.
Well, I"m a fan of his stuff, but he pretty clearly is too lazy smart to proofread
Is it relly an efficiant use of one's time to correkt spelling or grammer?
We are ofen amazed at the massive amount of verbal production many in the 18th century were able to produce.
141: Ill be you're copy editor; Stanley.
At least Matt isn't always posting in Spanglish like Stanley.
As penance for my sins, I give you all a video of a kitty trying to fix a printer.
It is true that "far" means something spelt/corn/meal/grain. It's that element of truth that makes the falsehood so deadly.
102, 106: I discovered that series, conveniently, in 7th grade. Educational. I need to start strategizing about what sort of "educational" books I should start leaving lying around for Rory to discover.
137
Well, I"m a fan of his stuff, but he pretty clearly is too lazy to proofread. ...
As far as the spelling type stuff goes I think he might have some sort of disability so I am inclined to cut him some slack. If not he is being a bit disrespectful of his readers.
149: Man, I can't think of any light fiction where the sex isn't all fucked up to the point that I can't see actually leaving it around for my kids. Of course, given that the first literary sex scenes I recall were in the Travis McGee books ("Dang it, there goes another girlfriend killed by a meteor!") and the Flashman books (which had less rape in them than you'd think, but a whole heck of a lot of "what a lucky coincidence that she happened to be into it, given that I wasn't asking permission or anything!"), and I survived, I'm planning not to worry about it.
what sort of "educational" books I should start leaving lying around for Rory to discover.
Fanny Hill, Forever Amber, and Jude the Obscure should be a good start.
Jude the Obscure is on the list to teach Rory that it doesn't pay to try to better yourself.
As far as the spelling type stuff goes I think he might have some sort of disability
Yep. As noted above, my father's got that one. You wouldn't think a well-read professional in his fifties could misspell "maybe", would you?
You could put The Joy of Sex in the jackets from The Joy of Yiddish, or vice versa, depending on your goals.
Huh, apparently the title is actually The Joys of Yiddish. Yiddish: officially more, and more multifariously, joyous than sex.
Every good yarn contains elements of truth. I've always enjoyed the skillful telling of tall tales. Bullshitting is underrated.
In the case of the "100% true fact," I so liked the delivery I just had to immediately say that I knew that. Plus it's really cool to think of the Romans having cooperatives.
149: I do not, particularly, recommend The Good Earth.
Norma Klein wasn't bad, actually, although her books are all disappointingly dated now.
153:Jude the Obscure has many important lessons to teach young children.
You could set Rory on the path to folklore-and-mythology geekdom, and lesbianism, by leaving out The Mists of Avalon.
You could put The Joy of Sex in the jackets from The Joy of Yiddish
You know that this is called "marrying" a dust jacket to a book to which it does not rightfully (on some definition of rightfully) belong.
I found a book about the "basics" when I was 14 or so laying around. I picked it up and read the whole thing. It had a lot of handy diagrams. Later I found out that my parents had gotten it and decided it was too graphic for me, and instead gave me a James Dobson book. This "Son of Dob" character wasn't too helpful.
People should never bullshit, parsi. I'm shocked to here you say that.
162 cont.: "laying around the house", to be specific.
My favorite joke in The Joys of Yiddish concerns a wealthy London Jew who, since he is moving up in the world, converts to Anglicanism, changes his name from "Goldberg" to (something more English-sounding which I can't remember), acquires a home on Park Lane, and sets about to acquire various objets d'art, among them a painting by Rubens.
The following year, his affluence having increased, he exchanged the Rubens for a Goya.
Yiddish: officially more, and more multifariously, joyous than sex.
It's nice that you keep the blog's self-cock-blocking tradition alive, ben.
Actually, a terrific thing to leave around would be Outlaws of Sherwood, which is hands-down my favorite Robin Hood retelling ever, not coincidentally because Marian is never referred to as Maid.
No sex, exactly, but plenty of gender-equal nods to attraction and lust. Women like sex too, etc.
164 cont: "lying around the house", to be correct.
No sex, exactly
There is irrational, transcendent sex, though.
128
I'd say most of his errors are pretty easily fixable in context, but the point is that they're obvious. I've never seen (that I could recall) a Yglesias post with errors that would have left a competent but ignorant reader believing something that was importantly untrue. It's not risky to trust what he's saying if he's making sense on a topic you don't know about.
See this for example:
... In policy terms, the sort of curbs McCain was urging (and that apparently now have actually been adopted) don't make any difference. As Arnold Kling says, there's no way for short-selling to force your stock price down unless there's nobody willing to buy your stock even at its new, lower price. And if that's the case then that -- the fact that nobody wants your stock -- is the problem, not the short-sellers. A stock that nobody wants to buy is going to run into serious trouble sooner or later.
I believe this is wrong. If you have a market in which shorting is not allowed then if you think the a stock price is too low you can bet on it going higher by buying more stock but if you think it is too high you can only bet on it going lower by selling stock if you already own some. If shorting is allowed then you can bet against the stock by selling it even if you don't already own it. This additional selling pressure will reduce prices when shorting is allowed. The argument for shorting is that this reduced price is more accurate as it reflects the full range of opinion on the stock and is not biased towards the opinion of the people who own it. In Yglesias's defense he is citing somebody else but I believe they are both wrong.
I never did think much of that distinction, though.
It might be complex, but only if either the real or imaginary parts, or both, are irrational or transcendental.
||
Holy crap, the local burners list I read has a long thread which began as "Why we're fucked," on the financial meltdown, and in the space of some 30 or 40 comments is now about the possibility of raising a guinea pig farm for food, recipes and advice on dealing with roadkill, whether you can eat weeds, and so on.
|>
guinea pig farm
I have an Ecuadoran friend who often mentions the eating of guinea pigs by people in Ecuador. I gather that it's sort of a delicacy there. One of the Spanish terms for guinea pig is conejo de Índia, or "rabbit of India". Fact.
170: Here's where arguing with you gets boring, Shearer. That's not the sort of just-flat-wrong, absolutely-erroneous, would-lead-you-to-believe-easily-checkable-things-that-are-simply untrue, thing we're talking about at all, and thinking that it it fits into the same category means you're either not playing fair, or you're too weird to communicate with across the interspecies boundary.
Ygelsias, and Kling, who he links to, are both stating that short-selling can't get the price down below what the market will bear -- if you can find enough buyers for all the stock at a given price, the price isn't going to drop below that point, shortsellers or no. Quibbling about the phrasing has nothing to do with straightforward errors of fact.
155: Would have been an interesting approach a year or so ago when Rory thoguht she might want to become Jewish. (Then I explained that being Jewish might possibly involve more than playing dreidel and eating gelt...)
160: Ironically, I had just finished reading the Mists of Avalon when I hooked up with UNG. If I want to set her on the path to lesbianism, it might take something stronger.
167: plenty of gender-equal nods to attraction and lust. Women like sex too, etc Witt, naturally, has the right idea.
I think that a key thing about Yglesias is that he doesn't present him as an expert on anything, whereas for a long time McMegan let people think she was an economist, and she still talks like one.
I read Matt as a generally well-informed non-expert who's quicker at picking up on things, and expresses himself better, than almost anyone. But it's hard to think of him as an expert on any area of policy. He's probably best on foreign policy, but that's actually a bit less mysterious than economics.
So, score a couple points for Shearer.
The women in Fanny Hill like sex, and it's put out by Penguin Classics, so you know it's reputable.
it has been recognized more recently as a unique combination of parody, sensual entertainment and a philosophical concept of sexuality borrowed from French libertine novels. Modern readers will appreciate it not only as an important contribution to revolutionary thought in the Age of Enlightenment, but also as a thoroughly entertaining and important work of … fiction, deserving of a place in the history of the English novel beside Richardson, Fielding and Smollett.
You see, it's all very philosophical and abstract, even if the presence of a wee smidgen of French influence can't be denied. Set it alongside Shamela or something; very educational.
Plus, Anne Fadiman was educated by finding a copy lying about, and she turned out well.
176: I have an Ecuadoran friend who often mentions the eating of guinea pigs by people in Ecuador.
Yes, they have discussed that on that list.
I considered telling them, in re: the potential toxicity of rats (they eat everything, you never know what's in them) about how you have to put, um, slugs, I think it was, in cornmeal in order to let them work the toxins out of their digestive systems themselves before you dine upon them, then I thought: Christ, who has cornmeal at a time like this? Let's get serious: what about the rats, now?
Ben, you commitment to the question is touching. I thank you.
184 cont. (My commitment to proofreading was stronger before I made myself that Sazerac. I believe Ben is to credit/blame there as well... )
What is there to discuss? You can eat guinea pigs.
You know, if it didn't kill the rat, why would it kill you? Sure, bioaccumulative poisons are a possibility, but that's assuming you're living on rats for a long time, in an environment where they're eating toxic stuff. At that point, I think slow poisoning from heavy-metal-filled-rat-meat is the least of your many worries.
I think that it's snails or some other mollusc that that you run cornmeal through to clean them out. But some slugs are highly toxic regardless of what's in their gut -- an Oregon frat boy or redneck won a chugalug contest by swallowing a banana slug, but it killed him.
Even sewer rats are non toxic once well cooked, but you'd probably want to wear gloves cleaning them. IIRC guinea pigs are clean and vegetarian.
If, in the post-collapse world, I'm given the opportunity to open a rat-meat serving shack, we're definitely going to have a "Rat Zinger" on the menu. Mark my words.
In Peru they keep guinea pigs in little pens in the backyard, and feed them vegetables and grass. They are clean and tasty, or so I hear from my Peruvian friend.
What's the disease rabbits have that's dangerous if you butcher them? Tularemia? (And of course Texans should know to avoid the armadillos if they don't want leprosy.)
183 and 187 sadden me as Rory's rat nibbles cheese spread from my finger... How could you sick bastards even speak of eating such a creature?
Heavy metals mostly accumulate in carnivores at the top of a food chain, I think -- carnivores which eat other carnivores, etc., and concentrate metals over a considerable period. That wouldn't be rats.
before I made myself that Sazerac
Not to pry, but was there any positive resolution with the friend with whom you made the shared sobriety pledge?
Remember to handle the bile duct and intestines with care when slaughtering your guinea pigs. You don't want to get any of the stuff in either of them on your food.
(And of course Texans should know to avoid the armadillos if they don't want leprosy.)
Honest and for true? Crazy.
193: No, it'd be you. The problem would be eating rat after rat after rat, each of which had been nibbling little bits of toxic metals, not enough to hurt the rat, but enough to stay in your system. Three years down the road, enough accumulates in your body that your gums turn blue and you die.
But I wouldn't worry about it until you find yourself living in the sewers off a consistent diet of rat meat for years. At which point you've got worse problems.
In Peru they keep guinea pigs in little pens in the backyard, and feed them vegetables and grass
A friend thought this would be a good idea one summer. But the pen had no top, and hawks are common in these here parts.
197: Honest, although I admit I don't know the odds. But leprosy is totally an occupational disease of armadillo butchers.
You can let this Moldavian actual pig slaughter be your guide (NB: gruesome).
Sigh. You mention the fact that Ecuadorans eat rats, and you provide a link. Someone observes that they don't think they could handle seeing the little paws, so you'd have to remove those. Someone else remarks that rats are surely more readily available than guinea pigs, much less starting a farm of them, so let's get back to the rats, please. An argument begins over whether hunting rats is more difficult than raising guinea pigs.
Ygelsias, and Kling, who he links to, are both stating that short-selling can't get the price down below what the market will bear -- if you can find enough buyers for all the stock at a given price, the price isn't going to drop below that point, shortsellers or no. Quibbling about the phrasing has nothing to do with straightforward errors of fact.
After thinking about this more, I think Shearer's right. Without shorting, if a stock is currently trading at $20, people who think it's worth $5 or $10 can't do anything about it. If you allow shorting, the person who thinks it's worth $5 borrows a share from the person who thinks it's worth $20 and sells it to the person who thinks it's worth $10. This drives the price down.
Banning shorting should result in lower volumes and higher share prices. It will be harder for companies to raise new capital due to thinner markets, and it won't actually help companies that are going to go under anyway, and it's an explicit admission that there are a troubling number of people out there willing to but lots of money behind their opinion that shit is fucked, but it's not completely useless.
194: No. She resumed drinking within 48 hours and for various related reasons we are no longer friends.
Someone observes that they don't think they could handle seeing the little paws, so you'd have to remove those
Oh, sure, like your hands are so clean, just because you can't see the rat's? Can't stand the heat, etc.
If you allow shorting, the person who thinks it's worth $5 borrows a share from the person who thinks it's worth $20 and sells it to the person who thinks it's worth $10
I thought the way it worked was that the person shorting borrows and sells a share from the person who thinks it's worth $20, to someone else who thinks it's worth $20, and then waits until it's trading at $10 (assuming that ever happens), and then buys a share at $10 and restores it to the original dude.
Leprosy is not sexually transmitted so you don't really have to worry about whether your armadillos have it.
191: Rabbits do carry Tularemia, also. Whee.
203: But if you look at what he's saying, it's not that blocking short-selling won't have any effect -- you're right, it will slow the fall of the stock. Yglesias is saying that shortselling won't bring down a stock if most buyers believe in its value. It doesn't matter if people are shorting a stock, if enough people want to buy it at $X/share, the price is going to stay at $X/share.
Now, I'm shaky enough on the financial stuff that I suppose that someone could convince me that even that's wrong, but I don't think it is, and it's reasonably clear to me that that's what he's saying.
194: No.
Sorry.
I worried that asking was a bad idea as soon as I posted the comment.
205: No, apparently it's the guinea pig's paws that are troublesome, not the rat's. How are you going to survive if you don't pay attention here?
177
Ygelsias, and Kling, who he links to, are both stating that short-selling can't get the price down below what the market will bear -- if you can find enough buyers for all the stock at a given price, the price isn't going to drop below that point, shortsellers or no. Quibbling about the phrasing has nothing to do with straightforward errors of fact.
You are missing the point. Suppose there are 100 million shares of stock outstanding and short selling is not allowed. And suppose there is demand for say 101 million shares at 99, 100 million shares at a price of 100 and 99 million shares at 101. Then the market clearing price will be 100 as this matches supply and demand. Now suppose short selling is allowed and an additional 1 million shares are sold short. Then you need buyers for 101 million shares and the market clearing price will drop to 99. This is not a quibble about phrasing, allowing short selling causes the price to drop.
Yglesias is saying that shortselling won't bring down a stock if most buyers believe in its value.
I thought this commenter made a plausible counter-argument:
If one is able to sell an unlimited amount of something he doesn't have, he is able vastly increase the perceived supply. If there are only 100,000 shares of stock in a company one day, then all of a sudden the next day there are 200,000 shares, the price is going to drop.
Further to 211: My bad, not paying attention. I see I wrote earlier "Ecuadorans eat rats." No, no, eat guinea pigs. Sorry.
I'm going to survive because I can handle the idea of seeing animal feet.
No, thanks for you asking.
Had another, huh?
It doesn't matter if people are shorting a stock, if enough people want to buy it at $X/share, the price is going to stay at $X/share.
People shorting the stock increases the value of "enough", though, and that makes a difference.
212, 213: Before last week, shorting was fairly unrestricted. Why did shorters push all stock prices to zero years ago?
Here's Yves Smth to make short selling even more complicated. Comments are good. Some of the best minds only comment.
I do wish Yggles wouldn't read and link people like Kling and Brooks. And add at least one heterodox economist to his regular reading.
Ok, I officially don't understand how naked short selling makes sense. How can you sell it if you haven't got it?
Though the counterargument in 213 does seem to fail: 'The SEC's short selling FAQ also cites common misconceptions about the practice, such as the belief that naked shorting causes "phantom" shares to enter the market, as one source of confusion over the practice's market effect. Naked short selling, the SEC said, would not increase a company's shares outstanding shares nor result in "counterfeit shares."'
Why did shorters push all stock prices to zero years ago?
Assuming you mean why didn't they, because as the price goes lower, more and more people are willing to buy it, and eventually the shorts run out of money or balls.
219
Before last week, shorting was fairly unrestricted. Why did shorters push all stock prices to zero years ago?
Assuming you meant "didn't" the reason is the same reason bulls can't push a stock to infinity. Namely you have to post margin in case the market moves against you so you can't actually buy or sell an arbitrarily large amount of stock.
Ok, I officially don't understand how naked short selling makes sense. How can you sell it if you haven't got it?
There's three days between when you sell it and when you have to deliver it to the buyer. You just need to be confident that you can lay your hands on it between now and three days from now, not actually have it.
because as the price goes lower, more and more people are willing to buy it, and eventually the shorts run out of money or balls.
But as the price gets lower, the shorters are making money, no?
So have the new regulations affected clothed short selling?
221: You're right. Some of the comments are very good. The possible effect on the options market, for example.
Yes. You can't sell short any of the 799 financial companies on the list released this morning. Presumably these are the companies that you would very much want to sell short, and it's not clear what's going to happen on Oct 2 when the ban is supposed to lapse.
209: I suspect that they're worried about something akin to a bank run in the market.
Huh. All right, I missed that shorting a stock increases the total volume of shares of that stock on the market, until the borrowed shares are returned, and by increasing supply will drop the price.
But I don't think that makes Yglesias and Kling's posts false. See this: As Arnold Kling says, there's no way for short-selling to force your stock price down unless there's nobody willing to buy your stock even at its new, lower price. He's recognizing that there could be a drop ("new, lower price"), just denying that it's going to be a significant effect ("force your stock price down")
What you're talking about is generally going to a small effect -- you need a whole lot of short-sellers compared to the total amount of stock on the market to affect the supply significantly. If the demand curve reflects general faith in the value of the company -- there are buyers for 100M shares at 100, 101M shares at 99, and 500M shares at 95, because 95 is an obviously great deal, shorting might drop the stock some, but it can't drive the price down much -- after a fairly small drop, there just won't be enough shortsellers to inflate the number of shares that much, and the price will rebound as soon as people stop shorting and all the imaginary shares go away. (or rebound to whatever the market clearing price is for the number of shares it looks as if there are given a steady state level of shorting.)
