Results for “best book” 1835 found
Would you take an architectural pilgrimage?
Donald at www.2blowhards.com nominates some architectural pilgrimages worth taking. I suggest the Ford Rouge plant in Dearborn, Michigan:
Here is a brief history, with some stunning black and white photos. I also enjoyed my pilgrimages to Tulsa and Kansas City (barbecue too). Buenos Aires has the best public sculptures. I’ll nominate the Taj Mahal for the most overrated site; it looks just like the postcard and I liked the saris of the visitors more than the site itself. Here is a picture of Magnitogorsk, which I hope to visit. Here is a broader index of Magnitogorsk pictures. Brasilia is another dream of mine, and yes I do find that image attractive.
Here is an on-line version of Ludwig Lachmann’s Capital and its Structure, courtesy of Liberty Fund.
Further subjective impressions of Argentina
…the good stores just don’t have the larger sizes for their finest items. What else?
Piegari was the best food, Olsen the best restaurant decor (they serve Swedish food, oddly enough), and Ataneo (the Santa Fe branch, set in a former Art Deco movie theater) is the most attractive bookstore I have seen anywhere. If it wasn’t for that tiny matter of per capita wages, I would live here. It is my favorite city, period. I don’t care that I go to bed before most of them wake up; I am not that social anyway.
The people here don’t seem very Catholic. But most of the politics revolves what has happened to various dead bodies. Older people still speculate about what happened to Eva’s corpse during its missing years, a topic fraught with political implications. And for two decades the "desaparecidos" (disappeared ones), killed under the military dictatorship, have dominated the national consciousness.
When the New Year comes everyone rips out the pages of their old calendars and leaves them on the street. It makes for a mess. You can walk just about anywhere in the central bank without encountering hostile or even inquisitive security guards.
I recognized only one name on the top ten music charts, namely Madonna at number four. The new Saramago book — not yet available in English — is number one in book sales. Taxi drivers know not only Borges but also Ernesto Sabato.
A quality apartment in an excellent part of town can sell for as little as $U.S. 50,000. I have stocked up on DVDs of recent Argentine movies.
Have you heard of the appropriately-named "Faena Hotel and Universe"? The Hotel as Womb. The people who stay here (that’s not us) are pampered by a personal assistant and barely leave their quarters. The modern world has not ceased to produce architectural wonders.
Get the bitter [amargo] chocolate ice cream. Go to Uruguay with low expectations and you will be charmed.
Tango shows are mostly a waste, unless you have an inside connection to a dance group or some good lessons. And don’t be put off by the fact that two-thirds of your meals boil down to a choice of either lomo or pasta; both are superb.
Woe to the young Argentine woman who is perceived as overweight.
Our guide at Recoleta had indigenous features, but she insisted repeatedly (and to a foreign audience) that her family was white and she simply had too much of a sun tan. She has been learning about the histories of the families in the graves since she was five years old; she can talk for hours about them without notes and has an opinion of each and every family and its moral character. Auto-Icon, or the cemetary as Panopticon.
Why do so many stores and restaurants use the "ring the bell" system? These are not diamond merchants seeking to protect their wares. I suspect that clientele effects are especially strong in this city. Perhaps "regulars" are more willing to ring the bell, and these same regulars are more valuable as customers. Signalling is rampant.
Don’t expect major sights of the kind you find in a Frommer’s guidebook. Use the Time Out guide to find experiences.
Contrary to what my wife thinks, people here are not happier than in the United States. She won´t go to the parts of town that prove her wrong. Nine years ago, there were no beggars opening taxi doors for you, expecting a peso in return. The shanties near the airport are extreme. The poor of Buenos Aires have it good compared to parts of northern Argentina, but Salta and Jujuy will have to wait for another trip.
Go to Kumana’ for the best corn empanadas, fifty cents a piece. El Obrero is excellent Italian home cooking, with amazing soccer decor, again for a pittance. Cafe Uriarte was first-rate. La Brigada has the best baby lamb intestines you can imagine.
