Sentences to ponder
You cannot imagine really solving the Greek imbalance without – at least somewhat – correcting the German imbalance.
Here is more, mostly on why the IMF cannot solve the problem.
Haiti fact of the day
Between 25% and 30% of postearthquake surgeries will need to be done again to avoid problems, says Dr. Jean "William" Pape, an infectious disease authority who is founder of Gheskio, an HIV/AIDS clinic next door to a field hospital set up by the U.S. Department of Health and Human Services.
The title of the article is "Emergency Doctors Leave Haiti."
The culture that is Japan
“The concept of this restaurant is that Robot No. 1 is the manager, which boils the noodles, and Robot No. 2 is the deputy manager, which prepares for soup and puts toppings,” said Famen’s owner, Kenji Nagaya. “Human staffs are working for the two robots.”
Here is much more, interesting throughout. Here is one more bit:
One entry, Beerbot, detects approaching people and asks for beer money. When it acquires enough, it “buys” itself a beer. Bystanders can watch it flow into a transparent bladder. As for other humanizing behaviors, “like a robot that doesn’t stop short at lighting a cigarette but actually goes ahead and smokes it?” Mr. Wurzer says, “We had that.”
The rice fields of Japan
I thank Yan Li for the pointer. Here is more information.
Assorted links
1. Myron Scholes lecture on YouTube.
2. Eliot Spitzer on taxes and growth.
3. Marriage and jobs: we're slowpokes in both.
4. Why has the Australian property bubble yet to burst?
5. Revisionist claim that Haiti death toll is below 100,000; hard to evaluate.
6. Hollywood Stock Exchange to go "real money."
7. Sometimes the internet complements TV.
8. Lars von Trier directs Danish tourism ads (or maybe this is a joke?)
*Reputation and Power*, a new theory of the FDA
The subtitle is Organizational Image and Pharmaceutical Regulation at the FDA and the author is Daniel Carpenter. Here is the book's home page but I don't yet see an Amazon listing. Here is a Barnes&Noble listing, note the price discount.
Where to start? It exhausts me to even write about this book, which is the most comprehensive and most detailed study of a regulatory agency written — ever – to the best of my knowledge. It supplements and overturns all existing work on its subject and it will prove a model for future investigations. It's not short!
The starting point is the notion of reputational capital and the claim that the FDA seeks to preserve and extend its reputation, for a variety of political reasons. One implication of this is that the FDA is sometimes too loose and other times too strict but that both biases are possible. The framework is then used to address numerous questions, including the following:
1. Why the U.S. has the most bureaucratically intensive drug regulation in the world.
2. Why the 1962 amendments were passed.
3. Why FDA regulation is so often treated as de facto irreversible.
4. Why the tenure of a division director matters for how the decisions of that division are treated.
5. Why there is so much judicial deference to the FDA.
6. Why the FDA has been so influential on a global scale.
7. How public attention affects the speed of FDA procedures.
The author makes a strong case that the FDA is one of the most powerful and most important regulatory agencies in the world and one of the most important extensions of state power. Everyone interested in the economics of regulation should read this book, just be prepared to be a little overwhelmed. I would also note that this is not mainly a partisan book in one direction or the other, though on net I read the author as wishing to see a stronger FDA. (On p.379, for instance, I read Carpenter as overly dismissive of the "drug lag" argument.)
Here is Carpenter's previous book, which I have not read. For the pointer to this work I thank Steve Teles.
The laws of New York City (not from *The Onion*)
Here is a new one:
Months after it barred schools from holding most food fundraisers, the city says bake sales can go on–as long as no homemade treats with undisclosed calorie counts grace the fold-out tables. The new regulation, designed to combat ever-increasing childhood obesity, limits bake sales to "fresh fruits and vegetables, or one of 27 specific packaged items" that include low-fat Doritos, Nutri-Grain Cereal Bars (blackberry only) and Linden’s Cookies (butter crunch, chocolate chip or fudge chip cookies in two cookie packs) among other things.
