Month: March 2009

Not a small detail — Department of Whoops

by  Tyler Cowen in

The joint venture funds would be able to draw on Fed Talf financing — which is a surprise concession.

That's from today's FT.  Previously it had been thought that Talf was to finance new lending, not legacy assets.  That's where the whoops comes in.  Do you not worry that the future independence of our central bank has been tossed out the window?

The benefits of international trade are usually greater than you think, belated St. Patrick’s Day post

by  Tyler Cowen in

The shamrock (three-leaf clover) is one of Ireland's most recognizable symbols. But demand for "Irish" shamrocks is now so great that the small island nation must import clover seeds from countries like New Zealand, India, and Germany. In 2007, Ireland imported nearly 200 metric tonnes of clover seeds worth $677,864.

I thank The Browser for the pointer.

Someone has to be wrong

by  Tyler Cowen in

Paul Krugman thinks Brad DeLong is wrong.  Brad DeLong thinks that Paul Krugman is wrong.  Robert Waldmann thinks that Brad DeLong is wrong.  The topic of course is the Geithner plan.

I'm not so far from Kevin Drum's view, as stated here and here.  It has some chance of succeeding and the relevant alternatives are also bad for the taxpayer.

But can the government itself be trusted?  Here is some of the recent fallout:

…some executives at private equity firms and hedge funds, who
were briefed on the plan Sunday afternoon, are anxious about the recent
uproar over millions of dollars in bonus payments made to executives of
the American International Group.

Some
of these executives have told administration officials that they would
participate only if the government guaranteed that it would not set
compensation limits on the firms, according to people briefed on the
conversations.

The executives also expressed worries about
whether disclosure and governance rules could be added retroactively to
the program by Congress, these people said.

The bottom line?: Here are what Thugz say about the various bailouts.  Excerpt:

…they laughed when I said the government should prioritize the punishment of senior management. In the words of Shine,
the elder statesman of the group, “You have to be real careful when you
mess with folks at the top, because when the war is over, you’ll need
these guys real quick. Ninety-nine percent of people just doing what
they’re told – you couldn’t find half a brain among all of them. But the ones with the brains – don’t let them go.”

In fact you would expect a successful businessman to understand that.

Insurance markets in everything

by  Tyler Cowen in

Jared Sylvester writes me:

Earlier this month you
made one of your "Markets in Everything" posts on Marginal Revolution
about Hyunadi's program to buy back cars from people who lose their
jobs.  I thought you might be interested to know that Jos A Bank is now
offering to refund the price of a new suit in the same circumstances,
or in the case of the self-employed, in the case of a bankruptcy
filing.  You can find the details here:
http://www.josbank.com/Templates/riskfreesuit.tem

Buy a House, Get a Visa (2)

by  Alex Tabarrok in

The buy a house, get a visa program which I have been pushing for some time is getting some serious play.  Writing in the WSJ, Richard Lefrak and Gary Shilling note:

The blueprint for a program to sell surplus housing to immigrants is already in place with the EB-5 visa program. Each year, 10,000 EB-5 visas for this country are available for foreigners who each invest $1 million in a new enterprise ($500,000 in economically depressed areas) that creates at least 10 full-time jobs. After two years, the entrepreneur and his family can become permanent residents.

Why not reduce the investment required and expand the program to 100,000?  

Barry Ritholz John Mauldin has further thoughts and links.  Thanks to Jim Ward for the pointer.

How to travel to Europe after college

by  Tyler Cowen in

Jason, a loyal MR reader, asks as a request:

I'm a graduating senior who is planning on taking the much cliched trip
to Europe after graduation. I'm also an economics major and, naturally,
want to maximize my time spent there. I have never been to Europe. Do
you recommend travelling around Europe and seeing a little bit of
everything, or is it perhaps better to focus on one particular area? If
you'd recommend focusing on one area, which would it be?

I am of the mind that when it comes to travel you won't know in advance where you will like — especially on a first trip — so diversify.  Not long ago I offered up five spots to visit in the United States.  My five spots for a first European trip would be:

1. Paris. Duh.

2. Rome, the major city of antiquity plus still a major national capital.

3. Süsten Pass in Switzerland, or Zermatt on a clear day.  Rural Europe, and scenery, with a Germanic slant.  I love Germany but am hard pressed to pick out a single locale to make this list.