You have a status quo bias. And like most people, you probably overinvest in goods and underinvest in experiences. Get off your bum and go. Many major cities in the USA have direct connections to Buenos Aires. You fly overnight and sleep on the plane. You wake up in a new universe.
In the meantime, thank god or luck that you were born where you were, unless of course that was northern Argentina. Happy New Year to you all.
My favorite things of Argentina
1. Tango CD: Astor Piazzola’s Tango: Zero Hour. If you are looking to download a single song, try Carlos Gardel’s El Dia Que Me Quieras.
2. Novel: Cortazar’s Hopscotch [Rayuela]. I read one chapter (almost) every day, which amounts to about three pages. I expect to finish in July, and no I don’t understand it in English either. It does hold my attention, and is rapidly becoming one of my favorite novels. Looking elsewhere, Eduardo Berti is a much underrated author.
3. Short story: Tlon, Uqbar, Orbus Tertius, by Borges. Could this be the best short story period? Here is an excerpt.
4. Film: Nine Queens is the obvious choice, and yes it is implicit commentary on their economic crises. Here is a longer list. For "Film, Set In," you might try Kiss of the Spider Woman.
5. Pianist: Martha Argerich. Try her Chopin, or perhaps her Prokofiev. She is one of the sexiest women:
6. TV show: I only know one Argentinian TV show — Epitafios — but it is a blockbuster. Noir about a serial killer in Buenos Aires; sometimes they show it on HBO.
7. Social science: Domingo Sarmiento, Facundo: Civilization and Barbarism. The Argentinian Tocqueville, you might say, and just translated into English last year. If you relish the idea that rural areas are barbaric, you will find intellectual company in this book.
8. Painter: Guillermo Kuitca. Try this one, or here is a classic Kuitca image.
The bottom line: This is one of the best places on earth, and yes I am here now. Comments are open, if you would care to add to this.
More on the Xbox shortage
I’m finishing an MA in Economics at Boston University right now, and am also the author of "PSX: The Guide to the Sony Playstation" which is being released this week. In the course of research for the book, I interviewed a number of VPs at Sony about why they priced at 299 when the PS2 came out. The waits for the PS2, in fact, were much longer than those for the Xbox360, and still no rise in prices.
Here’s my understanding of the pricing situation:
1) Console prices are announced months in advance of the system release, unlike many other products. There is a general consensus that a price above 299 (or 399, perhaps, which is the true price of the 360) will be unsuccessful. In the mid and late 90s, a huge number of consoles bombed by announcing prices of 400-1000 (Sega Saturn, cd-i, 3DO, Amiga CD32, etc.). Third party developers are essential to a system’s success (a system without games, after all, does nothing), and in order to have games ready for a system, they evaluate a system a year before launch. A high price would discourage developers -> discourage games -> lessen demand. Given the competitiveness of the console game market, I have no doubt that major third-party game producers (Activision, Ubisoft, Square, EA, etc.) would balk if Microsoft were to raise prices, fearing, justly or not, that system sales two years down the road (when their games are ready) will be lower. For the 500-pound gorillas (EA in particular) there might even be contractual stipulations with MS about the system price.
The other reason is the one Alex gave – The $700 consoles on ebay represent the highest WTP on the demand curve, not the average. Personally, I don’t think MS would’ve sold 500k Xboxes at $500. Why MS didn’t auction off "limited edition" systems early, as you said, remains a mystery though. Nintendo has done exactly that with some items (in charity auctions, however).
In any case, the basic pricing structure is no mystery at all. MS needs to satisfy both end-users AND third-party developers, not just end-users. They’re selling a *platform* more than a product.
Brush your teeth to lower weight?