Where the market as a whole has a strong consensus belief in the value of a company, which is what Yglesias and Kling were talking about, shorting isn't going to be able to affect the stock price significantly, which was their point. It could pop a bubble -- a stock starts falling, and then everyone realizes that it really isn't worth anything at all -- but where the company is perceived as having real value, shorting's only going to do a limited amount of harm.
So, a minor failure to explain all the subtleties, but really not a howler in at all the way we were talking about.
226
But as the price gets lower, the shorters are making money, no?
On paper, but to realize their profits they have to buy back all the stock they previously sold which will tend to drive the stock price back up.
To put it another way, the problem that Yglesias accurately identified that these companies have is that there are many, many, people out there that think they're overvalued, and that shorting them would be profitable -- it's that a significant part of the market thinks their price is too high. If you're a company who's not in that position, shorting can't hurt you.
But as the price gets lower, the shorters are making money, no?
Sort of. To actually get their profit, they have to buy the stock back so they can return it to the person they borrowed it from. To ensure that they don't run off, they have to leave enough money with their broker so that he can buy the stock back if he needs to. If the stock goes up, they have to give their broker more money to ensure that he can buy it back if he needs to.
This can lead to the "short squeeze". If a stock starts going up, and you have it shorted, you have to give your broker more money to keep the position open, or you have to buy the stock. Of course, if you run out of money and have to buy the stock, that makes the price go higher, so now your friends who were short also have to give their broker more money, which they don't have, so they have to buy the stock, which makes it go even higher, etc etc.
Right, I get that—but we were talking about the stock going down. Why would you run out of money in that scenario? If it starts going up again, sure.
I can't believe the Dow is only down 33 points for the week. That's the most surreal part at the moment.
I should know more about the whole naked short controversy than I do. What I don't understand is why the SEC and/or FINRA can't go after the specific people who are doing naked shorts. It's not like it's some big mystery as to which traders are placing the trades, and the SEC and the SRO(s) have plenty of opportunity to open up those firms' books to find out who placed the orders. If it wasn't illegal before, then obviously the actors, bad as they may be, would be immune from penalties, but at the very least the govt. should be able to shake the finger of badness at them.
Also, to clarify a point above, the reason people don't short stocks to zero very often is that many firms on the street would require more than 100% margin for very low-priced shorts. E.g. if you were to short something at seventy-five cents a share, the margin requirement might be $2 per share, so you'd be tying up quite a bit of capital for a minimal potential gain. Because you can only make your net of market value short, minus commissions, minus margin interest, minus opportunity cost on the margin you put up. Not that appetizing, considering that if the stock goes up to seventy-six cents a share, you've made nothing at all.
236: You see? The fundamentals are strong.
To put it another way, the problem that Yglesias accurately identified that these companies have is that there are many, many, people out there that think they're overvalued, and that shorting them would be profitable -- it's that a significant part of the market thinks their price is too high. If you're a company who's not in that position, shorting can't hurt you.
Well, sort of. If a bunch of your investors just went into "I don't know how cheap the stock of your financial company is, I'm not going to buy it because everything is going to hell", that will magnify the influence of short sellers.
Shorting should cause price support as the stock falls, so the massive falls in financial stock prices wasn't purely due to massive shorting.
The obvious problem is that yesterday and today's recovery would have been driven by people covering their short positions. You get that once. And then of course, because people have lost money by covering their shorts, then then pull out of their now long positions.
Here's the thing: if anybody believes that actual 'financial terrorism' is involved, then the SEC can simply halt trading in a stock. They could do that to allow Congress breathing room to bail them out, if they wished. I have no objection.
So the suspicion continues to lurk that they're trying to prop the market up in advance of the election and/or trying to cover their own positions.
max
['Yes?']
231
What you're talking about is generally going to a small effect -- you need a whole lot of short-sellers compared to the total amount of stock on the market to affect the supply significantly. ...
Short interest can be significant. See here .
... As of August 29th, the average short interest as a percentage of float for stocks in the S&P 1500 declined to 10.7% from a peak of 11.9% on July 15th. ...
Looking at individual stocks, there are currently 13 in the S&P 1500 which have over half of their float sold short, and one stock (JOSB) has more than 100% of its float sold short. ...
So I'm struggling to understand the motivations behind allowing someone to borrow my stock, with the intent of shorting it. Is it that I think this borrower is wrong, and the stock's value is actually accurate or even undervalued?
And then of course, because people have lost money by covering their shorts, then then pull out of their now long positions.
Say this again slow? You mean that they're more likely to sell other, entirely unconnected stocks, now that they've lost money shorting? Because once they've covered their shorts (bought the stock, returned it), I'm not clear on what they have to pull out of.
Sigh. You mention the fact that Ecuadorans eat rats, and you provide a link. Someone observes that they don't think they could handle seeing the little paws, so you'd have to remove those. Someone else remarks that rats are surely more readily available than guinea pigs, much less starting a farm of them, so let's get back to the rats, please. An argument begins over whether hunting rats is more difficult than raising guinea pigs.
Raising guinea pigs is easy. Plus, they breed like rats!
max
['Also, more recipes than rats.']
243: Ah, and I'm betting on them not making up the fee difference?
Let's say you had two people, one who thought the stock price should go down, and the other who thought the stock price would go up. Both of them had 5 trillion dollars deposited in a margin account. What would the stock price be? Zero, because of the person shorting. A gazillion, because of the person borrowing going long? Would the world be destroyed in a LHC-style accident?
233
To put it another way, the problem that Yglesias accurately identified that these companies have is that there are many, many, people out there that think they're overvalued, and that shorting them would be profitable -- it's that a significant part of the market thinks their price is too high. If you're a company who's not in that position, shorting can't hurt you.
What Ygelsias actually said was:
... In policy terms, the sort of curbs McCain was urging (and that apparently now have actually been adopted) don't make any difference. ...
This is not at all the same thing as saying they don't make any difference for a stock unless there a lot people out there who think its price is too high.
Say this again slow? You mean that they're more likely to sell other, entirely unconnected stocks, now that they've lost money shorting? Because once they've covered their shorts (bought the stock, returned it), I'm not clear on what they have to pull out of.
Brain fart, mine. If they lose a lot of money covering their short positions (prices rise) they have to sell to cover their losses. What they have to sell depends on how they're doing their shorts. (Damn, that sounds bad.) They'll either have to cover margin, or in the case of hedge funds they have to do something else (like shift into puts, perhaps) or just dump for cash.
max
['If I go read McArdle will the extra headache cancel out the one I have?']
246: That's actually a good question. Most holders of large blocks of shares lend them out for shorting, which is surprising because them have the most to lose. Probably if you're a large investor you think you really do know better than the shorters.
246
Ah, and I'm betting on them not making up the fee difference?
You may also be betting if you don't lend it to them someone else will and you might as was be the one who gets the fee. Another source of stock for short sellers is margin accounts. Normally if you have a margin account with a broker your customer agreement will allow the broker to lend your shares.
You can ask for them back whenever, can't you?
Let's say you had two people, one who thought the stock price should go down, and the other who thought the stock price would go up. Both of them had 5 trillion dollars deposited in a margin account. What would the stock price be? Zero, because of the person shorting. A gazillion, because of the person borrowing going long? Would the world be destroyed in a LHC-style accident?
A massively dense guinea pig armadillo (that was dirty, well-armed and had a lot of tattoos) would be formed which would immediately evaporate into Arnold Kling.
max
['This is referred to as 'Klinging to one's shorts'.']
Hadn't been there for a while, but here is
Sandy Levinson of Balkinization invoking Carl Schmitt at length.
"Sovereign is he who decides the existence of a state of exception." Well, it's easy enough to identify the "sovereign(s)" this past week: Ben Bernanke and Henry Paulson.
This is what took me aback
Though, interestingly enough, no one seems to want to define the present moment as a "constitutional crisis," only (if that is the right word) as an economic one.(SL)
Because my mentor Stirling Newberry made a point of saying that our current mess is a "constitutional crisis" in this brobdignabian thinkpiece Of course, what Levinson thinks is a profound insight is the mere obvious prologue for Newberry.
This is why our present crisis is a constitutional crisis. It is not a crisis of finance as such, but a crisis of the governing mandate. Governments take over companies all of the time. Many governments have run important parts of the infrastructure. The US government runs a bank, The Federal Reserve. In fact, one of the first acts of the new government under the Constitution of 1787 was to charter The Bank of the United States.
He gets into a lot of trouble for some criticisms of Obama from the usually sympathetic Agonist readers. I am, of course, with Stirling.
But mainly I am terrified and enraged because this is the moment of a pemanent & profound structural change in the social relations in America. This not about saving GS. This is guillotines for some or chains for most. A coup or a revolution.
251
"might as was" should be "might as well"
This is not at all the same thing as saying they don't make any difference for a stock unless there a lot people out there who think its price is too high.
Right, you'd have to actually read the next three sentences to get to where he says pretty much exactly that.
In policy terms, the sort of curbs McCain was urging (and that apparently now have actually been adopted) don't make any difference. As Arnold Kling says, there's no way for short-selling to force your stock price down unless there's nobody willing to buy your stock even at its new, lower price. And if that's the case then that -- the fact that nobody wants your stock -- is the problem, not the short-sellers. A stock that nobody wants to buy is going to run into serious trouble sooner or later.
It's quite clear that he's saying that stocks for which shorting poses a significant problem are only those where there's a widespread lack of belief that they're worth their current price. Again, this is imperfectly written, but it's not in the same category as the howlers we were talking about.
250-1: Thanks Walt and James for the clarifications. Not that it makes this sort of thing seem less insane to me, who thinks, man, those must be awkward conversations.
Because my mentor Stirling Newberry made a point of saying that our current mess is a "constitutional crisis" in this brobdignabian thinkpiece
I think his comment in the Agonist thread was best:
This is not really a financial crisis, it is a crisis of leadership. The whole point is to keep the financial system out of the hands of those who can, and will, buy it when it becomes a bargain. Namely the people who ahve been selling all this oil to us.
The entire focus of what the administration is doing is centered around keeping the same kind of person in charge as has been in charge. Insanity got us into this mess, insanity can get us out, apperantly.
The sheeple would of course rather be slaves to our SOBs than some other group of SOBs, but they aren't yet willing to take responsibility for themselves. So the question is who gets to shear them, for how long, and how bad.
If it's a constitutional crisis, it's one that has been ongoing for some years now.
max
['More like constitutional abeyance.']
Where I disagree with Stirling is that he believes the current crisis is important compared to the one that will follow with some oil event.
Whereas I believe Republicans have since Reagan(Nixon) been building a structure of a slow-motion, and irrevocable, neo-feudalism. There will, with very bad luck, be no motivating crash but simply a gradual decline in middle-class standards of living until most are so desparate and ashamed they won't even bother to vote.
Republicans are smart enough to avoid breadlines. Just Kraft Mac & Cheese.
We are very close.
James, the fact remains that stocks have a value based in reality, and if shorts drive the price down below that value, that creates an opportunity for people to buy - and they do buy. As they say, nobody leaves a $20 bill lying on the sidewalk.
Further, a heavily shorted stock is one that, absent future insolvency, is a stock with built-in buying pressure because the shorts have to cover at some point. Sometimes investors buy shares in anticipation of a short squeeze - and sometimes they get that squeeze. In that scenario, the presence of shorts increases prices unnaturally.
It's true that shorting increases the supply of stock and therefore drives down the price, but that lower price increases demand, pushing the price back up (which was Yglesias's point).
Now all of what I have said - just like what Yglesias said and what you said - is over-simple. Shorts, for example, can manipulate a market. They can foster panic. But by-and-large, their presence promotes liquidity, and liquid markets attract more participants and (therefore) generally higher prices.
How does it all net out? I haven't got a clue. I wonder what the academic research says. But anyway, it seems obvious that Yglesias is basically right when he says that lower stock prices are much, much, much more a function of problems at a company than they are caused by the presence of short-sellers in the market.
256
It's quite clear ...
This would be more convincing if you hadn't been arguing something different was "reasonably clear" in 177 and 209.
Remember to handle the bile tear ducts and intestines with care when slaughtering your guinea pigs.
It's true. The bitter, bitter taste of guinea pig tears will ruin your meal.
258:No, his best comments were about Obama, because they show a courage & honesty that is lacking in most of the blogosphere
you need to come to terms with the fact that he's an egomaniac Reaganite who is statistically even with the pillsbury dough boy and his all moose orchestra.
Fact:
Barak Obama is committed to tax cuts in the face of a ballooning deficit and bail outs which will reduce the savings rate and prop up consumption. Precisely what we do not need.Obama's economic plan is better than John McCain's, only because John McCain's economic plan is barking mad.
It wasn't war or religious madness that defined Reagan. It was tax cuts.
261: Yeah, I can't see that the fact that Yglesias's post didn't effectively educate me on the difference between "can't bring down the stock price significantly", and "can't bring it down at all", as a problem with the post.
Ah, and I'm betting on them not making up the fee difference?
You get the shares back, so you don't lose anything. They pay you a dollar to borrow your share and return it in a week, and agree to keep enough money on hand to make sure that they can buy the share back. If the price of the share is going up, they either set aside more money, or buy it back with the money they have set aside to do so.
I'd rather talk about names for the new incarnations of the WPA and the CCC. (Too bad we couldn't just keep those.) There could be one for Wall Street refugees: Former Investment Bankers (FIB) or Repaying Our Debt to Society (RODS). They would be ditch diggers, natch. The skilled jobs would be for people with actual skills: How about Americans Rebuilding Infrastructure (ARI)?
My earnest little heart wants one called the Common Good. "In its first 6 months, the Common Good has repaired New Orleans' most vulnerable levees, cleared out the wreckage in Galveston and begun rebuilding houses, overhauled 15 major bridges and overpasses, and planted half a million seedlings in national parks."
The key point is that whatever you can do to make a stock go down, you can do the exact thing to make it go up. You can buy on margin to make it go up just as well as you can short to make it go down. Both are constrained by the size of the margin account -- the fact that investors face margin calls has a symmetric effect.
You get the shares back, so you don't lose anything.
Under the assumption, of course, that the fact of shortselling isn't going to drive the price down significantly. If people thought it would -- that their stock was worth holding at the current market price, but shorting would destroy its value, they'd probably get a little tetchier about lending it out.
268: I figure a hell of a lot of people are going to need jobs.
260
It's true that shorting increases the supply of stock and therefore drives down the price, but that lower price increases demand, pushing the price back up (which was Yglesias's point).
It doesn't really increase demand, supply and demand are functions of price and allowing shorting doesn't change the demand curve. It does change the supply curve from a flat amount to the flat amount plus the short interest (which will increase with price). This causes a decrease in the marketing clearing price (assuming supply and demand are plotted as functions of price).
260
It's true that shorting increases the supply of stock and therefore drives down the price, but that lower price increases demand, pushing the price back up (which was Yglesias's point).
It doesn't really increase demand, supply and demand are functions of price and allowing shorting doesn't change the demand curve. It does change the supply curve from a flat amount to the flat amount plus the short interest (which will increase with price). This causes a decrease in the marketing clearing price (assuming supply and demand are plotted as functions of price).
Under the assumption, of course, that the fact of shortselling isn't going to drive the price down significantly. If people thought it would -- that their stock was worth holding at the current market price, but shorting would destroy its value, they'd probably get a little tetchier about lending it out.
Right. Which CalPERS has just done.
If there's a bunch of companies that are currently doomed, and the market is slowly figuring that out, but the feds think they'll have a plan to save these companies in the near future, then it makes some sort of sense for the feds to prevent the market from fully realizing and acting on the doomed state of said companies. Stopping shorting does this, so would stopping trading.
I haven't been able to wrap my head around the old "uptick" rule for shorting, though.
270: You gotta move the manpower around, that's all, and train it. Not naysaying, just saying. Let's start setting it up now.
The fact that the uptick rule was abolished last year by the same SEC chairman that just introduced the most dramatic regulation of shorting in a long time (perhaps ever) is pretty ironic.
267 has it. Yes, price can be manipulated down by disproportionate short interest, but they can equally well be manipulated up by disproportionate long interest.
Among the myriad ironies: free market proponents asking for limits on short sales.
276: Listen to F, people! He's right when he says that I'm right!
260
James, the fact remains that stocks have a value based in reality, and if shorts drive the price down below that value, that creates an opportunity for people to buy - and they do buy. As they say, nobody leaves a $20 bill lying on the sidewalk.
In fact the "real" value of stocks is often very uncertain so different people can have widely varying opinions about the real value. Allowing shorting permits people with a low opinion of the real value to affect the price driving it down.
274: You're on. (But manpower? Deprecated. Let's just say people.)
There's not too much training needed for the first wave. There are plenty of skilled ironworkers, bricklayers, electricians, plumbers, and roofers around. While they get started, the FIBs can be in re-education camps vocational training.
The salient difference between prices being driven up or down is that you can't fatally harm a company by driving it's stock price up.
Allowing shorting buying permits people with a low high opinion of the real value to affect the price driving it down.
264
Yeah, I can't see that the fact that Yglesias's post didn't effectively educate me on the difference between "can't bring down the stock price significantly", and "can't bring it down at all", as a problem with the post.
That's actually "can't bring down the stock price significantly unless there are a whole bunch of people who would like to sell the stock short". Yglesias's post can easily lead you to believe that the ban on short selling doesn't make any difference (since he says so) which is wrong.
Anyway I think this illustrates my larger point which is Yglesias gets more slack when he tackles subjects he doesn't quite understand.
It doesn't really increase demand, supply and demand are functions of price and allowing shorting doesn't change the demand curve.
James, read your own words "Supply and demand are functions of price."
So okay, shorting doesn't change the demand curve, but it doesn't change the supply curve, either. It changes the price. And therefore shorting does increase demand to the extent that it lowers the price. The curves don't change. The location on the curve changes.
If I offer 100 dollar bills at 90 cents apiece, I will have buyers for 100 dollar bills. If I offer a thousand dollar bills at 90 cents apiece, I will have buyers for a lot more dollar bills. (You might protest that this analogy is inexact because it doesn't offer an opportunity for buyers to bid up the price of dollar bills. I hope you see that a more precise analogy would be even more damaging to your case.)
