Category: Current Affairs

Via Ezra Klein, we learn from the WSJ:

A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter.

Ezra comments:

…the reasons appear to be twofold. First, few investors or banks want to work with the government. And second — and maybe more importantly — few investors and banks now think they'll have to. The banks, in particular, are apparently enthused by their ability to raise private capital, and now think they can wait out the market turmoil and sell their toxic assets in a few years, when they'll be worth more money.

And then:

Recently, I asked an administration official which government program we'd remember as making the most difference in averting catastrophe. Where will the history books place the credit?

"It'll be the Federal Reserve," he replied. "It'll be their decision to increase the size of their balance sheet from whatever it was before the crisis to whatever it is now."

Love Land,
a sex theme park set to open this October in China won't have the
chance to lose it's virginity. Chinese bureaucrats ordered the park
destroyed after details of the park's featured attractions were leaked.

The story is here.  The rest of the article relates:

The park was to have giant-sized reproductions of male and female
anatomy, and offered lessons in safe sex and the proper use of condoms.
There was also an exhibition about the history of sex, as well as
workshops offering sex techniques.

The entrance to park featured
a giant pair of women's legs clad only in a red thong. Those legs are
now closed forever. Officials would only say that the concept of the
park was vulgar, and deemed unnecessary. Bulldozers and wrecking ball
were seen destroying the exhibits as onlookers tried to get a peak.

China considers the topic of sex taboo, even though illegal prostitution is at an all-time high in the country.

David Henderson reports.  He was a pioneer in the economics of sports and a very good applied microeconomist.  Here is Scully on scholar.google.com.  Here is John Goodman's write-up.

I do not vouch for these tips, but they are interesting to ponder.  Here is one of them:

Choose women who are happy, but they shouldn't smile too easily.
This is hard for men to do. Because men are hard-wired to be drawn to women who laugh at their jokes. Men want to be funny. But women who are slower to smile do better at work, according to communications consultant Neil Lowndes. So you should date women who smile a lot, but work with women who don’t. (Hat tip: Derek Scruggs.)

That's from Penelope Trunk.  I wonder what the implied model looks like.  Is this a coordination game or does a hard-to-mimic smile create a separating equilibrium in a signalling game?  Since men compete against each other for dates, should they not choose a randomized mixed strategy when it comes to female smiling?  (Multiple dimensions have value, even if smiling predicts some of them on average.)  Can a taste for arbitrary markers serve as such a mixed strategy?  Are the eyes the window to the soul?  Etc.

Who needs Match.com?

Jin Tai Cheng, a Beijing company, is offering a creative solution for
prospective buyers at its "Ecological Bay" Villa project. The company
encourages future homeowners to date its sales girls and promises a
wedding present of RMB 60,000 to any couple that ends up getting
married. The official story is that the company lured the sales ladies
with a commitment to pay 8% in sales commissions as well as the
opportunity to strike gold by securing a wealthy husband.

Here is the story.  Yet rarely is a market as simple as it sounds at first.  It seems they are trying to pair up "lesser" prospects without portraying them as such:

…a local Real Estate executive I spoke to pointed out that the
girls on offer are not that attractive. His theory is that the
developer is not making money on selling apartments and so it signed a
deal with a matchmaking agency to marry these "unwanted" girls to rich
husbands. In return, the developer will receive much more than RMB
60,000 for every girl they manage to "give away". This way, the girls
don't lose face by putting themselves on sale, the husbands don't lose
face by going directly to an agency to look for a bride, and the
developer makes a nice profit. In a country with too many apartments
and not enough girls, this doesn't sound like a bad idea.

I thank The Browser for the pointer.

The TARP money seems to be for bank bondholders (not bank lending), banks are gaming the system like crazy and winning the public relations earnings announcement battle, and step-by-step the Obama team has ended up painted into a corner and now needs to publicly announce the results of the bank "stress tests."  No one wins when the government pronounces a bank "weak" (and thus destroys it) and no one wins when the government pronounces a bank "good" (and thus to some extent owns it).

That's the latest.

One sugar daddy whose screen name is Sam has tried long-term
girlfriends, mistresses, prostitutes and a brief marriage. Now single,
the 39-year-old entrepreneur has found the arrangement that suits him
best: a monogamous business-associate-with-benefits deal in which he
pursues an entrepreneurial project with a young, beautiful, intelligent
woman. He provides financial backing, mentoring and networking; she
provides sex, fun and, inevitably, a bit of worshiping, all of which
make him feel virile and influential. In between vacations using his
private jet, both work hard on the project. They don’t tend to see each
other much, as he travels frequently for his work.

I don't recall seeing that arrangement anywhere in Oliver Williamson's typology of the business firm.  Should I have entitled this post "What people will spend on theatre"?  Does this make it sound better?

Sam runs these relationships with an explicit business plan, a set
budget, measurable goals and quarterly reviews. From the outset, the
contract has an end date. It’s a brilliant, if contrived, way to
protect his pride. The contract specifies that the romance and sex are
to end by the preset date, so there’s no break up, no rejection, no
bruised ego. She’s not dumping him; the gig’s just over.

Here is the much longer story.  Here is more:

He has an almost mathematical approach to assessing relationships, and
once even computed the costs for a girlfriend, mistress, prostitute and
wife – mistresses turn out to be most expensive by the hour; wives, by
the year; girlfriends are cheapest all around. But he’s not as
calculating as he seems. In fact, he concluded there’s little
correlation between cost and quality. Still, he is relentlessly
searching for an algorithm that will predict relationships’ success.

“This is an opportunity to forge an alliance between Main Street, Wall
Street and K Street,” said Steven A. Baffico, an executive at
BlackRock, referring to the Washington address of many lobbying firms.

That's about the new plan to possibly allow small investors to participate in buying up "legacy assets" through mutual funds.  My fear, of course, is that the government ends up committed to particular outcomes for those "little guys."  There are more than those three streets! 

Theory 1: President Obama replaced Wagoner with Fritz Henderson as CEO of General Motors because he is convinced that Henderson will be a better corporate leader.

Theory 2: President Obama replaced Wagoner with Fritz Henderson as CEO because the A.I.G. public relations debacle taught him not to appear "soft" with corporate leaders receiving government money.

Which theory do you vote for?  Which principles do you think should be governing the disposition of leadership in major U.S. corporations?

I don't much blog the auto industry because it is so depressing. But this passage, from Francis Cianfrocca, today caught my eye:

Today, the President of the United States is expected to make
significant announcements about GM’s warranty policy. No, that’s not a
typo, and yes, it’s remarkable. I didn’t say the President of General
Motors, I said of the United States.

This bit was interesting too:

Many of GM’s dealers will receive lavish buyouts as an inducement to
close their doors, for a total cost in the billions of dollars. That’s
disgusting, but it’s required both by GM’s contracts with them and by
the welter of state laws that protect the dealers. (If you want to know
who the political power brokers are in any given city or town, look for
the car dealers.)

This is going to be kept scrupulously out of the news, because car
dealers contribute huge sums to every last man and woman in Congress
and the Senate. The public was ready to torch the private residences of
AIG executives, but they won’t make a peep about paying billions of
their own hard-earned dollars to provide a cushy retirement for
thousands of already-rich auto dealers.

The post is interesting throughout.

Only in this respect.