…there is no clear evidence that schools are contributing to the growth in obesity. The obesity-related complaints about school lunches, vending machines, and physical education are based largely on the assumption that these factors are causing our kids to get fat. Yet, I find little evidence to support this claim. For example, in looking at survey data on the health behavior of middle and high school students, the factor I found that best predicted whether or not a kid was obese was tooth brushing [emphasis added]. More important than how much junk food they ate, soda they drank, or physical education they received was whether or not they brushed their teeth. Among fourteen- to seventeen-year-olds, only 16 percent of kids who brushed their teeth more than once a day were overweight compared to 24 percent who brushed less than once a day. Of course, other factors were important as well — teenagers who play more computer games, eat more fast-food, and drink less whole milk were also more likely to be obese — but these factors were tiny in comparison with tooth brushing. Meanwhile school policies, such as whether the kid was in physical education or ate school lunches, had no predictive power for whether or not a child was obese.
Now obviously the act of brushing one’s teeth plays little direct role in a child’s weight, but it is a good indicator of something else — in what type of household the child lives. Children who brush their teeth more often are more likely to come from homes where health and hygiene are a priority…In other words, outside of genetics, the biggest factor predicting a child’s weight is what type of parenting they receive [emphasis added].
That is from J. Eric Oliver’s Fat Politics: The Real Story Behind America’s Obesity Epidemic. Here is my previous post on the book; the comments are open.
Should Christmas be more commercial?
Sometimes a bracing Randian approach is needed. Leonard Peikoff writes:
Christmas in America is an exuberant display of human ingenuity, capitalist productivity, and the enjoyment of life. Yet all of these are castigated as "materialistic"; the real meaning of the holiday, we are told, is assorted Nativity tales and altruist injunctions (e.g., love thy neighbor) that no one takes seriously.
In fact, Christmas as we celebrate it today is a 19th-century American invention. The freedom and prosperity of post-Civil War America created the happiest nation in history. The result was the desire to celebrate, to revel in the goods and pleasures of life on earth. Christmas (which was not a federal holiday until 1870) became the leading American outlet for this feeling.
Historically, people have always celebrated the winter solstice as the time when the days begin to lengthen, indicating the earth’s return to life. Ancient Romans feasted and reveled during the festival of Saturnalia. Early Christians condemned these Roman celebrations — they were waiting for the end of the world and had only scorn for earthly pleasures. By the fourth century, the pagans were worshipping the god of the sun on December 25, and the Christians came to a decision: if you can’t stop ’em, join ’em. They claimed (contrary to known fact) that the date was Jesus’ birthday, and usurped the solstice holiday for their Church…
Then came the major developments of 19th-century capitalism: industrialization, urbanization, the triumph of science — all of it leading to easy transportation, efficient mail delivery, the widespread publishing of books and magazines, new inventions making life comfortable and exciting, and the rise of entrepreneurs who understood that the way to make a profit was to produce something good and sell it to a mass market.
For the first time, the giving of gifts became a major feature of Christmas. Early Christians denounced gift-giving as a Roman practice, and Puritans called it diabolical. But Americans were not to be deterred. Thanks to capitalism, there was enough wealth to make gifts possible, a great productive apparatus to advertise them and make them available cheaply, and a country so content that men wanted to reach out to their friends and express their enjoyment of life. The whole country took with glee to giving gifts on an unprecedented scale.
Santa Claus is a thoroughly American invention. There was a St. Nicholas long ago and a feeble holiday connected with him (on December 5). In 1822, an American named Clement Clarke Moore wrote a poem about a visit from St. Nick. It was Moore (and a few other New Yorkers) who invented St. Nick’s physical appearance and personality, came up with the idea that Santa travels on Christmas Eve in a sleigh pulled by reindeer, comes down the chimney, stuffs toys in the kids’ stockings, then goes back to the North Pole.
Of course, the Puritans denounced Santa as the Anti-Christ, because he pushed Jesus to the background. Furthermore, Santa implicitly rejected the whole Christian ethics. He did not denounce the rich and demand that they give everything to the poor; on the contrary, he gave gifts to rich and poor children alike. Nor is Santa a champion of Christian mercy or unconditional love. On the contrary, he is for justice — Santa gives only to good children, not to bad ones.