As shorts drive a price stock down below its proper level, a liquid market adjusts by bringing in more buyers, who bid the stock back up.
281: Except when it returns to its fair value.
269
"Under the assumption, of course, that the fact of shortselling isn't going to drive the price down significantly. If people thought it would -- that their stock was worth holding at the current market price, but shorting would destroy its value, they'd probably get a little tetchier about lending it out."
Unless as I said above they knew someone else would lend it out if they didn't driving the price down anyway and depriving them of the fee. A collective action problem.
I found a $20 on the sidewalk earlier this summer.
273
If there's a bunch of companies that are currently doomed, and the market is slowly figuring that out, but the feds think they'll have a plan to save these companies in the near future, then it makes some sort of sense for the feds to prevent the market from fully realizing and acting on the doomed state of said companies. Stopping shorting does this, so would stopping trading.
There is another factor, some of these companies may only be doomed if they become unable to borrow money (ie they are illiquid but not insolvent). For these companies a falling stock price can become a self-fullfilling prophecy as it makes potential lenders nervous and unwilling to lend the company money.
If the stock price of a company gets wildly inflated, it can always come back down. If the stock price goes too low, the company might go out of business before it can come back.
Companies are inherently long themselves, and the market can remain irrational longer than you can remain solvent.
284
So okay, shorting doesn't change the demand curve, but it doesn't change the supply curve, either. It changes the price. And therefore shorting does increase demand to the extent that it lowers the price. The curves don't change. The location on the curve changes.
No, suppose a company has 100 million shares outstanding. Suppose shorting is not allowed. Then the supply is a constant 100 million shares regardless of price. Now allow shorting. Then as the price increases more and more people will think the stock is overvalued and want to short shares. Suppose for example at $100 a share people want to short 10 million shares. Then the effective supply at $100 a share becomes 110 million shares. So the supply curve is raised above 100 million shares and increases as a function of price. This increase in effective supply will cause the price to drop.
This is just blatantly wrong. There are only 100 million shares. There cannot possibly be a supply of 110 million shares because there are only 100 million shares.
Besides which: if you really believe in the free market, the effect of short sellers on the supply and demand curves must be taken into account. To ignore the negative but not the positive is not free market; it's artificially inflationary.
Yglesias's post can easily lead you to believe that the ban on short selling doesn't make any difference (since he says so) which is wrong.
But what he actually says is that short selling isn't going to be a problem "unless there's nobody willing to buy your stock even at its new, lower price. And if that's the case then that -- the fact that nobody wants your stock -- is the problem, not the short-sellers." The unless clause makes it essentially accurate. If you pick it apart, sentence by sentence, it's not absolutely complete and doesn't itself provide all the information you need to understand how shortselling works. But the point -- that shortselling is not a problem for a company that the market believes is worth somewhere around its current price -- is correct.
I know you really really want this post to be as badly mistaken as the ones we were complaining about, but it really isn't.
287: And you didn't leave it there, did you. See? Nobody ever does.
I know you really really want this post to be as badly mistaken as the ones we were complaining about, but it really isn't.
Since we seem to be reaching the point in the discussion where we're talking in circles, let me suggest a compromise position:
1) James is overstating things considerably to compare that post to the McMegan posts under discussion.
2) The Yglesias post in question is essentially an Econ 101 post (attempting to regulate market activity is either counter-productive or useless because the market is just trying to find it's equilibrium). The discussion is mostly about whether or not Econ 101 applies in this case -- and I for one have been interested because it isn't something that I have thought about that much.
292
This is just blatantly wrong. There are only 100 million shares. There cannot possibly be a supply of 110 million shares because there are only 100 million shares.
If the short interest is 10 million shares then the long interest must be 110 million shares for the total to be 100 million shares. So there must be 110 million shares worth of demand at the market clearing price.
Besides which: if you really believe in the free market, the effect of short sellers on the supply and demand curves must be taken into account. To ignore the negative but not the positive is not free market; it's artificially inflationary.
This is the argument for allowing shorting as I said above in 170.
No, suppose a company has 100 million shares outstanding. Suppose shorting is not allowed. Then the supply is a constant 100 million shares regardless of price.
The supply is still constant. The person going short has to borrow a share from someone who is long and not trading. If the lender demands the share back, the person shorting the share has to buy the shares back and return them. There's no extra share in circulation, rather the long shares have been put back into circulation. A naked short is a phantom share until the naked shorter finds a share to borrow. If they can't they have to abort the trade.
Then the effective supply at $100 a share becomes 110 million shares. So the supply curve is raised above 100 million shares and increases as a function of price.
The circulating supply increases, which reduces the price. And when the short seller covers, the price goes up. Shorting could reduce a price temporarily, but not permanantly. Likewise having a lot of people go short requires that a lot of people be long in the stock. Being long in a stock reduces supply before the short seller shows up (reducing the circulating supply and driving up the price).
A situation could develop where lots of shorts have to be covered because the owners of the stock want it back to sell it, but that requires the shorter to buy (increasing the price) before the long owner sells the stock.
To have a lot of shorts requires a lot of longs. (duck dong!) You could have a naked shorting situation where a bunch of people sell phantom shares and then people who are long in the stock freak out and sell, but you still need the long selling to make the stock price go down.
Someone could conduct a bear raid to drive the price down, but that isn't a problem with shorting, that's a problem with market manipulation. (The long equivalent of a bear raid is a stock pool or a pump 'n dump operation.)
I'm pretty sure that the NYT story and correction about Morgan Stanley was part of a market manipulation operation, but again, that's not caused by shorting. In such instances, the correct thing to do is not to ban shorting, but to stop trade in stocks the SEC believe are being manipulated.
Banning shorting forces a temporary increase in the price...
Computers that automatically buy and sell for big investors hit snags because they were not programmed for such a restriction. Securities firms and money managers that routinely sell short to hedge against possible losses wondered how they would cope. In certain stocks and funds traded on New York Stock Exchange, some prices and trades were "erroneous," a spokesman said.
The surge in financial shares was driven at least in part by traders who were forced to buy those stocks to cover earlier short sales, raising doubts about whether the rally will last.
Hedge fund managers who made vast profits betting against the nation's financial titans called the ban unfair, and said the move would only prolong the financial crisis. Some traders said they were no longer betting on the intrinsic health of companies, but rather on what the government might do next. Others simply withdrew from the market.
... but that's only from the initial forced cover.
max
['You're trying to have the front end of the transaction while ignoring the back end.']
This is the argument for allowing shorting as I said above in 170.
Ah, comity at least on that.
But the supply is not 110 million shares, it's (# of shares that people want to sell)+10 million.
293
I know you really really want this post to be as badly mistaken as the ones we were complaining about, but it really isn't.
I believe the post you were complaining about was this one in which McArdle says:
Every new entrant into the New York rental market is competing for just 30% of the available housing stock. ...
where what she means is "competing on price". I don't see this as such a big error. Unless some substantial portion of the regulated 70% has a market price below the legal limit.
And you didn't leave it there, did you. See? Nobody ever does.
I did bring a $20 bill I found in an ATM to the bank, figuring they would be able to tell who had used it right before me and credit that person's account, but they wouldn't do it that way. They said they'd try to contact the person and then have them contact me, which seemed weird. I never heard back from anyone.
300: Not even Jesus would do that. He'd spend it on a cab.
I found a $20 bill on the sidewalk once. When I stopped to pick it up, I found that it was afixed to the sidewalk by dog shit, and a porch full of frat boys across the street were laughing their asses off at me.
A 300 post thread on short selling, and no mention of the uptick rule until 273 ?
Anyway, I think Yggles is better than Gretchen Morgenson at explaining phenomena not understood by the author.
302: Are they laughing at you for being greedy enough to pick up a $20 covered in dog shit, or are they laughing at you for being sufficiently unbothered by shit that you are willing to handle it in order to accomplish basic tasks.
Also, how much dog shit did they have to handle to set up this joke?
126: Note the date on that comment (March 17, 2008). If you'd shorted Lehman Brothers at the high of that day ($34.91), you would have seen it rise to $50 over the next three days, losing you $432 for every $1000 you had shorted (although any sensible risk-management system would have stopped you out long before then). Your trade would not have been in profit until June 2. A quick glance at the chart shows that March 17 was in fact the single worst day in the first half of 2008 to have shorted Lehman Brothers; waiting even a single day would have increased your profits from shorting it by 60%. List price, baby.
I know less about finance than I do about almost anything else. Nonetheless, I am convinced that finance controls everything, and that regardless of the gender, gender-identification, race, or nationality of the financiers, they're all evil. I wish, in fact, that finance was controlled by evangelical Christians, because then I could kill two birds with one stone and not have to waste units of hate.
Dsquared excepted, of course. The saving remnant. The one good man. The righteous gentile.
Gamblers and investors, of course, would be wise to put their money on finance, and not on me. I can't even destroy analytic philoophy, so what am I doing picking up my pitchfork and torch and going after finance?
What indeed!
305 contains a serious point by the way; unlike in philosophy or even politics, finance has no eternal truths and all statements are only true or false at a particular time. Trying to be right sub specie aeternatis without considering what's going to happen in the here and now is the surest recipe for failure. That's (one of the reasons) why I'm absolutely not writing anything about the crisis at present - I simply can't financially afford the luxury of thinking about it in abstract terms.
I, good people, am off to register voters.
Via con Dios, good crustacean.
I think that the McManus hypothesis is still on the table: nobody knows what's happening, we're in uncharted waters and no one could know what's happening, it could be worse than anything we've seen for decades (and some say, worse than the Depression), most of the people in charge are either incompetent, predatory, right wing ideologues or all three, the villains will almost certainly profit from this, and the Democrats don't know whether to shit or go blind.
If he chooses to renounce this hypothesis, I'm willing to call it the Emerson hypothesis. If Dsquared wants dibs I'm willing to cut him in.
I guess it's time to take my antideppresant and get myself back in touch with a pleasing unreality.
we're in uncharted waters and no one could know what's happening
I don't see how it could be worse than the Great Depression. The Great Depression is the lower bound of badness. The people in charge (Bernanke and Paulson) are not clearly incompetent, predatory, or right-wing ideologues. (The only clear evidence of it is that they were hired by Bush, which should be a strike against anybody's reputation.)
Things are fucked up, but we still currently in "What's the right solution?" territory, not in total collapse. Right now, I'm more worried about the inevitable bailout costing too much because the input of con-men. I'm not yet worried about where my next meal is coming from, which I would be if unemployment hit 20%.
Walt will not be cut into my profits from this genius idea.
Bernanke endorsed the Brooks-McMegan theory the other day, so he's at least a right-wing ideologue.
This seems to be the biggest non-war political happening since 1945 or 1950, and as far as I can tell all the elected officials except maybe Cheney have been cut out of the decision making. I really wish that Cheney was in custody right now.
I still don't understand the right way to think about McManus events. It would hubris to say they are impossible a priori. Doing that would be exempting ourselves from history. Societies have experienced McManus events before, and they will again.
On the other hand, there seems to be no way of assigning real probabilities to such events. Since ogged is gone, I will introduce an analogy.* None of the IPCC climate change models predict that the Earth will turn into something like the surface of Venus. But presumably, there is some level of carbon that we could pump into the atmosphere that would genuinely render the planet unfit for all life. When I ask around about this hypothetical level, climate guys always blow me off. "There's no way of knowing, so its not worth thinking about."
Is a economic McManus event like a climate change model where the earth becomes unfit for life? Is it something that we can't know, and therefore should ignore?
* I actually had no scruple against using them when he was here. It is in fact, the only way I know how to think.
What's the worse case, right now? The worse case right now is that the entire banking system is totally bankrupt, which is surely an EPIC FAIL. In the Great Depression, the failure of the banking system took down "the real economy", the actual productive part of the economy.
Is it wrong that I'm glad that the economy is dominating election politics?
My biggest fear is that this weekend solution patches things up sufficiently to stave off economic doomsday headlines until after Nov. 4th.
After adding half a trillion dollars worth of debt a year over his presidency, with the final tab for Iraq likely to dwarf what's been charged so far, Bush effectively doubled the already gargantuan national debt in just eight short years. Now the same people in charge of that debacle are going to charge up another cool trillion dollars to bail out their buddies and contributors before Bush sneaks out the door to go give speeches about freedom and the atrocities of marginal tax rates.
God, the whole thing is so depressing.
I still don't understand the right way to think about McManus events.
Simple revolution. Pitchforks & guillotines, or debt-peonage. Irrevocable. 1789. 1851(? Louis Napoleon) Not 1830 or 1848 or 1871. 1917 Russia. Spanish Civil War, or most the years shotly after. American Civil War.
I would say the New Deal, Great Society/Civil Rights but I am no longer confidant those achievements won't be reversed, maybe soon. The left won't fight anymore.
A permanent significant change in the social relations of of a nation. Can be quick & violent, but even then usually has a gradual development or transition underneath.
The Republican revolution started in the late sixties. I don't think we will be able to redistribute without violence, or complete collapse followed by violence. Some kind of Fascism or authoritarianism. is more likely than not, Franco more than Hitler.
I blame liberals more concerned with form than substance.
231: Its really the collapse-followed-by-violence scenario that has been topic of the past few threads, although I recognize that that is only one of the futures you have been predicting for a long time.
What kind of collapse could possibly trigger revolution in the US, a land of complacency and patriotism?
The worse case right now is that the entire banking system is totally bankrupt
The worse case is that Congress preserves the current system at the expense of practical freedoms and in spite of the opportunity costs.
It isn't corrupt & inefficient because It's broken. It's broken, and opportunists have taken advantage of an anarchy. It will still be broken, no matter the effort spent to "fix it." Don't need regulation or reform. Need revolution.
Pshaw. A mere trillion dollars is only 25% of GDP. Think of it as if 25% of your salary this year sent to bail out the banks. It's play money. You probably would have blown it on comic books.
322:Damfino.
The Great Depression had 50+ years of radicalism behind it. It's hard to be optimistic.
I think that's an astute point, and the quiescence of the radical left over the last couple of years has puzzled me. The only way radicalism makes sense as a political strategy is to groom yourself as a leader for when a crisis happens, and then step forward. The inevitable collapse of the housing bubble was sure to be a crisis situation, and was a predictable a crisis as could be imagined.
Dutch
have no idea what language is this, is it Dutch? hilarious!
how to dance trans
the quiescence of the radical left over the last couple of years has puzzled me
I'm not sure if they're quiescent; perhaps they're not but no one listens because they all sound like mcmanus and so people who might otherwise have been susceptible to their dulcet sounds have reason to be wary of the radical leftists' motivations.
I'm not sure if they're quiescent
As far as I can tell, they don't really exist. A few Trostkyist and or 'tanky' hangovers from the past, and the usual council-communist/socialist-anarchist/left-libertarian types. All of which are so small and/or marginalised they might as well not exist.
328: That's sort of my point. In ordinary times, the reaction to radical leftism is "what's wrong with you?" When the crisis happens, suddenly people are willing to consider ideas that they wouldn't normally. Bob is a good example: the fact that things are going to shit makes his predictions of doom seem more credible than they did a year ago, and people here are visibly giving him more credibility.
328:Nah. 1875-1925 certainly had it's share of nuts & charlatans. Ask SEK.
But still, Manet & Gauguin & Cezanne & Picasso felt they could would should change the world. Freud & Schoenerg & Pound & Sengler & Dewey & Lenin and a fricking cast of millions were perceived, self-perceived, accepted as productively radical.
There may be radicalisms out there, but we are no longer very interested as a society in mathrock. We have no fear or hope for our radicalisms. I don't know what happened, maybe we are just the victims of success as the liberals believe.
I try to figure it out. Some of the best of the radical era, like Schumpeter & Weber & the Italian pessimists (& Freud?) kinda predicted where we are now.
Or is could be that they were talking to inveterately stupid people like Tim.
Six years ago no decent person opposed the Iraq War. Crazy hippies did, and naive, weeny Christians, and old liberals living in the Sixties, and effete academics, but all normal, serious, real-world people supported the war and laughed at whoever opposed it.
And hell, it goes back much further than that. Spinozists were hung, but still printed & distributed proscribed books.
Kant & Novalis & Schilling felt they were doing necessary work.
It's like the Enlightenment roared along for 300 years and then died with a whimper when Tim Burke rejected the Weatherpeople.
Gotta go mow my lawn.
Bob, my theory is that the Austro-Hungarian Empire predicted the political world of the future. The leftist, nationalist, and democratic parties were living in dream world.
After adding half a trillion dollars worth of debt a year over his presidency, with the final tab for Iraq likely to dwarf what's been charged so far, Bush effectively doubled the already gargantuan national debt in just eight short years. Now the same people in charge of that debacle are going to charge up another cool trillion dollars to bail out their buddies and contributors before Bush sneaks out the door to go give speeches about freedom and the atrocities of marginal tax rates.
That, sadly, appears to be what they're set to do.
My biggest fear is that this weekend solution patches things up sufficiently to stave off economic doomsday headlines until after Nov. 4th.
They can stave off economic doomsday and still have bad headlines every day for months. There's a contraction and a recession going on, and they aren't going to get out from behind the eightball.
Six years ago no decent person opposed the Iraq War. Crazy hippies did, and naive, weeny Christians, and old liberals living in the Sixties, and effete academics, but all normal, serious, real-world people supported the war and laughed at whoever opposed it.
Speaking as an undecent person, what category do I fall under?
And would someone define a McManus event?
max
['Pitchforks and guillotines isn't much to go on.']
A McManus event is a social or economic upheaval that fulfills Bob's most dire prophesies. This definition distorts the intention of the original thinker, because he was interested more in revolution than any collapse that might proceed it.
Also max, I hereby pronounce you a crazy hippie. Welcome to the club.
Your bandanna and acoustic guitar should arrive in the mail shortly
They can stave off economic doomsday and still have bad headlines every day for months. There's a contraction and a recession going on, and they aren't going to get out from behind the eightball.