4. Prague, with architecture from all major periods of European history since medieval times.  Plus you get a dash of Eastern Europe and corruption, as well as some Germanic and Jewish history.

5. Rural Albania, maybe Shkodra or Girokaster.  See how much of Mediterranean Europe lived in the 19th century.  Recall a Malthusian world.

Don't tell Natasha I said this, but Russia to me is really a part of Asia.  England belongs to the northern orbit, which maybe someday gets a post of its own.

Data revisions

by  Tyler Cowen in

Simon Johnson notes:

We don’t know how much of banking profits in recent years were illusory
and should not have been booked as GDP.  In fact, it would not be a big
surprise if – eventually – we go back and mark down our true production
of goods and services in 2007 by 2 or even 5 percent.  In this sense,
we face a statistical situation similar to that of the Soviet Union at
its demise – once they figured out that all their military production
had no real value, they had to reduce measured GDP sharply.

Don't forget to make another adjustment for the real value of health care and whether it rose proportionately with expenditure.

At first I thought these numbers were a typo

by  Tyler Cowen in

From this story:

To entice private investors like hedge funds and private equity
firms to take part, the F.D.I.C. will provide nonrecourse loans – that
is, loans that are secured only by the value of the mortgage assets
being bought – worth up to 85 percent of the value of a portfolio of
troubled assets.

The remaining 15 percent will come from the
government and the private investors. The Treasury would put up as much
as 80 percent of that, while private investors would put up as little
as 20 percent of the money, according to industry officials. Private
investors, then, would be contributing as little as 3 percent of the
equity, and the government as much as 97 percent.

Rejecta Mathematica

by  Tyler Cowen in

There is a new journal:

Rejecta Mathematica is a new, open access, online journal that
publishes only papers that have been rejected from peer-reviewed
journals (or conferences with comparable review standards) in the
mathematical sciences.

Isn't that like almost every other journal?  Not quite:

Many authors of a rejected paper may simply have disagreed with or
chosen to not address the original reviewers' concerns. Rejecta
Mathematica also gives those authors the chance to speak out in defense
of their own paper.

One very unique aspect of Rejecta Mathematica is that each paper
includes an open letter from the authors discussing the paper's
original review process, disclosing any known flaws in the paper and
stating the case for the paper's value to the community.

Triya offers comment.  Maybe they should start a comparable journal for rejected blog posts…

Only in England, part II

by  Tyler Cowen in

Spud was found wandering in a garden and taken to Tiggywinkles Wildlife
Hospital in Aylesbury, Bucks, last August. Experts are baffled by his
condition, which has caused his skin to dry and his spines to fall out.
The hospital is asking practitioners of alternative medicine to suggest
possible remedies.

Here is a picture of Spud, a hedgehog with no spines.

I thank Chug for the pointer.

The religion of John Rawls

by  Tyler Cowen in

I sometimes jest with Robin Hanson that he is a Christian theologian, studying eschatology.  In my dialogue with Peter Singer I described his thought in terms of a longstanding Jewish tradition of commentary on the idea of suffering, a successor to Spinoza you might say.  In Law and Literature class I often ask my students: "What is the author's implicit theology?"

Now Kevin Vallier sends me this very interesting piece on Rawls:

When John Rawls died in 2002, there was found among his files a short statement entitled “On My Religion”, apparently written in the 1990s. In this text Rawls describes the history of his religious beliefs and attitudes towards religion. He refers to a period during his last two years as an undergraduate at Princeton (1941–2) when he “became deeply concerned with theology and its doctrines”, and considered attending a seminary to study for the Episcopal priesthood. But he decided to enlist in the army instead, “as so many of my friends and classmates were doing”. By June of 1945, he had abandoned his orthodox Christian beliefs. With characteristic tentativeness and a disclaimer of self-knowledge, Rawls speculates that his beliefs changed because of his experiences in the war and his reflections on the moral significance of the Holocaust. When he returned to Princeton in 1946, it was to pursue a doctorate in philosophy.

The article, by Joshua Cohen and Thomas Nagel, has much more of interest. It's one of the best mid-length essays I've read in some time.