All the best customs of Christmas, from carols to trees to spectacular decorations, have their root in pagan ideas and practices. These customs were greatly amplified by American culture, as the product of reason, science, business, worldliness, and egoism, i.e., the pursuit of happiness.
OK, some of that is over the top and some of the history is a wee bit false. Many Christians place greater stress on Easter. Still, I should start a new title: "Bracing but Required Randian Shocks, A Continuing Series."
Thanks to www.politicaltheory.info for the pointer.
Hello, I’m Johnny Cash
I’d always thought that Sun Records and Sam Philips himself had created the most crucial, uplifting and powerful records ever made. Next to Sam’s records, all the rest sounded fruity. On Sun Records the artists were singing for their lives and sounded like they were coming from the most mysterious place on the planet. No justice for them. They were so strong, can send you up a wall. If you were walking away and looked back at them, you could be turned into stone. Johnny Cash’s records were no exception, but they weren’t what you expected. Johnny didn’t have a piercing yell, but ten thousand years of culture fell from him. He could have been a cave dweller. He sounds like he’s at the edge of the fire, or in the deep snow, or in a ghostly forest, the coolness of conscious obvious strength, full tilt and vibrant with danger. "I keep a close watch on this heart of mine." Indeed. I must have recited those lines to myself a million times. Johnny’s voice was so big, it made the world grow small, unusually low pitched – dark and booming, and he had the right band to match him, the rippling rhythm and cadence of click-clack. Words that were the rule of law and backed by the power of God.
That is from Bob Dylan’s Chronicles, volume I. And I am picking the film to win Best Picture this year, whether or not it deserves it.
Unlikely film adaptations, part II
Leonardo DiCaprio is to play a man with a particular gift for reading body language in the forthcoming adaptation of Blink, Malcolm Gladwell’s bestseller about how people make snap decisions. The writer-director will be Stephen Gaghan, who won an Oscar for his screenplay of 2000’s drug trade film Traffic. "[Gaghan] came to me out of the blue," Gladwell told trade magazine Variety. ‘He thought there was something in the book that was a movie. We took one chapter from the book and fashioned a story out of it. But most of it is something we dreamt up together."
Thanks to http://kottke.org, now touring Asia, for the pointer. Here is updated information on a previous installment in this series. So who will star in Freakonomics?
Why Americans are fatter
…Americans are not consuming more carbohydrates and trans fats because McDonald’s is super sizing our dinners. Nor is our diet changing because Uncle Sam is subsidizing corn. Rather, Americans are eating poorly because of a much more fundamental change in how we eat, specifically, the rise of snacking. In fact, the amount we eat and drink between meals accounts for nearly all the growth in our consumption of carbohydrates and fats over the past thirty years. Perhaps the biggest source of America’s recent weight gain and sugary diet is not so much the value "meal" but the simple snack.
…the free market has caught up with American food culture…With snacking, food is no longer about sustenance or even sociability: it is about amusement and self-medication. We now eat to relieve our stress, to alleviate our boredom, or simply make ourselves feel better. Food, in short, has become our drug of choice. And the types of foods that are best suited for these psychological tasks are the very ones that cause us so many health problems, that is, sweets, fats, and refined carbohydrates. In other words, the ultimate source of the changing American diet goes beyond McDonald’s, corn syrup, or the food pyramid; the ultimate source is the American way of life.
That is from J. Eric Oliver’s excellent Fat Politics: The Real Story Behind America’s Obesity Epidemic. Here is Steve Levitt’s positive review. Here is an LA Times review.