That's right. I can't imagine this happening in a non-election year. Historically, plans like these drag off the enthusiasm when details emerge. All the market knows is the government will buy crappy mortgages from I banks. I sense Congress will be under pressure to price those mortgages aggressively low.
It's in their interest in an election year to prevent a quick disaster, but it would seem it's also in their best interest not to see soaring prices of I bank stock. In any case, there will be crappy mortgages and foreclosures for years and $2 trillion dollars will only slow things down a bit. Fun fact- a trillion dollars would buy every foreclosed home in the country.
337:I said Revolution. All kinds of revolutions and paradigm shifts. Future shock my ass, the 17th & 18th & 19th centuries up til 1968 breathed violent radical change like air.
335:I came back in from trimming because I was thinkin what the answer & hope might be and I chose Confucianism, a positive love of the bureaucracy. An anti-romanticism, an anti-individualism. I think Islam history and culture might have elements of this bureaucratism. Socialism is still a individualism. an idealism, a romanticism. Europe is farther along this path than the US, if we don't wreck the place
And maybe that was an aspect of the Austrian-Hungarian Empire? Don't know enough.
Hey, if there needs to be a Goldman-Sachs, let us administer a battery of tests and appoint the best performer, to be paid the same as a professor or plumber, because she would just be the administer and executive of a full group effort. No superstars. No charisma.
And this is what Schumpeter & Weber feared. Might not be so bad.
Groovy!
Well, then, we're nowhere near a McManus event (particularly if things like 1848 don't count). There are an immense number of possible paths open at the moment (unlike say, last year), only some of which lead to McManus events.
max
['The dice are rolling.']
338:Unfair. I really would love to see a supermajority in the country go all Green or socialist. It doesn't look likely.
Greenwald on the bailout:
If there is any "pitchfork moment" -- an episode that understandably would send people into the streets in mass outrage -- it would be this.
(Greenwald is pretty pissed off.)
333: I wonder if the Iraq War protests are a key factor. The radical left seemed crushed by their inability to stop the war, while the pre-WWII left was sustained by their faith that history was on their side.
I think part of it (and this might be reversing cause and effect) is that the left these days attracts people who are quick to despair. Despair may usually be justified, but it's not an effective platform for leadership.
Anyway I think this illustrates my larger point which is Yglesias gets more slack when he tackles subjects he doesn't quite understand.
How many subjects does Yglesias understand, period? For a while he was a generalist attempting to specialize in foreign policy, but still punditizing on a regular basis on health care, the economy, the environment, water policy, transit, etc. whenever the subjects came up, and not exactly dropping caveats such as "by the way I don't know anything about this, don't pay attention to me." And in the meantime his foreign policy specializing has gotten pretty incoherent. I gather that he supports the Democratic policy on Afghanistan and Pakistan, which is more or less The Surge Part II.
The Austro-Hungarian principle, like the Confucian, is that commoners don't need to understand, but just to obey.
Tu Wei-ming (Harvard) has worked on interpreting Confucianism in a form usable in the modern world. So did Pres. Lee Kuan Yew of Singapore, and a conference report was published in which you can see Tu working very hard to keep from implicating himself in Lee's authoritarian interpretation of Confucius -- the conference was in Singapore and they hoped to trap him.
The fact that Democratic leaders were "stunned by warnings" is what is freaking me out, and thinks the chances that we're about to be scammed. The Democratic leadership has no excuse for not being as well-informed as the most informed of us here. I can't imagine a revelation that would stun me, unless you were lying to me. So the Democrats in Congress are uninformed, and gullible.
To further John's point with information he probably knows. Tu was a part of a larger movement of "Boston Confucianism" which attempts to bring Confucianism into the modern democratic age. This leads to some odd ideas. Roger Ames, for instance, has an interpretation of Confucius that turns Confucius into John Dewey. This is really weird, but it does allow Ames to argue that Confucianism is perfectly compatible with democracy.
Yeah, the Democratic reaction is bothersome, particularly since Dodd appears to be shilling for the his home state credit card companies. (So who is left to shill for the homeowners?)
Uninformed (and thus ripe for the picking) seems the likely option.
The Austro-Hungarian principle, like the Confucian, is that commoners don't need to understand, but just to obey.
Kaisertrau?
That seems like a return to the US of 1800.
max
['I'm not sure they would be that nice.']
The Austro-Hungarian principle, like the Confucian, is that commoners don't need to understand, but just to obey
That's not really a fair description of Confucian thought. Obedience is a must, certainly. But there was never a sense that understanding is unnecessary. Confucius himself emphasized that the cardinal virtue of ritual propriety is worthless if it is just going through the motions without feeling and understanding. The great Song Confucian Zhu Xi spent a great deal of time writing books that would popularize a real understanding of Confucian philosophy.
I just saw the bailout proposal in the NYT. $700 billion goes to one man to use as he sees fit, with Congressional input and legal challenges ruled out.
I've probably held on too long, but this really does seem like the definitive end of an era. The message is that if something's important enough, it will be done autonomously by the executive or by a technocrat. Congress can declare National Avocado Week and so on. The courts put terrorists in jail when asked.
A lot of people believe that this turning point was reached five, ten, twenty, or even seventy years ago. But it really does seem that liberalism and constitutionalism is a fiction, and that finance-and-military technocracy is our government.
That was really a direct quotation from Confucius, Rob. I can't look it up at the moment but he was pretty authoritarian regarding the populace.
I never denied he was authoritarian, merely that authoritarianism was accompanied by ignorance. But I'm still a newcomer to this field.
353: Congressional input doesn't seem to be ruled out. I'm not even sure what that would mean.
"accompanied by ignorance" s/b "accompanied by satisfaction with ignorance in the commoners."
And it would place no restrictions on the administration other than requiring semiannual reports to Congress, allowing the Treasury to buy and resell mortgage debt as it sees fit.
Congress will have input when the bill is passed, but once passed there's no legislative or judicial role. Even the executive seems frozen out.
I have to admit that I was anticipating a quick Democratic cave when I posted above. "No Congressional role, of course, as per usual" was what I meant.
This is going to reveal total, absolute, riveting ignorance, but hopefully someone will explain things to me slowly. When we talk about a trillion dollar bailout, we're talking about the Federal Reserve bailing AIG and god knows what else out, right? And while I truly don't understand this stuff in any depth, the Federal Reserve isn't spending US Government funds, because it doesn't control those -- it's spending money that other solvent banks have deposited with it. So this isn't like slapping a trillion dollars on this year's budget deficit, right?
I may be completely in space here, but if someone would walk me through this, that'd be appreciated.
(And Shearer? Your attempt at a charitable reading of McM's post in 299 is valiant but insane. She says competing "for", and is clearly talking about tenants. In your reading, where she's talking about, erm, new landlords? none of it makes any sense.)
Not actually a direct quotation, but an accurate paraphrase. Confucian government was collegial within the elite, but that didn't extend to commoners and they were not expected to understand why anything was done.
particularly if things like 1848 don't count
Mosing the law in 90 degree Heat Index, and my brain is going "1830? 1848? 1851? 1830? 1871? Do I need to read the 18th Brumaire again?"
Yes, I do.
I think Marx was too invested in the delusions of 1848. My personal opinion is that the bourgeois won culturally, socially in 1830, and politically in Dec 1851 when LNB became Emperor.
Which might be all you need to know about the bourgeois, and might be what Marx said. Been thirty years.
This isn't a catastrophe. It's merely an extreme event that will result in some adjustments. What is going to happen is a slow slide in the direction of empire abroad and aristocracy at home, with the empire abroad serving as the bread and circuses to keep the peasants from picking up torches and pitchforks. The catastrophe is many decades, if not centuries, down the road.
Peak Oil will not precipitate the catastrophe because (1) Hubbert's Peak is actually a fairly broad plateau, albeit sloping downwards somewhat, and (2) alternative technologies already exist which can step in to take up the slack: they are expensive because they have not yet had a chance to take advantage of economies of scale the way oil has, and because they have not seen the degree of aggressive refinement that only large scale deployment can bring. Both of those factors will change as oil prices increase.
The financial crisis will be papered over, some modest checks and balances will be restored, and things will roll on more or less as they have been over the past couple of decades.
So this isn't like slapping a trillion dollars on this year's budget deficit, right?
They will be raising the debt ceiling simultaneously with the passage of the bill. I think I read that this morning.
The liberal economists are promising that though it will probably be considerably higher than a trillion. and remember the Fed had already emptied it's 912 billion reserve, and asked for 40 more from the treasury, so we are down at least at 2 trillion in a year...
...the economists promise we will get it all back, with a profit, and a pony.
So this isn't like slapping a trillion dollars on this year's budget deficit, right?
No, I think in this case it is the Treasury that is buying the securities backed by bad loans, and it really is new debt. The Times says that they will have to raise the debt ceiling to do it.
Togolosh is extremely optimistic.
And isn't FDIC down around 80 billion? Chump change
My gut expects the Federal Debt to be doubled from say 2007 in the next couple years. This is the last bubbles of the bathtub drowning. What happens after that...?
Right, but the Fed is borrowing from the Treasury, not simply spending gov't funds, and the reserve was bank deposits, not tax money (this is all assuming I understand how it works at all, which I mostly don't). In theory, assuming the Fed remains solvent, moneys borrowed by the Fed from the Treasury comes back.
I may be hopelessly confused, but I think that's how it works, and why it can happen without specific legislative authorization.
364:pwnd ya, pwnd ya. And I type with two fingers.
367 was to 363. 364 might be right, which I need to look up, in which case I really don't understand how that can happen without Congress's authorization.
But they can't just conjure 700 billion from nowhere, right? The Treasury is going to have to issue new bonds. Effectively, aren't we asking the Chinese to loan us money to buy up these bad investments backed by bad mortgages?
not simply spending gov't funds
Uh, yes gov't funds, future taxes or cut spending or pony profits.
Depends entirely and terrifyingly on Far East and Middle East loaning us money at a loss.
Got it. That part of it does need Congressional authorization.
372 cont.: Which remains terrifying, but it's not unbridled technocracy, it has to go through legislative channels.
it has to go through legislative channels
Which will then rubber stamp unbridled technocracy.
but it's not unbridled technocracy
I don't know, the Fed ran thru 912 billion for new windows, but we did get some kind of collateral for that, but we are not allowed to see or know what that collateral is or what its worth. So maybe the Fed isn't down $912B. Who knows.
The Fed was strengthed with vast emergency powers under FDR, but he presumed that the people in charge wouldn't have the agenda of bankrupting the country.
365 True, sort of. I actually subscribe to a worldview similar to your own, only with slightly longer time constants. It's all shit and right now we are in a phase of vegetarian shit (slightly less stinky), but sooner or later the great asshole of history will crap us some carnivore shit.
My only point about the Fed is that the money it can get whimsical with is not Treasury money, it's bank deposits. Congress still controls the public purse, even in emergencies. Now, it's a weakly obedient little organization, but if Congress came up with a different plan than the Bush administration's, then Congress could do what it wanted (or could at least refuse to go through with this bailout).
This doesn't cheer me up, particularly, I'm just trying to get the players straight for myself, and if I type it into the comments box people will correct me where I'm confused.
Where we go this month on the debt ceiling, 11T to 12T?
Roubini quite a while ago preducted less than 2T, but I think he was assuming smarter policy. We are now at 2T. Roubini also says we are in the third inning. So I figure at the very least 5-6T new additional debt in the next administration, simply from the economic crisis. And I expect mch worse.
As the recession deepens, Chicago-school Obama, net tax-cutter, will cut taxes even more for stimulus, probably for the middle three quintiles. The bad Keynesians will encourage him.
And there will be war.
So I consider a doubling from 10-20 very possible.
But they can't just conjure 700 billion from nowhere, right? The Treasury is going to have to issue new bonds. Effectively, aren't we asking the Chinese to loan us money to buy up these bad investments backed by bad mortgages?
If the Treasury buys for cash, they probably have to issue new T-bills. They could, however, swap for T-bills, which would mean no money has to be raised. Likewise, the Fed could participate and simply print money and give it to the banks in exchange for the bad paper. (This would similar to an open market operation where the Fed swaps cash to the banks in exchange for T-Bills. Nothing changes hands physically, numbers just get moved around on the books.)
The thing is, is that Bernanke has been pretty strongly anti-inflationary, and having the Treasury simply swap T-bills for bad paper would be deflationary, so they may very well want to auction some T-bills, in which instance the money does have to come from China. We're getting close to the region where the are no dollars to suction out of foreigners tho.
max
['Does that even help?']
My only point about the Fed is that the money it can get whimsical with is not Treasury money, it's bank deposits. Congress still controls the public purse, even in emergencies. Now, it's a weakly obedient little organization, but if Congress came up with a different plan than the Bush administration's, then Congress could do what it wanted (or could at least refuse to go through with this bailout).
Subject only to the restrictions of the veto.
max
['Congress could do lots of things. Congress could create a new Treasury, call it the Exchequer and tell Paulson to get fucked.']
See, this shit is magic. Don't try to understand it. The only thing you can be sure of is that you and everyone you know will pay full price, as Dsquared says.
Remember the hyper-inflation when a loaf of bread ended up costing a million dollars? What I think we should do is first buy all the bakeries, then inflate the currency, and then pay everyone off at the rate of 1000 loaves per billion. It could be nice fresh-baked bread, too, if we had enough ovens. That would be a lot of jobs created too.
It could certainly refuse to take action. The executive can't veto Congress into actively doing anything.
You know what would make me happier than anything else in a Presidential candidate? Imagine, and I'm sure someone running like this couldn't possibly be elected dogcatcher, someone running by reading extracts from the Federalist Papers, and explaining that the founders of the country were terrified of and disapproving of a strong executive, and that his goal in office would be to return Congress's powers to it.
382: Congress will lose any game of chicken.
Even when Bush needs Congress to do something -- i.e., when filibusters aren't blocking anything and Bush isn't threatening a veto, so that the Democrats only need 51 votes -- even then Democrats back down.
If the government winds up holding securities backed by bad mortgages, is it possible that the government will just wind up owning millions of foreclosed homes? Could the government go into the slumlord business if it wanted to?
386: HUD! Seriously, the only thing that I find even vaguely reassuring about this mess is that underlying all the bad securities are actual houses, and they're worth something. Maybe, on average, half of the money borrowed against them (number completely invented), but something significant. I seems like that should be some kind of limit on how much money can disappear overnight.
359
(And Shearer? Your attempt at a charitable reading of McM's post in 299 is valiant but insane. She says competing "for", and is clearly talking about tenants. In your reading, where she's talking about, erm, new landlords? none of it makes any sense.)
No she is still talking about tenants. In a free markets landlords rent to the tenants who can pay the most. So tenants compete on price (how much they are willing to pay) for the available rental units. This allows rich newcomers to displace poor long time residents. In rent controlled markets the number of tenants willing to pay the legal rent exceeds the number of available units (assuming the market rent exceeds the controlled rent) so landlords use other criteria to select their tenants from the group which can afford to pay. So tenants compete in other ways than price for the available units.
That's an excellent try, but still insane.
Actually, it's not even a good try. She said, "Every new entrant into the New York rental market is competing for just 30% of the available housing stock." You have to read that as "competing [on price] for just 30% of the available housing stock [and in other ways for the other 70%]" to make it work. It's completely implausible that that's what she meant.
Give it up, dude.
347
How many subjects does Yglesias understand, period? For a while he was a generalist attempting to specialize in foreign policy, but still punditizing on a regular basis on health care, the economy, the environment, water policy, transit, etc. whenever the subjects came up, and not exactly dropping caveats such as "by the way I don't know anything about this, don't pay attention to me." ...
This is unreasonable. It isn't usually the problem that he doesn't know anything about what he is discussing, the problem is that he sometimes doesn't know enough. And he tends to be sloppy. But I really don't like the tendency of experts to pull rank on nonexperts in order to shut off discussion.
390
... It's completely implausible that that's what she meant.
So you think it is more plausible that she thought it was impossible (as opposed to difficult) for a new entrant to get into a rent controlled unit?
If you start off with a high (low) opinion of someone you tend to put the best (worst)interpretation on their statements.
I advocated something similar to the bailout on the other thread, but at the moment I think the actual Treasury plan doesn't look very good at the moment. This kind of haste (and Bernanke and Paulson are clearly trying to manufacture panic in Congress to rush a bill through) will only lead to
Calculated Risk suggests an alternate, cheaper plan. (They also link to Krugman's reaction, which is negative.)
Someone has proposed the nickname AUMF for the bill: Authorization to Use Monetary Force.
(Someone at Brad's got the nickname from someone at Atrios'.)
392: I've got no idea what she seriously believes on the subject -- I assume if she gave it a moment's thought she'd have to know that a very large part of the apartments for rent on any given date in NYC are rent-stabilized -- but it's clear what she intended to say in the post, and your charitable interpretation isn't remotely plausible.
Being charitable to a piece of text means correcting obvious unintended errors (that is, things on the level of misspellings and missing words), and then of the plausible interpretations, picking one that makes sense. Trying to figure out something for the writer to have said that would have made sense, regardless of whether it's a plausible interpretation of the text as written, and crediting the writer with that, goes beyond charity.
397
... Trying to figure out something for the writer to have said that would have made sense, regardless of whether it's a plausible interpretation of the text as written, and crediting the writer with that, goes beyond charity.
But people do this for Yglesias all the time as he often writes things that are the exact opposite of what he means.
That comes under the rubric of correcting obviously unintended errors. When you've got a sentence that contradicts the rest of the post, and everything you know about the writer's positions, and there's an obvious place to drop in a "not" that would make everything make sense, that's reasonable charity, and Yglesias gets plenty of that. But that's charity to a bad typist/proofreader, not to someone who's written something coherent and internally consistent, but just wrong.
LB, you are one of the most formidable arguers I have ever seen on the Internet, but I'd hate to see if someone put you in front of the Eliza program. "What do you mean, tell me about your mother! Why do you keep changing the subject!"
If you check back on old threads, Shearer does generally get the last word; between the two of us, I'm marginally less tenacious. But I'll admit to being manaically dogged. And I'm getting over a cold, leaving me too low-energy after a morning of various youth sports to do much but blog-comment.
I'd prefer a better argument, but this is the one I've got going.
I'll argue with you on the subject of your choice. I suggest avoiding the law, though.
LB, you are one of the most formidable arguers I have ever seen on the Internet,
It makes me sad that the creeps at her old firm failed to recognize her awesome power and (it seems) mommy-tracked her. On the other hand, her clients their included big tobacco and (IIRC) Beelzebub. So we should all be glad she's on the side of the angels now.
Angels need legal representation? I guess no one can trust anyone anymore.
LB needs to find a steps group. It may be that Monty Python provides one, down the hall from the contradiction steps group.
It is funny -- I'm getting much more (more being more than none) court time (oh, mostly on tiny cases), and much more interaction with opposing counsel than I did at any of my prior jobs, where I was mostly stuck in my office brief writing. And I really do (at least in my own opinion, based on how things have worked out so far) have a knack for it.
Which is nice. I'm enjoying it.
Okay, this is funny. The best chance of putting the kibosh on the bailout? The Republicans in Congress.
I wonder if the Iraq War protests are a key factor. The radical left seemed crushed by their inability to stop the war
This doesn't seem right to me. In the UK at least the 'left' (radical or otherwise) has been marginalised since at least the early 80s and arguably before that.
The Iraq war protest had a much larger base than anything you'd be able to describe as 'the left'. There were literally millions of people on the streets. That's orders of magnitude more than anything that could be described as the 'radical left'.
There's still a huge centre-left contingent -- in the sense of moderate social democratic or 'Old Labour' views -- but their views are essentially marginalised as well. Some lip service is paid by all parties to some classic centre-left issues, they all talk about reducing social stratification and the gap between the rich and pooor, equality of opportunity, racial and sexual equality and so on, but there's no enthusiasm for anything other than the most token policy changes that would actually effect any of these measures and economic redistribution as a policy goal has almost disappeared within the political establishment. There's certainly much less enthusiam within the political establishment than in the population at large.
397
Being charitable to a piece of text means correcting obvious unintended errors (that is, things on the level of misspellings and missing words), and then of the plausible interpretations, picking one that makes sense. Trying to figure out something for the writer to have said that would have made sense, regardless of whether it's a plausible interpretation of the text as written, and crediting the writer with that, goes beyond charity.
It is common in informal writing like blog posts to omit all the qualifications and caveats required to make an argument immune to nitpicking. It is also common in polemics to indulge in exaggeration and hyperbole and in general overstate your case. It is charitable to adjust for all that and deal with the underlying point. People here are more willing to do that for Yglesias than McArdle. In the case at hand it is clear (to me at least) that her underlying point was that rent control makes it harder for outsiders to move to New York City a point which as far as I know you are not disputing.
401
I'd prefer a better argument, but this is the one I've got going.
If you want to argue about something different how about this post by Yglesias in which he says:
... The second is that while bashing our system as "Soviet-style" makes for good rhetoric, primary and secondary education in the Soviet Union was fine. Indeed, Communism, if applied across the board in the United States, would probably do a lot to improve our public schools. ...
Now I am pretty sure he doesn't actually believe this and is just tweaking the right but a naive reader could certainly be misled.
The second is that while bashing our system as "Soviet-style" makes for good rhetoric, primary and secondary education in the Soviet Union was fine. Indeed, Communism, if applied across the board in the United States, would probably do a lot to improve our public schools. ...
Why would it seem unlikely that he'd believe that? Many of the communist states did indeed have pretty good educational systems. It wasn't the quality of their educational systems that was the problem.
Gotta go mow my lawn.
I absolutely love that mcmanus's bloodthirsty, misanthropic, stream-of-consciousness rants are punctuated by the need to 1) walk his dogs; 2) lift weights; or 3) mow his lawn.
410, 411: Yeah, once you get past the basic "Soviet Communism bad!" kneejerk, I'm not clear on what's wrong with that one. Lots of extremely lousy things about the Soviet Union, but I never heard much of anything bad about the schools.
409: The problem with the post is that she relies on facts, stated as such, to support her conclusion, and those facts are false, and not in an 'she exaggerated the numbers a little' way, but in the 'there is no number that you could plug into that sentence to make it true' way. So someone who trusted her reasoning and evidence would fundamentally misunderstand the issue.
That's as bad in the service of a conclusion I roughly agree with (as I do in this case) as it is in the service of one I disagree with.
You know who doesn't get enough blame in this current crisis? Lawyers. The derivatives contracts are so opaque that nobody is really sure what they entail. If they had been clearer on paper, maybe this whole crisis would have been averted.
Heh. You know, for a very short time when I was working for Ideal's firm, they were underworked and rented me out to a solo practitioner who did derivatives contracts to prepare them for her. You're right, those are some opaque sonsofbitches.
And you know, if the people doing shell games talked more slowly and more clearly and didn't keep moving the shells around so much, people would understand them better.
As a simple peasant who can only count to three, I am foolishly convinced that the sophistication of the financial instrument is in direct proportion to the size of the fraudulent, parasitical windfall accruing to the first person who figures out how it works. So when someone uses "numbers" larger than three, I reach for my pitchfork and torch.
If someone as ignorant as I am gambles, his probability of losing on the net approaches one. The beauty of high finance is that you can lose without even playing.
That all sounds pretty solid to me. I've devoted my efforts to setting up my life in such a way that even if I'm paying full price for everything, I'll get by.
But derivatives contracts are traded between two sophisticated investors, both of whom have expensive lawyers. Who's scamming who? Is each side scamming the other?
Actually, I was kidding about the contracts. They are fairly complicated, but the stuff I was doing was a form contract between two parties -- each seperate derivative deal was an event under that contract, but I wasn't looking at the details of what was bought and sold. That was all the finance guys.
413
The problem with the post is that she relies on facts, stated as such, to support her conclusion, and those facts are false, and not in an 'she exaggerated the numbers a little' way, but in the 'there is no number that you could plug into that sentence to make it true' way. So someone who trusted her reasoning and evidence would fundamentally misunderstand the issue.
The facts in her post are in the WSJ article she quotes and as far as I know you are not disputing them. The rest is her reasoning. So the facts are ok. The reasoning is an oversimplification of a correct argument which I don't count as a fundamental misunderstanding.
If you want a bad McArdle post, try this one.
This discussion may be dead, but any discussion of NYC's rent stabilized housing situation should include the fact that a very large number of those apartments are market price. That is the statutory price level is above the market clearing level so if landlords want an income stream they have to charge less than they are legally allowed to.
413
Yeah, once you get past the basic "Soviet Communism bad!" kneejerk, I'm not clear on what's wrong with that one. Lots of extremely lousy things about the Soviet Union, but I never heard much of anything bad about the schools.
I could be wrong but I doubt Yglesias actually knows much about Soviet educational methods and results and would flounder if you asked him (without giving him the opportunity for some post facto research) which should be adopted here to improve our results.
"Competing for 30% of the housing stock" is a fact claim, and it's nonsense. It's not an oversimplification of a truth -- the closest true statement you could make to the statement she made wouldn't have a percentage in it.
And while I'd seen that post, I'd missed the comments. The Vanguard employee vehemently stating that Vanguard funds are absolutely safe! They'd figure something out! is comic. But generally, that one's outside the area in which I'm comfortable checking her. As obvious above in the short-selling conversation, finance isn't my thing -- I can follow an argument as it's made, but I haven't got enough interest for them to stick, so I don't build up a useful knowledge base. It's an irritating blind spot to have.
421: Yeah, I pointed that one out in her comments.
422: But you don't appear to know anything about Soviet educational methods or outcomes either. While you may suspect that Yglesias is just tossing off something uninformed to sound cleverly shocking, without some actual basis for calling him uninformed, what's your point?
So if I want to read McArdle posts, I should find the ones James doesn't like so I don't get a headache?
max
['That's helpful.']
418: The one who wins. At that level it becomes a game of skill. People find out that they're no longer predators, as they thought.
Obviously there are some very sharp people who lost this round, though fortunately for them they'll be able to transfer mych of the problem to suckers who weren't playing.
Yglesias knows Russian and has lived there.
Freemarketers pointed out that Communism produced the best-educated poor nations in the world.
My guess is that elite Soviet and satellite education was better than ours, but that the bottom wasn't much if any higher.
426
What do you mean by the bottom? If you're talking about access to good schools at all levels for people you're wrong - it was excellent, at least in Poland. And the gap between good and bad schools was much smaller than in the US. If you're talking about higher education you'd have more of a point, and in general the humanities and social sciences were generally at a lower level at the elite universities there than here.
Krugman says No Deal
Sorry, voice-crying-in-the-wilderness-for-a-decade, it will pass, Paulson/Bernanke will empty the 700B, and come back for more end-of-the-world money.
Via Calculated Risk who has an analysis, and like so many people, offers a thoughtful, fair, efficient alternative.
Too bad thoughtful fair efficient people aren't in charge.
Brad DeLong supports the plan, and much more Bernankism, but wants to cap all incomes at $1 million dollars. Fuck your pony, Brad
Fun fact- Barclays has lowered it's price for Lehman junk between 5 to 10% after lower real estate appraisals in New Jersey (via Calculated Risk). Not even a week has passed.
Fun fact- Barclays has lowered it's price for Lehman junk between 5 to 10% after lower real estate appraisals in New Jersey (via Calculated Risk). Not even a week has passed.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency
Is this provision in the bail out even constitutional?
Soviet Union?
The fall of the Soviet Union, and the victory of liberal capitalism, was the greatest tragedy of the 20th century. I will not bother to explain, although I have given hints throughout this thread with the throttling of the Enlightenment hopes & dreams. It wasn't about McDonald's for everybody.
So much for Bob.
432: Short answer, no, or at least it won't be enforced as written -- if a court wants to review a decision, it's darn well going to. But it will probably have the effect of getting the Secretary the maximum judicial deference constitutionally possible in this context.
426: If I'm not mistaken, Soviet schools tracked, and I don't know what the level of education of the poorly educated was.
435
Yes they were tracked in the standard European style- i.e. after a certain point the good students went to separate schools from the bad ones. Admission to all high schools was competitive with students listing a number in order of preference and taking an exam. I'm not sure how the non 'matura' tracked schools were. They'd be hard to compare since they weren't intended to serve the same purpose as American high schools. They were basically an initial dose of academics, then you either went straight into a job or on to a specialized trade school.
Dean Baker has a very detailed bailout plan suggestion.
Even though this wasn't at all unexpected, I have the feeling that a lot of the econobloggers were a bit stunned when it happened. Or perhaps they just delayed a day or two while the got the faxed straight. It seems to be big and new enough that no one really guessed exactly how it would happen.
I know no one is paying attention to me, correctly, it is masochistic madness to obsess on the econblogs on a Saturday night. But it is not a coincidence that this is happening on a weekend.
1) There are no pitchforks or revolutions available anymore, even in the imagination. The predators can do as they like. That is the partial meaning of 433.
2) This best comment I read, I wish I remembered where, in the last hours detailed how much Congress of both parties, especially the Senate, had invested in the toxic waste predators. 26 Senators have more than a million dollars invested in AIF BS, Lehman, etc. Pelosi's husband had 275k in AIG. Teresa Heinz Kerry. Not Microsoft or TI or Google. Rich quick stocks. Congress is different than us, and will view the situation differently.
3) Tyler Cowen noted that Deutschbank has liabilities X times German DBP, is leveraged 50 times, and is loaded with toxic waste. The German gov't by law can't do (inflate, etc) what Paulson/Bernanke do. Yes, we will probably have to save Britain and Germany, if they can be saved.
And Paulson probably wasn't bullshitting Congress, contra "pitchfork" Greenwald. The world financial system is on the verge of total collapse. Designed by Greenspan. Republicans play for keeps.l
The decent, in all senses of the word, commenters at Thoma's prefer total collapse & depression over the Paulson bill, in full understanding of the consequences. It is that bad. DeLong now opposes it.
But it will pass very very close to its present form.
AFAIK, Obama has come out in support of it.
Why would anyone in their right mind prefer total collapse and depression over the Paulson bill, in full understanding of the consequences?
440: 'Cause it's the morally right thing. What the hell, I have plenty of .223 ammo to barter with or use as the situation warrants and my lifespan can't be all that long anyway.
440:Because the Paulson bill will give us collapse
+ massive upward distribution
+ a dictatorship
Selectively removing jurisdiction from federal courts has long been a goal of the Const-in-exile.
The bill includes such a provision. The Fed Courts are out, cannot review decisions.
It is total abandonment of the rule of law and balance of power. Go read Greenwald.
I read Greenwald earlier today. The bill is clearly terrible, but we are not in fact faced with the choices of a) Paulson bill, or b) total collapse. That is the frame they're trying to sell in Washington, but we have no reason to buy it.
Via TPM, financial industry lobbyists in a meeting with Republican Hill staffers:
"We're opposed to adding provisions that will affect [or] undermine the deal substantively," said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, whose members include the nation's largest banks, securities firms and insurers.
A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding.
Fuck this shit and fuck these people. They have no real "fear" of the long-term consequences (it may well be that they should have, but that is not how they are operating or making decisions). Just another week in the blackmail game. Several hundred thousand exceedingly wealthy white-collar criminals who "simply can't financially afford the luxury of thinking about it in abstract terms." The difference between a tragedy and a calamity; a tragedy is when a country goes slowly down the tubes, a calamity is when that causes the very top to lose money and influence.
444: Psychopaths sure have nerves of steel, don't they.
I don't think they're going to be able to undo Marbury that easily, but they might.
The relevant fact is, if they pass the Paulson bill, there will be a temporary reprieve and then all hell will break lose and investor types will head for the exits. And then the banks will tank again.
It's mostly a lost opportunity; the money doesn't matter so much because they clearly aren't going to actually try and fix things, so the system will blip.
max
['Blah.']
If they pass the Paulson bill, what do you see happening next? If they overpay enough for the assets, the banks shouldn't be in trouble any more.
Bernie Sanders is making sense.
446: It really just does seem to be a way to kick the can down the road a bit doesn't it? But whom I to judge? maybe magic money ponies will fly out of everyone's butts sometime in the next 90 days and we'll all have a good laugh about it. Could happen.
If they pass the Paulson bill, what do you see happening next? If they overpay enough for the assets, the banks shouldn't be in trouble any more.
If they pay enough money. That's the question of the hour: how much money would it cost to handle not just the broken mortgages but also the mortgage-backed equities? By handle I mean, 'make go away'? And the answer is: I don't know, excepting that every estimation I've seen says it's more than 700 billion dollars. (Remember, not only are the banks carrying mortgages listed as broken on the books, they are also carrying broken mortgages still listed as good on the books, otherwise they'd already be broke.)
It doesn't fix the mortgage chain reaction for sure, because underwater houses will still be underwater, they just might be less underwater. Maybe. Or they'll sink more slowly.
It doesn't directly solve the derivative problem, which is two parts: what are the real liabilities of the derivatives and how the hell do we make them go away?
If there is more bad paper than can be covered by 700 billion, then this may temporarily recapitalize the banks, so it may put their balance sheets back in the black for a bit (hours?), but it won't make them lend more.
It may help their stock price briefly, but then everyone will figure out that they're screwed and ditch.
It doesn't increase inflation which, in a deflationary spiral, is what you want, unless they get the money from Bernanke. If they raise the money at auction, whoo boy; a bunch of money that has fled to T-Bills will stay there and more will move over. If they just give away T-Bills directly, to fix the balance sheets and drop the mortgages, it doesn't mean very much except it
will increase doubts about the US.
It Still Does Nothing.
Bob way up there was correct about the deficit size involved. There is (or was) 46 something billion worth of housing in the country, and the last figure I heard was something like a 10% foreclosure rate. That doesn't include derivatives. 700 billion is not properly scaled to the problem. 7 trillion is properly scaled to dealing with the problem... if you are trying to keep home prices elevated.
max
['Drop, bucket.']
443,449:Deutschbank suspended trading in derivatives last week. We may really be within a week of total collapse.
443:What will Bush sign? Can a veto be overridden? We are not going to get a good bill, a bill we want. And we probably can't last til February.
We may only have those two choices, although the bill will only postpone the collapse.
There have been post about the political consequences to Democrats if they delay or resist, and the Dow goes to 5000 in October. But hey, a lot of these people voted for the bankruptcy bill.
I'd choose collapse. Let Congress appropriate the $700 billion, allocating $200 billion to the FDIC, another $200 billion to Fannie and Freddie to process the most toxic sludge, $200 billion to an RTC to invest in converting REO into rental housing, and $100 billion to the SEC, FBI and other agencies to augment criminal enforcement and civil recovery efforts over five years. That last would have a bracing effect.
Course Bush would veto that, and won't be overridden.
448: Yeah. I've been thinking this for a while now: If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up.
452:I am tired of reading all the good ideas and plans. There are dozens. They are all like the good ideas and plans about Iraq in 2002-2005.
We aren't in charge.
Good night.
Heh. Got it; now I understand the bill. Very basic version: not enough money to fix the housing market. Not enough money to permanantly right the banks if you don't fix the housing market.
Enough money, however, to do small (is 70 billion small?) injections of money into whatever entities Paulson chooses all the way to election day. Combine with the short-selling ban, and that means they're betting that the banks can stay alive through November 4th; and then they come back and get somebody else to do something.
Conceptually, Benanke is fixated on the Keep the Banks Alive theorem, that preventing bank collapse prevents the Great Depression, no matter what else happens. Paulson is fixated on saving his friends. (I don't mean that in a harsh way, that's just his world. They're his friends, he wants to save them. No further thought need be involved.) Making it unreviewable lets him do all kinds of stuff and nobody can complain or subpoena or anything, so there's no accounting for it before November 4th.
It's too self-centered to mean, it's more like someone who can't swim thrashing around.
max
['It might stretch this out til the middle of October, but no further, I think.']
453.2 is sadly probably the only really important thing.
I wonder how much this was planned. Why did the government seize Fannie and Freddie when they did? They have largest pool of experts in valuing mortgages.
It's not clear to me that Bernanke's wrong about the Great Depression. What's driving the current deflationary pressures? The equivalent of a bank run as investors head for the exits. If the banks can be kept standing, then those pressures should abate.