What about me? I am not going to exercise beyond my current levels of tennis, basketball, and walking are enough. So I could become thinner in three ways. First, I have recently switched from Raisin Bran to Spelts cereal in the morning. Second, I prefer mineral water to Coke, but Szechuan restaurants do not serve the former. I am waiting for Markets in Everything, and in the meantime I am not willing to give up Dan Dan Noodles or eat them with plain ice water or tea. Third, in the last year I have started snacking on high-quality dark chocolate. I have yet to decide whether I wish to fight this new source of additional calories…
Addendum: Comments are now open…
The Undercover Economist
Companies find it more profitable to increase prices (above the sale price) by a larger amount on an unpredictable basis than by a small amount in a predictable way. Customers find it trouble some to avoid unpredictable price increases — and may not even notice them for lower-value goods — but easy to avoid predictable ones…
Have you noticed that supermarkets often charge ten times as much for fresh chili peppers in a package as for loose fresh chilies? That’s because the typical customer buys such small quantities that he doesn’t think to check whether they cost four cents or forty. Randomly tripling the price of a vegetable is a favorite trick: customers who notice the markup just buy a different vegetable that week; customers who don’t have self-targeted a whopping price rise.
I once spotted a particularly inspired trick while on a search for potato chips. My favorite brand was available on the top shelf in salt and pepper flavor and on the bottom shelf, just a few feet away, in other flavors, all the same size. The top-shelf potato chips cost 25 percent more, and customers who reached for the top shelf demonstrated that they hadn’t made a price-comparison between two near-identical products in near-identical locations. They were more interested in snacking.
That is from Tim Harford’s new The Undercover Economist: Exposing Why the Rich are Rich, the Poor are Poor — and Why You Can Never Buy a Decent Used Car (don’t trust Amazon, the release date is November, not January). This book is one of the very best introductions to the economic way of thinking. "Required Reading," says Steve Levitt, what better endorsement could you want?
Here is Tim’s home page, including his FT "Dear Economist" columns. Here is Tim’s Private Sector Development Blog. Here is Tim’s recent FT piece on Thomas Schelling. Comments are open, in case you have other examples of comparable supermarket tricks.
Thomas Schelling, new Nobel Laureate
Note my biases, Schelling was my mentor at Harvard.
Tom is an unassuming guy, who looks as if he sells Hush Puppies at the local mall. But he is one of the sharpest people you will meet. He delivers the killer point, argument, or anecdote with striking regularity. Even in his eighties he is sharp as a tack. He has a deeply philosophical and humanistic approach to economics. What are his contributions?
1. The idea of precommitment. You can be better off, either individually, or institutionally, if your choices are limited in advance. This is a key idea in monetary policy (many governments seek to tie the hands of their central banks), the theory of bargaining (try buying a used car, and see if the salesman doesn’t talk about "the boss upstairs"), and industrial organization (firms may invest in capacity to precommit a market position and deter rivals). You find the precommitment frequently in movies as well, especially where kidnapping is involved; what is that Mel Gibson flick again? Here is an excellent Jon Elster piece on the ambiguities of precommitment. Here is my piece on similar themes.
2. The paradox of nuclear deterrence. Ever see Dr. Strangelove? Tom developed the idea that deterrence is never fully credible (why retaliate once you are wiped out?). The best deterrent might involve precommitment, some element of randomness, or a partly crazy leader. I recall Tom telling me he was briefly an advisor to Kubrick. Here is someone else’s essay on the paradox of deterrence.
3. Focal points. People coordinate by directing their attention to commonly recognized points of importance. If a meeting time for lunch is not specified, you might assume 12 noon. If someone mentions "economics blog," of course MarginalRevolution.com comes to mind. And so on. Much social coordination occurs in this manner. I once asked me class: "If you had to hide a one hundred dollar bill in a book, so that your friend would find it, but you could not announce the book, which volume should you choose?" Many said The Bible but of course the game theorist picks Schelling’s The Strategy of Conflict.
4. Behavioral economics and the theory of self-constraint. One of Tom’s best pieces is "The Mind as a Consuming Organ," American Economics Review, 1984. Here is a lecture of his on self control. Will Wilkinson cites a bit of that essay. Tom made it respectable for economists to talk once again about happiness.