423
"Competing for 30% of the housing stock" is a fact claim, and it's nonsense. It's not an oversimplification of a truth -- the closest true statement you could make to the statement she made wouldn't have a percentage in it.
The problem isn't the percentage it is her description of what the percentage means. I gave a more correct description ("competing on price") above. It is correct that if 70% of the market is regulated then 30% is not. It is correct that it is easier for someone moving into NYC to find housing in the unregulated market. It is not correct that it is impossible for someone moving into NYC to find housing in the regulated market. So she has overstated her case. Like saying "employers won't hire ex-cons" when what you really mean is "employers are reluctant to hire ex-cons".
421
This discussion may be dead, but any discussion of NYC's rent stabilized housing situation should include the fact that a very large number of those apartments are market price. That is the statutory price level is above the market clearing level so if landlords want an income stream they have to charge less than they are legally allowed to.
This is in fact an important point if true. However unless "very large" means "almost all" the market will still be significantly distorted. Especially since one of the bad effects of rent control is psychological, it makes people reluctant to build new rental housing even if the current controls are not very severe.
424
But you don't appear to know anything about Soviet educational methods or outcomes either. While you may suspect that Yglesias is just tossing off something uninformed to sound cleverly shocking, without some actual basis for calling him uninformed, what's your point?
My point is I can't be confident that Yglesias is trustworthy when he says things like this. Do you disagree? You don't think Yglesias sometimes prefers wisecracks to careful and considered analysis?
428
What do you mean by the bottom? If you're talking about access to good schools at all levels for people you're wrong - it was excellent, at least in Poland. And the gap between good and bad schools was much smaller than in the US. If you're talking about higher education you'd have more of a point, and in general the humanities and social sciences were generally at a lower level at the elite universities there than here.
There is in fact little quality difference between schools in the US. The differences between schools in student performance are almost entirely explained by differences in student body characteristics. Homogeneous societies in which different schools have similar student body characteristics will have less difference between schools in student performance but this is not because the schools are more equal. The Soviet Union was much less homgeneous than Poland so I would expect greater differences in student performance between schools than in Poland.
re: 459
And all those smaller class sizes, and more time with teachers, and better facilities and more IT equipment, and better qualified teachers that you get in expensive private education ... it doesn't do anything? It's all about the student body?
Pull the other one Shearer, it has bells on it.
What's driving the current deflationary pressures?
Did you read the last Newberry piece I linked?
Credit based on expectations of future earnings and Friedman's lifetime income.
FDR with TVA, Hoover Dam; Eisenhower with Interstate Highway System, Levittown...built a credit economy based on rising demand for developed land. "House prices will always go up" is an idea you build a civilization, an empire on. Rome built its late army on landgrants on retirement. When land became scarce or untaxable Rome fell.
But that civilization is dependent on cheap transportation...oil. RE prices depend on oil prices. We are realizing two interpendent systemic civilizational busting shocks. Land deflation & oil inflation.
The greens understand a little of the conseqences of peak oil but haven't gotten the connected land deflation (and urban inflation). The current crisis will hopefully give them a clue. What happens when housing prices go down? The credit system crashes.
People draw interest rather than pay interest.
This is only a start. SN writes thousands of words for a reason. The equation since the 70s has been land creates credit that we trade for commodities(oil, iphones), I don't quite get the second half. Credit can mean, among other things, Chinese confidence that there will be a market for their goods.
And in any case, all this may not directly connect to the immediate crisis. But it might.
(American Gangster was pretty good. I may have to collapse to be able to sleep)
The Crisis ...Yggles
...then everyone's going to have to give serious consideration to becoming a pretty hard-core libertarian.
In vino veritas.
Electoral wedge politics, week of September 21st (aka Naomi Klein memorial edition): "Obama would rather let the world economy meltdown than lose an election."
461: You might not get the second half because the second half might not make sense. Do not trust a man who has a System, one that Explains History. There are some insights in there, but Newberry can't resist wrapping everything up and tying it with a bow so neatly that you'll think he's unlocked the code of the future.
I just checked, and even Greg Mankiw thinks it's a bad bill. Apparently that leaves the Democrats in Congress.
Yeah, I used to like Newberry a lot, but he has that prophetic, megalomaniac thing about him, and (I haven't read him much recently) IIRC he doesn't relate what he's saying much to what other people are saying.
465: Apparently that leaves the Democrats in Congress.
Yeah, I generally like Dodd, but Jesus, "I've been here 28 years, to listen to the language of last evening, we maybe were days away from a complete meltdown of our financial system"?
You'd think for once the fucking assholes would have the discipline to come out of a Bushco "scare" briefing and just say nothing while they sorted out what was what, rather than opening their yaps and inevitably painting themselves into a corner. But you wouldn't want to make a straight shooter like John Boehner mad,
Mr. Boehner added, "Efforts to exploit this crisis for political leverage or partisan quid pro quo will only delay the economic stability that families, seniors and small businesses deserve."
You know it's working well when you're reduced to relying on fucking Jim Bunning ("The free market for all intents and purposes is dead in America" ).
I just read on Kos that the Resolution Trust Company cost $125 billion, and thought: "That was pretty cheap". Sort of like the way that no one really sweats herpes any more.
366:I'm an architectonic kinda guy, and think the key to wisdom is the ability to juggle 12 Totalizing Prophets in your head at the same time.
Today's TV lineup is almost all bailout: Paulson FOUR TIMES, Dodd, Boehner, Barney Frank, Sen. Shelby, Bloomberg, Holtz Eakin, Rob Portman, Kyl, Schumer.
Plus poor Bonnie McElveen-Hunter, chair of the American Red Cross.
In other words: a lot of Paulson, six Republicans, and two Democrats closely tied to finance.
Talk about a fix.
It's not clear to me that Bernanke's wrong about the Great Depression.
It was Friedman's thesis, basically.
What's driving the current deflationary pressures?
The inability to pay off on the very large amount of debt, forcing a chain reaction.
The equivalent of a bank run as investors head for the exits. If the banks can be kept standing, then those pressures should abate.
And they might, temporarily. But then the same pressures will reassert themselves, because they're still holding lots of bad paper.
It occurred to me last night: this is almost enough cash to buy the banks outright. Market capitalization is about a trillion dollars. So you buy the banks, pay the shareholders off at market value, and then you write off the paper, stop foreclosing, and striaghten things out. That's almost enough money to do that.
There's enough money to prop up the banks for awhile, that's enough money to buy the banks outright, it's not enough money to save the bad paper.
All the well-intentioned plans of people outside the Treasury amount to one form or another of 'everybody grab a bucket and bail from their end of the boat'. This scheme amounts making people walk the plank to lighten the boat so the bankers can float away. ('First they came for the homeowners, then they came for...')
I figure if someone has to walk the plank, we can start with the bankers. New bankers can be had.
max
['And it still won't work!']
Saiselgy was apparently up with me last, drunkenly bemoaning his losses at the tables, and linked to Tyler Cowen about Deutschbank.
WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.
Yes, Virginia, there is a real financial crisis. This ain't like WMD in Iraq.
Now y'all can think I'm crazy for believing the bastards not only created planned executed and even timed this to concide with the elections, but damn the happy coincidences for Republicans seem to sprout like mushtooms, don't they.
And what kind of people would risk a world depression for political advantage? The kind of people would invade a major Middle Eastern nation for political advantage?
Are they that smart? Are you fucking running Goldman-Sachs and a near-billionaire? Nah, they're stupid, incompetent, and lucky.
I guess I shoulda put irony tags at the last bit of 472.
Yes, they are that smart, and evil beyond comprehension.
My wife just suddenly got laid off. But she works for a computer company, so no bailout for her.
Oh, I'm sorry, Walt. That's sucky.
474:Sorry Walt.
We are all connected to the tech industry, and I'm scared witless in my mid-50s. Just two more years on the mortgage, God.
collapses for everyone!
i mean, cheers
okay, i think i'm running out of my childhood faves
My wife just suddenly got laid off. But she works for a computer company, so no bailout for her.
I'm sorry guy.
max
['Really.']
474: Walt, that's awful. Do you live somewhere where she's got a decent shot at finding something?
462: Yglesias sums up the situation nicely re: Congress's role (and no misspellings -- drunkenness or copy editor, finally?), but his libertarian conclusion is revolting. I've never been a big fan; I'll continue to find all his conclusions suspect.
437: Dean Baker's plan looks right on to me, from a very lay persective. I can't begin to evaluate the consequences, intended or otherwise, of his ideas, but I trust him enormously in general. If I had to trust one person to fix this, it would be him. (And he predicted the timing of the housing bubble burst pretty accurately, BTW.)
Not that we have a prayer of getting most of what he recommends, but I'd be interested in knowing what other folks think about which of his ideas would be most effective and politically feasible -- were the Congressional Dems to grow a spine.
423
Most apartments in the boroughs are de facto market rate. Nor do the rent stabilization laws impact the building of new rental housing since they don't apply to post 1974 buildings unless the developer gets special tax breaks or other favours from the city in which case some or all of the units in the building may be stabilized for a period of ten to twenty years. The distortion tends to be limited to neighbourhoods that are undergoing a sudden class shift - i.e. rapid gentrification. And it has to be rapid. When I moved to my already gentrifying Brooklyn neighbourhood of Clinton Hill in 2002 I paid market rate for my stabilized apartment. Over the next three years my rent increases were below what was allowed - i.e. my apartment remained market rate. Since then my apartment has dropped a bit below market rates, but not by much.
Yglesias sums up the situation nicely re: Congress's role (and no misspellings -- drunkenness or copy editor, finally?), but his libertarian conclusion is revolting.
I think he was using it as a point of emphasis: if even the progressives want to set up an anti-progressive system, we might as well be libertarians, because that would be more progressive.
max
['Hoist the black flag!']
459
Define homogeneous. If you mean ethnically, sure. In developmental terms, not really. The rural areas were often extremely backwards. I remember on my first visit to Poland as a small child spending time first at my grandfather's place in Krakow - nice apartment, all the appliances. Then some time at my grandaunt's farm a half hour drive away - no running water, just a well. And as peasants go they weren't particularly poor.
we might as well be libertarians, because that would be more progressive.
Maybe we'd have to ally ourselves with libertarians to change things, but I will not be assimilated by the Borg. Besides, the red flag looks so much better.
we might as well be libertarians, because that would be more progressive.
I'm pretty sure he was making an argument about capture.
486: Doesn't read that way to me, but his regular readers may understand it differently.
re: 484
I think he's referring to the lack of black people. He's put forward similar claims -- that the poor and certain ethnic minorities drag standards down -- before.
Yg: "Of course it would hardly make a dent in the overall $700 billion cost of the bailout, but it seems to me that we should be seizing all the homes belonging to all the executives of companies in need of bailing out and selling them to raise some of the bailout funds."
Sounds good to me.
480: I'm not sure. My wife was telecommuting for a job out of the area.
Which executives? Cutoff based on salary? Net worth? There's no good way to measure authority or influence within the company that's not easy to manipulate.
Not that it actually matters.
There is in fact little quality difference between schools in the US.
This is a big fat lie. Some schools don't have enough desks for the kids, or enough textbooks, or have falling down buildings. Some don't have a college track and many don't have advanced placement. Few have real foreign language programs even in a single language. Shearer at his worst.
Here are some small signs of life from Congress.
460
And all those smaller class sizes, and more time with teachers, and better facilities and more IT equipment, and better qualified teachers that you get in expensive private education ... it doesn't do anything? It's all about the student body?
Within the range of conditions commonly found in US public schools yes. Maybe really high end private schools can do a bit better. Anyway Soviet schools didn't do well (if in fact they did) because they had fancy computers.
482
... Nor do the rent stabilization laws impact the building of new rental housing since they don't apply to post 1974 buildings unless the developer gets special tax breaks or other favours from the city in which case some or all of the units in the building may be stabilized for a period of ten to twenty years. ...
This isn't true as potential developers don't trust the politicians not to expand rent control to cover new buildings. I believe there are numerous examples where this has happened although new construction was supposedly exempt.
484
Define homogeneous.
Ethnicity, language, social class and culture.
Goosbee on the bailout: "There is more information on the back of a box of Froot Loops than on what they've presented."
James, where do you get that? You yourself have more credibility than the ToS, but not a lot.
I've seen the libertarian and other winger assertions too, don't refer me to them.
488
I think he's referring to the lack of black people. He's put forward similar claims -- that the poor and certain ethnic minorities drag standards down -- before.
This has nothing to do with blacks in particular, there weren't a lot blacks in the old Soviet Union but it was much more ethnically diverse than Poland. Throughout the world different ethnic groups tend to perform differently on average in school. Differential performance is not limited to blacks in the US. It can also be found in countries like India or Malaysia or Chile which don't have many blacks. In ethnically diverse countries much of the variation in student performance between schools is a consequence of this. So it is not particularly significant that less ethnically diverse countries like Japan or Finland tend to have less variation between schools in student performance.
I'm in favor of troll-rating Shearer. His good stuff doesn't make up for his bad stuff and his annoying doggedness.
In this case he's answering the easy question, and not providing evidence that there are no big differences in quality between American schools, or that there is no correlation at all between school quality and student performance which cannot be accounted for by racial differences.
I once did a rough back of the envelope look at American schools state by state, and it appeared that eight of the best performing states were also generous to their schools (exceptions: ND and Utah), and that 8 of worst performing states were stingy with their schools (exceptions: DC an Delaware). Anecdotal exceptions abound. And of course, school spending varies by district and correlates with race.
re: 500
And this alleged variation in performance in ethnically varied populaces follows from what, exactly?
"And all those smaller class sizes, and more time with teachers, and better facilities and more IT equipment, and better qualified teachers that you get in expensive private education ... it doesn't do anything? It's all about the student body?"
Within the range of conditions commonly found in US public schools yes.
Really? This flies in the face of, say, a great deal of empirical evidence. Forgive me if I am extremely sceptical [and that's putting politely] of your claim.
It's all about the student body?
yes
Throughout the world different ethnic groups tend to perform differently on average in school
i wonder what would you do to make the education system better? why you always criticize and never propose anything constructive, positive, productive whatever
maybe exclude all the poorer performing students, the poor and ethnic minority and have your school charts brilliant and your theory correct?
it would be a very disgusting conclusion, i see why people dislike you though it's not your fault it's just that you are that cingulate something person and suffer from the complex of superiority, it's how you were brought up
eat your carbohydrates
I have a friend whose wife just started teaching last year. For some reason -- you would never have guessed it from meeting her -- she has a talent for working with students (almost all of whom are black or Hispanic) who have historically done badly in school, and make them do better. She has single-handedly raised the school's average on some standardized test (No Child Left Behind, maybe?) that's used to evaluate the school.
There is actually quite strong evidence, btw, that reduced classroom sized correlates with increased educational achievement.
I'm now convinced that the initial $700 billion bailout proposal was just envelope-pushing. Anything else will look better than that. We should be very, very suspicious of their next proposal, too.
Really, Congress should take this all out of Bush's hands, make a proposal, and make him blink.
Fat chance.
The Democrats are completely attached to the horse-trading model of legislation. All of the criticism of it that seems to come from Democratic politicians is of the form "we need to hold out for X, Y, and Z", so that we end up with Paulson's bill plus laudable goal X, Y, and Z. There doesn't seem the appetite to chuck the whole thing as fundamentally wrong-headed.
Here are some small signs of life from Congress.
It's a start.
Maybe we'd have to ally ourselves with libertarians to change things, but I will not be assimilated by the Borg.
Again, I read it as discussing the bankruptcy of party progressivism, versus actual progressivism.
Besides, the red flag looks so much better.
Well, right now they've hoisted the white flag.
437: Dean Baker's plan looks right on to me, from a very lay persective. I can't begin to evaluate the consequences, intended or otherwise, of his ideas, but I trust him enormously in general. If I had to trust one person to fix this, it would be him. (And he predicted the timing of the housing bubble burst pretty accurately, BTW.)
Dean Baker is great.
Not that we have a prayer of getting most of what he recommends, but I'd be interested in knowing what other folks think about which of his ideas would be most effective and politically feasible -- were the Congressional Dems to grow a spine.
Is this the one he posted on Friday? Lemme see, but I thought it was fine enough.
max
['Distracted.']
My hog farm solution was developed for small-scale problems, but some of the industrial hog farms have a tremendous capacity and could easily be adapted to handle the entire financial services industry.
The Democrats are completely attached to the horse-trading model of legislation. All of the criticism of it that seems to come from Democratic politicians is of the form "we need to hold out for X, Y, and Z", so that we end up with Paulson's bill plus laudable goal X, Y, and Z. There doesn't seem the appetite to chuck the whole thing as fundamentally wrong-headed.
You have just made me very sad.
I'm now convinced that the initial $700 billion bailout proposal was just envelope-pushing. Anything else will look better than that. We should be very, very suspicious of their next proposal, too.
And Bob said it was planned; I don't think it was planned as in, 'they have intended for the market to collapse for years'. That said, Paulson has reputedly been making a list of institutions he wanted to bail, so when the time came, he looked at the list, added everything together and said, hey! Gimme some money or the world will collapse.
I'm sure they would've preferred that the world worked as they believed and the stock market would keep going up forever as long as they kept inventing new financial instruments.
All of the criticism of it that seems to come from Democratic politicians is of the form "we need to hold out for X, Y, and Z", so that we end up with Paulson's bill plus laudable goal X, Y, and Z. There doesn't seem the appetite to chuck the whole thing as fundamentally wrong-headed.
Executive compensation doesn't matter if you're just going to hand them 700 billion dollars. They'll figure a way around.
max
['How to simplify it enough?']
499
James, where do you get that? ...