Tom has been an underrecognized father of behavioral economics. His work on addiction, memory, and personal control was pathbreaking and came nearly twenty years before the "behavioral revolution" in economics. He analyses the tricks people use to control their wills. For Tom, self-control is often a more important determinant of happiness than is wealth. Tom once told me his work sprung from his own attempts to quit smoking, which he did finally manage. Several times.
5. The economics of segregation. Tom showed how communities can end up segregated even when no single individual cares to live in a segregated neighborhood. Under the right conditions, it only need be the case that the person does not want to live as a minority in the neighborhood, and will move to a neighborhood where the family can be in the majority. Try playing this game with white and black chess pieces, I bet you will get to segregation pretty quickly. Here is a demo model for playing the game.
6. Later in his life Tom turned his attention to issues of global warming. He has been skeptical of the idea that global warming involves insuperably high economic costs. Here is a short essay by Tom on the topic. Here is his excellent AER piece on the same topic.
Tom is not well-represented on the web, here is one photo, but the associated links are mostly broken. Here is Tom’s piece on Hiroshima. Here is the Wikipedia bio, note Wikipedia already reports he won the prize. Here is a great interview with Tom. Here is Tom’s work on the Copenhagen Consensus.
A few bio facts: Like so many other prestigious American economists, Tom worked for the Marshall Plan in its early stages. He spent most of his career at Harvard, first in the economics department, later in the Kennedy School. He had close ties with the Rand Corporation. He was an advisor to Kissinger during the Vietnam War but quit in disgust. He is now emeritus at University of Maryland. I have always interpreted Tom’s political views as those of a conservative Democrat.
Here is a piece I wrote with Dan Klein and Timur Kuran, Salute to Schelling: Keeping it Human. In this piece, recently published, we asked the Committee to give the Prize to Tom. Here are Tom’s books, they are all worth reading.
Comments are open, you can add more; Tom could have won more than one Nobel Prize for all his contributions.
Sales of new novels and romances during the Romantic period
Yes, it is Sir Walter Scott. Waverely, from 1814, sold about 40,000 copies; Guy Mannering sold about 50,000. His twenty-third bestselling novel (unidentified) sold about ten thousand copies. The twenty-fourth bestselling novel from this period — Fanny Burney’s Camilla — sold only four thousand. Scott was first also in the poetry market, with Byron a close second. Moore, Campbell, Rogers, and Southey dominate Coleridge and Wordsworth.
Keep all that in mind next time you despair about Dan Brown on the bestseller lists. More generally, we are leaving "winner-take-all" markets behind, not moving toward them.
The numbers are from William St. Clair’s excellent The Reading Nation in the Romantic Period. Here is my previous post on the book.
Economists who revolutionized macroeconomics
This list is from my lecture Monday night:
David Hume: His essay on money, circa 1752, remains one of the best writings on the topic. Honorable mention goes to Isaac Gervaise, who in 1734 outlined international mechanisms of adjustment.
Adam Smith: Growth is everything, no?
Thomas Malthus: A much underrated macroeconomist. He grasped aggregate demand, and price-cost margins, not to mention the importance of demographics.
David Ricardo: Not an original macroeconomist, but he showed you could apply the quantity theory of money to the policy issues of the day.
Henry Thornton: Super-smart, he integrated the best of all previous macroeconomics without making an error. He didn’t have much influence until Wicksell and the Austrians, however.
Knut Wicksell: He showed it was possible to have an integrated analysis of the real and monetary sectors of the economy. He also anticipated about 90 percent of modern real business cycle theory.
John Maynard Keynes: If you want another perspective on him, read his monetarist Tract on Monetary Reform, or Essays in Biography, both masterpieces.
Milton Friedman: Many of his most important ideas were a resurrection of previous wisdom, most of all from Irving Fisher, but his practical influence has been vast.
The 1979-1990 Theory Boom: We applied every idea in the toolbox — from game theory to adverse selection to imperfect competition — to macroeconomics. But who gets the credit?