From the 1966 Coleman report and successor studies which have repeatedly confirmed its central conclusion, that family background matters more than school facilities for student performance. See this 2001 article which I have cited here before:
An obscure provision in the 1964 Civil Rights Act called for a study of inequality of opportunity in education "by reason of race, color, religion, or national origin." The general assumption of educators, indeed Coleman's assumption, was that the funding differences between black and white schools would be large, and that these differences would provide the central explanation for unequal achievements of blacks and whites. In 1966, after conducting what was then the second largest social science research project in history-involving 600,000 children in 4,000 schools nationally-Coleman and his colleagues issued Equality of Educational Opportunity. It became, according to journalist Nicholas Lemann, "probably the single best-known piece of quantitative social science in American history," and it contained a number of surprising findings. First, the disparities in funding between schools attended by blacks and whites were far smaller than anticipated. Second, funding was not closely related to achievement; fam ily economic status was far more predictive. Third, a different kind of resource-peers-mattered a great deal. Going to school with middle-class peers was an advantage, while going to school with lower-class peers was a disadvantage, above and beyond an individual's family circumstances.
I was saying elsewhere that, even if Paulsen doesn't get all the arbitrary powers he's asked for, he should be watched every minute of every day for the rest of his life. All of his communications should be safely archived -- letters, emails, phonecalls, meetings. All of his meetings outside work should be recorded.
If he's dividing up a trillion dollar pie, his gardener, his babysitter, and the waitress where he has lunch should all be able to get cushy lobbying jobs immediately.
Have there been any criticisms of the 42 year old report?
re: 513
1966? Jesus, Shearer.
Look here, for example:
There's a known correlation between class-room sizes and educational achievment.
I was also going to mention, if I didn't already, that the Republicans in Congress just got their marching orders from a lobbyist group a day or two ago: "Just give us the money, no strings attached." An ultimatum to the lackeys.
No more Mr. Nice Guy -- the bankrupts are going to start playing hardball with us, and it won't be pretty.
503
And this alleged variation in performance in ethnically varied populaces follows from what, exactly?
It follows from the empirical facts that ethnic groups tend to perform differently on average in school, and that schools in ethnically diverse countries tend to vary in ethnic composition because ethnic groups tend to cluster geographically.
re: 518
I'm trying hard to understand what you are saying here and I keep coming up with the belief that "some ethnic groups aren't as smart as others". I take it that's a fair interpretation?
It's my understanding that Shearer is broadly correct--that is, there's a consensus--that for the series of educational situations we've tried here in the US, family characteristics swamp other factors like cash spent, teacher quality, etc. I don't find that particularly surprising, and I don't think that needs to depend on any genetic or even cultural (in some deep sense) claims.
I'm certainly no expert, or even a particularly well-read lay person.
No more Mr. Nice Guy -- the bankrupts are going to start playing hardball with us, and it won't be pretty.
If the Dems had any guts or brains they'd have had a counterproposal already written up to nationalize any financial institution in need of a bailout. Also, the ready made "John McCain was one of the Keating Five" ads would be all over the airwaves.
Instead, they'l bend us all over as usual.
I find it annoying to continue discussing Shearer's obsessive topic. Nonetheless:
James, are you of the opinion that when race is factored in, students from schools where (for example) calculus is not taught and the bare minimum of foreign language is badly taught are not taught perform as well in college as students from schools with good foreign language and math programs?
My guess is that the 42 year old study, whatever its merits or deficiencies, was not designed to answer the questions you're talking about.
This argument isalways and only trotted out when it is proposed that spending between districts be equalized. It is never trotted out when parents in rich districts talk about schools, or when realtors talk about the schools in a given district, or when parents decide which district to move into.
Can you imagine a bunch of wealth parents saying "Let's give our kids a minimum basic education without that calculus and so on"?
Actually, I can. There might be a natural experiment somewhere, where rich know-nothings actually decided not to pay for better schools. I'd love to see the study.
Then again, Dubya would have been successful if he hadn't gone to school at all. His job doesn't require him to know how to read.
re: 520
As you'll see from the link in 516, that's not actually true.
515
Have there been any criticisms of the 42 year old report?
Of course there have, the finding was very controversial. There were many attempts to dispute the findings but as I said successor studies have confirmed it and it is now generally accepted that family background is the most important factor (in the US). See for example this 2001 conference summary:
The ground that researchers are battling over in trying to accurately estimate the net effects of schools are on educational achievement is not vast. While scholars may not agree as to the extent of school effects, across the ideological spectrum there is a tacit consensus that the effects of other dimensions of background - be they community, family, genetics, etc. - are stronger. Yet, why after 35 years of evidence that schools are marginal in the grand scheme of academic achievement have educational politics and policy continued to focus almost exclusively on schools? What would an education policy look like if it did not mention the word "school"? Can government address achievement differences that are rooted in the home? What are the political implications? These are some of the questions that motivate this conference of scholars and policymakers, slated for June of 2001, which marks the 35th anniversary of the issuance of the Coleman report.
My, The Corner is downright sensible today.
519
I'm trying hard to understand what you are saying here and I keep coming up with the belief that "some ethnic groups aren't as smart as others". I take it that's a fair interpretation?
No, it is not. It is an empirical fact that for example Asians do better than Hispanics in LA public schools. The reasons for the difference are of course much debated (nature vrs nurture, genetics vrs culture) but they don't matter for the point I am making. Which is looking at Asians and Hispanics together increases the variation in performance as compared to looking at each group individually.
524: Fair enough. At a minimum, "consensus" is wrong.
Shearer, if you look at your link you'll note that there is some dispute about class-size effects. Just glancing around on the web, it appears to be a fight between Hanushek and Krueger over the data, with the data being limited and often pretty poor for the use intended (Krueger somewhere says the STAR program to which ttaM links is by far the best, but note that your link notes the stronger effect of extra funds spent on Southern African-Americans and that the STAR program is located in TN).
All of which is to say that the way forward is not clear, at least to me.
My suspicions that the initial request was chaff are strengthened by the conservative opposition.
Alternatively, it could have been a desperate improvisation, or maybe an attempt to expand unitary government and deliver a trillion dollars worth of graft.
It would be interesting to see someone apply this data to family childraising practices and residential choices. Is the choice of neighborhood by school quality a mistake? Does the data show that? Would kids be just as well off in a low-tax area with mediocre schools than a high-tax area with excellent schools?
536:Nah. Republicans have been given permission to look all fiscally responsible & libertarian on this vote. Win or lose, depression or not, the idea is to hang it on the Democrats. If it is close, just enough Repubs will cross over, but this will be a Democratic bill.
Why do you think the Corner allasudden grew a set of principles?
Matt Stoller at OPenleft has a hilarious email from a house staffer on exactly how Pelosi gets rolled on these things
I'm riveted with horrified fascination as to whether the Congressional Democrats are going to kick the football again.
I find myself wanting to invent (or half remember) eastern European peasant proverbs like "Whichever side is victorious in battle, the grass suffers." This is just going to be bizarre and unpleasant to live through.
Okay, here's something I don't understand. The program lasts past November. What if Obama wins the election? Is the plan to spend all $700 billion between now and then, so that it's too late for the Democrats to exercise any oversight? I guess it must be. Can the US really sell $700 billion worth of Treasuries in that amount of time? Who has $700 billion lying around? We're talking 1% of world GDP.
522
James, are you of the opinion that when race is factored in, students from schools where (for example) calculus is not taught and the bare minimum of foreign language is badly taught are not taught perform as well in college as students from schools with good foreign language and math programs?
It isn't just race, family background includes things like social class, two parent vrs one parent households etc. If I recall correctly, the difference between social classes is as great as the difference between races. I think the studies I am citing primarily measure student performance through standard achievement tests given as they attend school and not by how well they do in college or later in life. These studies show that family background is most important, peer effects matter somewhat and school resources matter very little. I expect these results would carry over to college and later life but for the most part I don't think the studies have looked at this.
534:Walt, the program lasts two years. They buy garbage and sell garbage with a balance sheet of 700 billion.
Week one:They buy (trade T-bills for) 100 billion and sell the shit to somebody for 20 billion (which may be worth 40 billion), leaving themselves 620 billion for week two, and having injected 80 billion worth of capitalization into the banks. Rinse & repeat until they come back to Congress for another trillion.
the difference between social classes is as great as the difference between races.
There's a RAND study indicating that family background explains apparent race- and ethnicity-related differences in test scores. (I think I have that right.) Family income was a factor examined as part of family background. More important, as I understand it, was maternal educational attainment. The study doesn't compare family background to dollar increases in education (e.g., smaller classes).
James, what about the family choice thing? It would seem that choosing a neighborhood for good schools is irrational if there's any cost involves.
. . . eastern European peasant proverbs like "Whichever side is victorious in battle, the grass suffers."
535: I don't James is far off here. Consider how school resources correlate with family backgrounds, it's expected that there would be confusion. But I've long thought that the single clearest predictor of academic success is family socio-economic status.
530
It would be interesting to see someone apply this data to family childraising practices and residential choices. Is the choice of neighborhood by school quality a mistake? Does the data show that? Would kids be just as well off in a low-tax area with mediocre schools than a high-tax area with excellent schools?
As I said above peer effects matter somewhat, it is better to go to schools where most of the kids are from "good" families than to schools where most of the students are from "bad" families (although this makes less difference than whether your family is "good" or "bad"). High taxes make for "good" schools by pricing out "bad" families not because they allow higher teacher pay or fancy classrooms.
It would seem that choosing a neighborhood for good schools is irrational if there's any cost involves.
"Good school" might mean "fewer poor students." Wasn't there a much-linked study that claimed that education suffered when the percentage of poor students rose above a certain level (15%? 40%?)? Yglesias mentioned it, I think. In that case, you would be talking about peers, which Shearer mentions.
So if a bunch of good parents got together in a neighborhood with "poor" schools and low taxes, that would be rational?
I still smell a rat.
536: My understanding is that they don't even need to "come back to Congress for another trillion." Paulson's carte remains blanche as long as he owns less than $700 B in garbage at once, right? Or is that not what this means?
The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one timeI.e., if he buys $100 B in assets, does his authorized balance really go down
544:Not positive. I just read a comment at CR that does support something like your interpretation.
Paulson did admit today that it will likely be more than 700.
Ah, here, grain of salt:
Andrea writes: I think you have miscalculated maximum losses - because there aren't any (aside from those innate in the 2-year time limitation). Assume the bailout fund can hold only $100 billion outstanding. It buys $100 billion, sells for $50 billion (all of the portfolio). Now it holds nothing, but has $50 billion in losses. Repeat 30 times, and you have $15 trillion in losses. THERE IS NO LIMIT TO LOSSES ON THE PLAN.And best yet, the Secretary gets to run the program without any supervision. Wow, how lucky one would be, to be a good friend of the Secretary.
Andrea | 09.21.08 - 5:00 pm | #
516 528
The link in 516 doesn't say anything about how large the purported beneficial effect of smaller classrooms is. Something can be statistically significant and still be very small. I am not contending that school facilities don't matter at all, just that their effects are small compared to peer effects which in turn are small compared to family background. This makes it difficult to reliably detect the effects if any of things like class size or teacher pay. And this applies to the range commonly found in the US, they might be more important in very poor countries.
There are all sorts of weird side issues -- say the extras that rich districts pay for have no educational value, Is spending money on making school more enjoyable for your children a waste, even if there's no educational effect? They're spending six hours a day there.
And then how does that work to increase economic segregation in schools? If you have two schools, each with sufficient resources to provide an adequate education, but one is pretty and pleasant, and the other is a foul-smelling hellhole with a leaky roof, wanna bet all the rich kids are going to end up in the pretty school? Which is going to have some effect on the educational environment in the other one.
How much of the research on school spending factors in PTA spending, which can be very significant in affluent schools? If you've got two schools with the same level of government funding, and the poor school is operating on that funding while the rich school is also getting another 10% out of PTA fundraising, is that the same level of funding?
Once you get away from very specific questions, this is very slippery stuff to measure. I think the only respectable policy is to work to equalize classroom environment -- supplies, physical plant, class size, teacher quality -- to the extent possible, and then look at results after classroom environment has been equalized to figure out where other ameliorative work needs to be done.
546: Elsewhere--to the extent my memory isn't playing tricks on me--someone (Krueger, I think) said the STAR program demonstrated a 30+% improvement on the relevant scores for either African-Americans or African-Americans on the school lunch program. That could be low baseline, Southern African-Americans, an odd artifact of something else, or actual benefit that matters a lot. I don't know (and wouldn't really know unless I were in that field). But, contrary to what I believed, I don't think it's clear, or a consensus view anymore, that size doesn't matter.
543
So if a bunch of good parents got together in a neighborhood with "poor" schools and low taxes, that would be rational?
From one point of view but there are other considerations, rich parents probably prefer their kids be in schools with a reasonable standard of luxury (like no peeling paint, AC on hot days, reasonably new textbooks etc) even if this makes no actual difference in how much they learn. As for example rich people don't just feed their children the minimum cost healthy diet. And there are status factors, rich people don't buy Rolex watches because they are better at telling time.
549: Moreover, it strikes me that the easiest way to limit the number of poor students is to not attend a "poor" school.
As for example rich people don't just feed their children the minimum cost healthy diet.
Exactly! Because how much nutrition you can get into your diet is also totally unaffected by wealth!
544: My understanding is the same at Otto's, that $700 billion is the amount of crap they can own at one time.
I guess you're right, they could swap Treasuries for the mortgage debt. Maybe that is the plan.
For me, the point was always that if you want better educational outcomes, raise wages.
That's also my way of saying "education policy terrifies me and I'm grateful I don't work on it."
Part of this is just a realistic acceptance that schools are of limited value in equalizing the various inequalities of life. If a kid has a lot of strikes against him and few family or other resources, a good school won't often be enough to change his entire life. It does call further into question the already-problematic idea that equality can be attained by educating everyone. As long as we have an competitive inegalitarian class structure, there will be someone at the bottom -- already mere HS grads with some college are mostly in the bottom half, and you can imagine a world in which 90% of the population had a couple years of post HS education.
In society that highly educated skill levels would all be higher, and average income and maybe even the income of the bottom 10% might be higher, but there's still be losers at the bottom. (And furthermore, until robotics takes over there will still be people overeducated for their jobs.)
So in these respects, what's called into question is the specifically American attempt to reach equality through education, without dealing with the other stuff.
As for the study, how the amount of residential segregation by class in this country seems to me to make the definition of independent variables hard. You'd be looking for bad families in good school districts and good families in bad school districts, but a lot of the best and worse schools are one-class schools.
So I still smell a rat. Especially because these studies always only show up when public spending is being discussed. No one ever explains to parents that they're wasting their time looking for good school districts.
Especially because these studies always only show up when public spending is being discussed. No one ever explains to parents that they're wasting their time looking for good school districts.
Right. Social science is fascinating stuff, but I have no faith in results (1) on stuff that's hard to measure, like anything in this area (2) that are really counterintuitive, like the proposition that equalizing classroom resources wouldn't have any significant effects, and (3) that are politically convenient.
I did a bit of Googling and it seems -- shocking, I know -- that UK research suggests that increasing spending per child increased educational attainment. The figures quoted, from a recent spending review:
A £1000 increase per child at secondary level results in roughly 1 grade increase [e.g. from a D to a C]. The same money used in a more targeted funding program aimed at lower economic status kids led to an increase of roughly 2 grades. [i.e. from a D to B, or whatever]
A different spending review, at primary school level, an approx 5% increase in spending per pupil led to approx 5% more kids reaching one of the standard state targets in mathematics.
I even have a dog in this fight. I came from a good family in a mediocre school district, and if my school had been better in math and foreign languages (see my post above) my first two years of college might have been more successful. I started out half a semester behind my classmates (a full year of French) and took a big bite in my GPA with math, both things being compounded by stress and bad feelings.
And my HS was average, not bad.
556: Ah, but you forget that the UK is perfectly ethnically homogenous, which makes it totally different.
The Welsh are not a bit homogenous.
So in these respects, what's called into question is the specifically American attempt to reach equality through education, without dealing with the other stuff.
This, as I understand it, is Yglesias's position. I'm suspicious here. I am, however, also suspicious in favor of Yglesias's position. Basically, we're always going to try to fuck the poor, and we're always going to succeed to varying degrees.
No one ever explains to parents that they're wasting their time looking for good school districts.
Note that there is value in a good district under either your theory (more resources) or Shearer's (fewer poor people, better peers).
My theory conflicts with Shearers in that respect.
But good parents gathering together in a bad, low-tax school district would save money, and their kids would lose little or nothing. According to Shearer's theory.
I still suspect that there's something wrong with the study's design, though I imagine it's been hashed over a lot.
Talking Points Memo: Phil Gramm is on the board of a foreign bank in deep trouble (UBS), so foreign banks will now be included in the bailout.
On the one hand, it couldn't get any better. On the other, the Dems still could fuck up. They say Schumer's in up to his neck, even Barney Frank.
I'd be curious to know whether there's anyone in Congress who understands this stuff who isn't in someone's pocket.
No one ever explains to parents that they're wasting their time looking for good school districts.
Right. They should put their efforts into buying stylish Kevlar vests and getting the kid some good weapons and training.
Glenn Greenwald and Firedoglake are talking about a tax strike.
But good parents gathering together in a bad, low-tax school district would save money, and their kids would lose little or nothing.
Except that poor people might move into the district--I'm assuming that "bad, low-tax" also means "more affordable"--and into your kids' schools. It sounds a bit like a description of a kind of white flight in the past. Move out to the first neighborhood you can afford and they can't.
My guess is that parents who vote to underfund schools, or who don't care if the schools are good, are bad parents. Most good parents haven't read the study, so they are wasting money on education. But if a group of parents wised up, and moved into a low tax neighborhood with a bad school, they could take over. You could have expensive, nice house and a budget high school.
Of course, that would be collective action. Individuals buying houses independently on the market couldn't do that. So it's the market causes us to spend too much money on schools.
567: I think if you could actually control the population, it might work.
It's odd that people who like commenting on small, quirky blogs don't instinctively believe that (possibly informal) segregation by social capital might yield a net positive for members of a community. That's not to say it's good education policy; just that I would think the idea that there would be benefits to the individuals who engaged in such behavior, independent of further spending, would seem immediately credible.
Maybe there could be a government program to settle good parents in poor school districts. The money saved good could be given to bankrupt financiers.
570: My understanding is that there have long been proposals to do the opposite. I think John Edwards proposed something similar.
That doesn't save any money though.
572: Depends how successful you think such a program would be and to what extent it would help those poor kids and their children on into the future. Some of the studies I glanced at--that is, don't trust this--suggested that benefits to improvements in educational outcomes included, for example, less criminal activity among a helped population. (Actually, that might have come from a Fresh Air discussion with Jeffry Canada.)
No, no, no. I was merely trying to help the rich families save money. We'd cleanse the area of poor people first.
Jesus. Latest news: everyone in finance who has any bad debt of any kind is lining up at the trough.
Jesus. Latest news: everyone in finance who has any bad debt of any kind is lining up at the trough.
God, this whole thing makes me ill. Seriously, is there any chance the Dems aren't going to totally fuck this up?
Latest news from CR: Australia and many other nations are temporarily banning or restricting short selling.
This is crazy or scary. Or both.
575: Do you mean the change to allow foreign banks to pawn stuff off on the US taxpaper, or has their been another, more recent change.
578: Never mind; I just saw what you're referring to.
Banning shorts is the fad. They need somebody to blame. When market manipulation is involved in stock prices going up, the situation calls for deregulation.
Jesus. Latest news: everyone in finance who has any bad debt of any kind is lining up at the trough.
Well, of course they are. The thing is, is that when hang out bank bait like that, you're supposed to setup in a blind nearby and then you can shoot the banks when they go for the bait.
Apparently our hunting strategy involves donning the orange vest, wandering off from the bait about a mile or so, and running around in circles yelling the sky is falling.
544: My understanding is the same at Otto's, that $700 billion is the amount of crap they can own at one time.
They would be raising the debt ceiling 1.8 trillion. So presumably they would have to go back to Congress to do more than that, except that if Congress raises the debt ceiling AGAIN for some other reason I do not see how they would prohibited from tapping the well. They can only hold 700 billion at a time, which looks more and more like an advertising number, so when they go over it everybody is like.... wha? And they say, we don't have more than 700 billion on the books. And then they get all smirky.
Bob's mechanism is exactly correct. Excepting that I think a better way to do it would be for the Treasury to flip some T-bills to the Fed and then the Fed should flip the ... nevermind. I'm gonna shut up about the extended accounting tricks. Just in case - no help for those guys.
Pelosi seems to have gotten the word, sorta:
"Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers' interests," House Speaker Nancy Pelosi said. She added that the administration's proposal did "not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation."
{sigh} There are good bankers, and bad bankers. There are giant useless companies with useless CEOs and useful (to the rest of us) startups with useful CEOs who are well-paid. Now, if we demanded the banker's books and emails, I'd bet we find that almost everyone of these sonsofbitches are up to their eyeballs in kinds of rules violations that would at least require the payment of large fines. As likely is that many of them are guilty as hell of violating all kinds of criminal laws, and if sent to jail, would be required to pay back any ill-gotten gains. Lastly, it's a lot simpler just to tax the shit out of high earners, rather than try to restrict their income, eh?
max
['There's more money in that anyways!']
For those who haven't seen what Emerson referred to, it's this.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYXtwpG9mw9g&refer=home
The money quotes.
The change suggests the inclusion of instruments such as car and student loans, credit-card debt and any other troubled asset. That may force an eventual increase in the size of the package as Democrats and Republicans in Congress negotiate the final legislation with the Bush administration, analysts said. ..."Just about everyone in the markets agrees the Paulson plan needs to be simple -- unencumbered by complications and penalties,'' Christopher Low, chief economist at FTN Financial in New York, wrote in a note to clients. "Of course, Washington doesn't know how to do that.''
Die, Christopher Low, die.
555
Right. Social science is fascinating stuff, but I have no faith in results (1) on stuff that's hard to measure, like anything in this area (2) that are really counterintuitive, like the proposition that equalizing classroom resources wouldn't have any significant effects, and (3) that are politically convenient.
(1) The effects of ethnicity on student performance are not hard to detect, they jump out of the data. What is hard to detect is any effect of things like teacher pay because these effects (if they exist) are so small that they are lost in the noise. (2) We have roughly equalized classroom resources. For example spending per pupil is about equal for blacks and whites. If the range was larger a resource effect might show up. (3) The results of the Coleman study were extremely politically inconvenient to the great society liberals who commissioned it. Dismissing politically inconvenient results is not reality based. Or is that just an empty slogan?
561
I still suspect that there's something wrong with the study's design, though I imagine it's been hashed over a lot.
The study was in 1966. People have been trying to find problems with it ever since. It has held up.
Whatever's going to go down, I am sure it is going to be ugly and costly. So maybe we can at least do it Magic Christian style.
574
No, no, no. I was merely trying to help the rich families save money. We'd cleanse the area of poor people first.
That's not always necessary, you just introduce tracking, honors classes, AP classes, gifted programs, magnet schools etc. Try to make sure your kids don't interact much with the bad kids.
re: 583
As I mentioned in 556 there are other studies that come to the opposite conclusion.
504
wonder what would you do to make the education system better? why you always criticize and never propose anything constructive, positive, productive whatever
In the case of education it is because I don't have any brilliant ideas for how to improve things and the ideas I see other people proposing generally ignore what is known about education. If I were running things I would change some stuff but I would not expect it to make a big difference. I would get rid of bilingual education because in practice it seems to be actively harmful. I would make it a bit easier to get rid of bad teachers. I would cut down on the special needs stuff. I would make easier to get rid of disruptive students.
The studies I have cited have been looking at how schools teach academic material. Schools also should be teaching non academic material like morality, good work habits and good citizenship. I don't think their performance on these things is as well studied so perhaps there is more scope for improvement.
In general I think schools over emphasize the importance of academic learning. Schools seem to actively resist teaching anything of practical value. High schools add a requirement for two years of algebra while dropping driver ed. I would put more emphasis on practical value. Ask employers what specific deficits they see in applicants which limit their opportunities. Ask adults what specific things they regret not having been taught in school. Try to improve school performance on these things.
586
As I mentioned in 556 there are other studies that come to the opposite conclusion.
Those were British studies. Maybe things are different in England. My comments are about conditions in the US. Which was the subject of the Coleman study.
Those were British studies. Maybe things are different in England.
Yes, but what about the Celtic nations?
Secondly, James, wtf? That's the best you can do? We'd best throw out Piaget because he was a Frenchman?
Come on.
Yes, but what about the Celtic nations?
I prefer to think of them as the shorter, smarter nations ...
(2) We have roughly equalized classroom resources. For example spending per pupil is about equal for blacks and whites. If the range was larger a resource effect might show up.
See, this is nonsense. Whatever one can say about spending (and while I've seen statistics like that before, I find them incredible, which makes me suspect that they're subject to manipulations), classroom environment -- what children in good and bad schools see and have access to in the classrooms, what their teachers are paid, what their physical plant looks like -- is inubitably all over the place.
574: I was kidding, Shearer. Call me old-fashioned, but for me ethnic cleansing is taboo. But thank you.
I thought the Scots were tall and brutish.
Those are the Celts who got all muddled up with the invading Norse, if we're going to get ethnicly cleansy about it.
588: Those were British studies. Maybe things are different in England. My comments are about conditions in the US.
See, and this is just stupid. The conclusion you've arrived at is "Nothing important can be done, so there's no sense wasting a whole lot of money and attention on trying." Where you've got evidence that something can be done, in Britain, your response is to instantly assume that those results are due to differences between the US and Britain that "nothing can be done" about.
The US and Britain aren't on different planets, and aren't teaching different species of children. What's possible in Britain is possible in the US, and it's certainly worth investigating why they seem to be able to detect better results from increased educational spending.
re: 593
There are two basic phenotypes.
[gross stereotyping follows]
Tall, 'strapping' and usually ginger. Ruddy. Open-faced, honest and a bit thick.
Short, slightly malnourished looking and dark [but sometimes ginger]. The diametric opposite of open-faced, honest, and thick.
And you're medium height, heavily built, and dark. Which leaves the question of whether or not you're honest and thick absolutely indeterminate.
I'm pretty definitely the latter type. The malnourishment can take either a weaselly form, or a pie-eating lardy form.
We'd best throw out Piaget because he was a Frenchman?
Suisse, en fait.
Just as Heebie will for me always be a cowgirl wearing a sixgun and chewing snoose, even though I've met her, in the same way ttaM will always be redhaired, brawny, and fond of smashing people's faces in for no good reason. 598 is null and void.
This is one of the internet traditions.
587
thanks that you thought about how to answer the question and i thought i already like got the essence of your thought, but, really, thanks for elaborating
your answer like re-confirms my Ds: very inflexible
though i think people are maybe a little more complex and unknown than what the doc says but who i am to argue with the leading neurophysiologist, to some people his clinical classifications apply pretty accurately
so maybe you will do yourself a great favour if you try his diet and recommendations
Don't forget "dark" in this case still usually means pale of skin, even if sallowly pale.
http://images.google.com/images?gbv=2&hl=en&q=scottish&imgtype=face
"Dark" is the opposite of rosy and fair, I guess. Doesn't heavy masturbation lead to that kind of complexion?
re: 600
I had reddish brown hair as a kid, and my beard comes in gingerish, if that helps? I'm also reasonably brawny.
http://www.mcgrattan.f2s.com/grading.jpg
This image will disappear in a few hours, but I am second from the right with arms folded [I was a bit heavier then than I am now].
re: 604
http://www.thefreedictionary.com/open-faced
Sense 1.
I would say that ttaM is adequately brutish.
Short, slightly malnourished looking and dark [but sometimes ginger]. The diametric opposite of open-faced, honest, and thick.
Hey, that describes my father's people!
So where are you motherfuckers? Has the entire Unfoggetariat been raptures? This is boring.
Anyway, I just figured out the Charley Brown hierarchy:
Charley Brown (the Democratic Party leadership) keeps hoping that Lucy (the Republican Party leadership) will finally let him kick the football, but he's always disappointed.
Meta-Charley Brown (liberal Democrats) keeps hoping that the primary Charley Brown will stop being suckered, but meta-Charley is always disappointed too.
Meta-meta Charley (The Left) keeps hoping that meta-Charley will stop hoping for the Democratic leadership to improve, but meta-meta-Charley is alway disappointed too.
Who is meta-meta-meta Charley?
IT'S SPELLED "CHARLIE," EMERSON. GOD DAMMIT.
You know, all of this finance stuff is a bit over my head, but doesn't this seem like the correct framework for a bailout?
Who is meta-meta-meta Charley?
Gnothi seauton.
Fuck that, Delphy. We want answers. We're positive-thinking, forward-looking, hands-on, can-do people. Americans. We don't do introspection.
We better pick up the commenting pace, before we're forced to read more comments like 610.
More where that came from, Walt. Get a move on.
The time honoured way to get a thread going is to say something controversial about sex, marriage or education.
Now that my wife is unemployed, should I dump her for a younger trophy wife, or for a gainfully-employed wife? Wait, is that sexist?
What level of trophy can you afford? The budget trophy wives tend to leave town with your credit cards.
My wife made most of the money. See, this shows you the importance of financial planning.
I suggest being warm and supportive about the layoff, and then asking at five minute intervals if she's found a new job yet. This should provide motivation.
re: 619
Just remember, whatever choice you make, its sanctioned by unassailable reasoning from our social relationships as practiced on the veldt, in the Pleistocene.
619, 621: You're in luck, Walt. The Washington Post has got the latest research addressing your dilemma.
The upshot: To maximize your wealth, you want to abandon any gender egalitarianism that you have, but you want a spouse who holds gender egalitarian views.
618: Or link Lindsay Beyerstein commenting on an inflammatory 'news' article.
595
See, and this is just stupid. The conclusion you've arrived at is "Nothing important can be done, so there's no sense wasting a whole lot of money and attention on trying." Where you've got evidence that something can be done, in Britain, your response is to instantly assume that those results are due to differences between the US and Britain that "nothing can be done" about.
My position isn't really that nothing can be done, it is more that the perception that there are "good" schools and "bad" schools is the US is largely an illusion and differences in school quality are not the main source of differences in academic performance. It is possible that there is a way to increase school performance by spending more money but the evidence indicates that that way is not for low spending districts in the US to mimic high spending districts. I am not saying results from other countires should be ignored, just that they don't contradict the Coleman report which is specifically about the effects of the differences currently (as of the time of the study) found in US schools on academic performance.
The US and Britain aren't on different planets, and aren't teaching different species of children. What's possible in Britain is possible in the US, and it's certainly worth investigating why they seem to be able to detect better results from increased educational spending.
It is worth investigating but it is possible that the effect is both real and inapplicable to US schools. It would be easier to discuss if someone gave links to the actual studies in question.
differences in school quality are not the main source of differences in academic performance.
See, this is the problem with your phrasing of the question. You appear to be thinking something along the lines of: (1) Poor kids tend to do worse academically than rich kids; so (2) even if the schools poor kids attend are lousier than the ones rich kids attend; (3) equalizing classroom environment wouldn't successfully equalize educational outcomes, so (4) why bother?
The thing is, I'll buy 1 and 3. Certainly, if you take a class full of kids from the lowest economic quartile, and one from the top economic quartile, and put them in absolutely identical schools, the rich kids are going to academically outperform the poor kids on average; more academically nurturing home environment, fewer life distractions interfering with school, and so on (if you like, you can speculate about the rich kids also being members of the genetically elite master race, but you don't need to).
As a matter of justice, though, there's still no excuse for unequal facilities in public schools. Even if the only difference were the comfort and happiness of the students, and there was no educational effect at all, it would be obscene to use public money to provide better services to rich children than to poor children. Furthermore, even if equal educational facilities wouldn't equalize outcomes for all students, for those poorer students with the academic capacity to excel, of which there are some, it is obscene to deprive them of opportunities because there are fewer students in their economic bracket likely to make use of them than in higher economic brackets.
The moral case for equalizing classroom environment does not depend on a claim that equalization alone will correct all other demographic effects on educational attainment.
605: So, ttaM, what was it like sparring with the freaky-looking zombie at the center rear? Seems like his limbs would snap off readily, but it probably wouldn't slow him down much.
From 624, I learn that my poor lifetime earnings are the result of feminism. I knew it!
627
... Furthermore, even if equal educational facilities wouldn't equalize outcomes for all students, for those poorer students with the academic capacity to excel, of which there are some, it is obscene to deprive them of opportunities because there are fewer students in their economic bracket likely to make use of them than in higher economic brackets.
These students can easily be identified and sent to good schools. Of course this leaves the remaining students worse off but there is an inherent conflict of interest here.
The moral case for equalizing classroom environment does not depend on a claim that equalization alone will correct all other demographic effects on educational attainment.
What does this mean in concrete terms? It seems to me that to get the sort of uniformity you think is morally required would require a complete federal takeover of the school system. Which I don't think is likely.
618: Or link Lindsay Beyerstein commenting on an inflammatory 'news' article.
I like how clicking that link gets you to DHS, which in turn asks to deposit a cookie with a name that starts 'ForeseeLoyalty'...
max
['Dear DHS: FUCK YOU. Have a nice day!']
These students can easily be identified and sent to good schools.
What possible basis do you have for saying this?
632
What possible basis do you have for saying this?
This is just tracking. It isn't hard to rank students on academic ability. IQ tests, achievement tests and teacher evaluations can be used. And you don't have to make irrevocable decisions. If a kid does well in a lower track move him up. Of course there will be arbitrary decisions at the margins but this won't affect the truly exceptional talents much. Suppose for example you have 3 tracks in terms of ability each with about 1/3 of the students. And suppose we define exceptional talent as the top 1%. How hard is it to recognize that a kid in the top 1% is in the top third in terms of academic ability? Another factor is that K-12 education in the US tends to move so slowly and repeat so much that it is fairly easy for a really talented kid to catch up when moved to a better school.
You've misunderstood. You're not claiming that educational resources have no effect -- presumably, you accept that there is some number of students who will do well academically in good schools, but poorly in bad schools. (There are also students who will do well regardless, or badly regardless.)
How do you propose to identify a student who would have thrived in a good school, but is doing badly in the deprived school they're actually in? By denying that any such students exist?
LB, James' method would write them off. He's saying that an exceptional student at the lousy school will be identified and moved up. If you're struggling but would do perfectly well (but not exceptionally) you're s.o.l.
On the other hand, if you follow that thinking all the way and also believe in maintaining standings based on academic ability, every `level' of the system should give more weight to entrants from lousy schools than from top ones (in other words, with equivalent results on paper, always choose the kid from the lousy school, since you'd want to normalize the expected results.
After all, one of the main purposes of expensive private high schools is to get average minds into top academic college programs, which runs counter to an academic merit based system.
634
Ok, I am not sure what we are talking about. I thought we were talking about the exceptional student in a poor school who is missing out because the instruction is aimed at slower students. For example there is no calculus class in his high school because there are not enough kids capable of doing the work to make it worthwhile for the high school to offer one. Such students are not doing badly compared to the slower kids in their school, they are at the top of their class, but they aren't learning as much as they would at a more challenging school. I don't think these kids are hard to pick out.
You seem to be talking about students who don't score well on IQ tests and who don't perform well (relative to the other kids) academically at a poor school and who don't impress their teachers but who would nonetheless excel if moved to a good school. Yes these students would be hard to identify and I do doubt there are any great number of them.
635
On the other hand, if you follow that thinking all the way and also believe in maintaining standings based on academic ability, every `level' of the system should give more weight to entrants from lousy schools than from top ones (in other words, with equivalent results on paper, always choose the kid from the lousy school, since you'd want to normalize the expected results.
I believe some elite colleges do do this, taking the kid from a lousy public school over the kid from a fancy prep school if their records are equivalent. And the fancy prep schools will be ranked based on how well their kids have performed in the past.
637: I believe that's true (that some do) but not universal.
It's a difficult problem, trying to come up with objective measurements. I know of at least one highly ranked department that weighs incoming freshman's transcribes via recent historical performance of their schoolmates in upper division classes. As far as I know though, this is both rare, and hard to generalize due to constraints of getting good statistics. Lack of good quantitative measurements makes this very difficult overall, and of course aptitude is considered as somewhat secondary to ability to pay tuition in some (clearly not all) cases.