Next on the horizon: ????? When it comes to high theory, we live in slow times.
Dark horse pick: Friedrich Hayek (or is it Mises?); even Paul Krugman is borrowing his ideas.
Addendum: Wesley Clair Mitchell also deserves mention, and read the second comment below for other names.
1491
At the DNA level, all the major cereals — wheat, rice, maize, millet, barley, and so on — are surprisingly alike. But despite their genetic similarity, maize looks and acts different from the rest. It is like the one redheaded early riser in a family of dark-haired night owls. Left untended, other cereals are capable of propagating themselves. Because maize kernels are wrapped inside a tough husk, human beings must sow the species — it cannot reproduce on its own…no wild maize ancestor has ever been found, despite decades of search. Maize’s closest relative is a mountain grass called teosinte that looks nothing like it…And teosinte, unlike wild wheat and rice, is not a practical food source; its "ears" are scarcely an inch long and consist of seven to twelve hard, woody seeds. An entire ear of teosinte has less nutritional value than a single kernel of modern maize…
…the modern species [of maize] had to have been consciously developed by a small group of breeders who hunted through teosinte strands for plants with desired traits. Geneticists from Rutgers University…estimated in 1998 that determined, aggressive, plan breeders — which Indians certainly were — might have been able to breed maize in as little as a decade…modern maize was the outcome of a bold act of conscious biological manipulation — "arguably man’s first, and perhaps his greatest, feat of genetic engineering," [Nina Federoff]…"To get corn out of teosinte is so — you couldn’t get a grant to do that now, because it would sound so crazy…Somebody who did that today would get a Nobel Prize! If their lab didn’t get shut down by Greenpeace, I mean."
That is from 1491: New Revelations of the Americas Before Columbus, by Charles C. Mann. I loved this book, which also tells you why Norte Chico, at its peak, may have been as advanced as the Sumerians. The book covers much of the New World, and the evidence in this area is in general muddy. So the text is virtually certain to contain mistakes. But the judgments are generally well-reasoned, the author is remarkably well-read, and the area I know best — the Nahua culture of early Mexico — is presented in a sober and balanced manner.
My bet on oil prices
John Tierney is looking to bet that oil prices will fall. He can find some willing opponents here, and they will offer him the best odds available. I’ve been urging Alex to short real estate investment trusts; if he has already done so I fear for his ruin. Brad DeLong discusses Google. Jane Galt warns against such bets, on the grounds that timing is everything and no one knows when the bubble will burst.
It remains an open question why markets don’t sell long-term bets for those people who have "price knowledge" but not "timing knowledge." The longest-term NYMEX crude oil futures sell for 84 months ahead; admittedly a forward contract can stretch longer. But why can’t you make a 30-year bet on organized markets? I see a few hypotheses:
1. There are few if any people who have real price knowledge but not timing knowledge.
2. The disagreement in the market is about timing, so shorter-term contracts attract the attention and volume. You might disagree about whether something will happen this month or next, but you can’t argue about whether it will happen ten or eleven years from now.
3. Long-term contracts make economic sense and someday we will have them. Right now we are out of equilibrium. We await tolerant regulators and heroic entrepreneurs.
4. You can replicate long-term contracts by trading short-term contracts in successive fashion. The informed traders have enough liquidity and borrowing power to make this work. (But hey, if that is so easy, why not have even fewer oil futures contracts?)
5. Liquidity is scarce, and involves significant economies of concentration. Intermediaries limit the number of contracts, just as we have limited trading locales and trading hours. (Admittedly many of these limits have, for better or worse, broken down.) Remember when the French used to trade stocks just a few times a day?
Take your pick or add to the list. Unless you opt heavily for #3, the market is saying that a general knowledge of price — without a knowledge of timing — simply isn’t worth that much.
My bet on oil prices will be restricted to buying another economy car, next time around. It is better to spend the money on books anyway, no?
Thanks to Tim Bartlett for the pointer.