The article is here and hat tip goes to Elmira Bayrasli.
Do imperatives in the past tense exist?
Douglas Krupka refers me to the following:
Although in discussion of the imperative clause type it is routinely denied that it could ever feature a past tense, imperatives in the past tense do exist. Specifically, past imperatives can be found in (Northern) Dutch and Frisian, many speakers of which can produce and understand sentences like (1) and (2).
(1) At liever eens wat minder! (Dutch)
ate rather once somewhat less
The English equivalent seems odd to me, but you would think it is hard to translate into a language which does not have imperatives in the past tense. Best to put the English out of your mind and focus on the:
At liever eens wat minder!
You can do a Google search on the concept here.
Assorted links
2. The future of the Republican Party?
3. Should there be a European Monetary Fund?
4. Jonathan Gruber's new estimates for how much the tax exclusion of health insurance matters.
6. Curling win probability table (for baseball here).
What happened in the shadow banking market?
Gary Gorton has a new and excellent paper on this question. It is called "Questions and Answers About the Financial Crisis." Here is one excerpt:
Q. Why doesn't the repo market just use Treasury bonds for collateral?
A. A problem with the new banking system is that it depends on collateral to guarantee the safety of the deposits. But, there are many demands for such collateral. Foreign governments and investors have significant demands for U.S. Treasury bonds, U.S. agency bonds, and corporate bonds (about 40 percent is held by foreigners). Treasury and agency bonds are also needed to collateralize derivatives positions. Further, they are needed to use as collateral for clearing and settlement of financial transactions. There are few AAA corporate bonds. Roughly speaking (which is the best that can be done, given the data available), the total amount of possible collateral in U.S. bond markets, minus the amount held by foreigners, is about $16 trillion. The amount used to collateralize derivatives positions (according to ISDA) is about $4 trillion. It is not known how much is needed for clearing and settlement. Repo needs, say, $12 trillion.
…to get a sense of the magnitudes, suppose the repo market was $12 trillion and that repo haircuts rose from zero to an average of 20 percent. Then the banking system would need to come up with $2 trillion, an impossible task.
One bottom line is this: the repo market funds the banks and there isn't enough "safety" to ensure the repo market is always working well. We ended up using synthetic securities, including those backed by mortgages. So every now and then we get a run on our banks. Gorton predicts the crisis was not a one-off event and it could happen again.
One implication of this (my inference, not found in the paper) is that most (all?) major current proposals for banking reform don't get at the real problem. You might wish to go back to "old banking" but according to Gorton that stopped being profitable during the 1980s. There's always an uninsured place to put your money, regulation can't stop that, and such money can find its way back to help fund the banking system, right? The systemic implications of that can prove scary.
I read all the same material that you do about "shrinking the banking system" or "decreasing leverage." This paper makes you realize just how far we are from making those recommendations work.
Gorton's short paper is one of the best essays on the crisis so far. Here are earlier posts on Gary Gorton and the crisis.
Dominance Displays
Compare:
Germany and Greece
…the Greek Finance Ministry had warned of "complete collapse" if the whole system…was not rethought…"Prices and value move in an atmosphere of imminent catastrophe," he wrote. "In Greece for a while now all the foundations of a healthy economy have been overturned. There can be no stability, neither in economic equilibrium nor in monetary or financial affairs."
…While the Italians…were genuinely worried by Greece's financial crisis, it was the Germans who needed to be persuaded. Initially, Altenburg's advocacy of the Greek position was not well received even in his own Ministry. But then the political stakes were suddenly raised…
…In Athens people expected the Finance Minister to win substantial concessions from the Germans. In actual fact he was in a very weak position.
…It was not that the Greek financial crisis could be ignored; nor that the Greek Finance Minister lacked the wit or intelligence to present his case. It was simply that no Greek politician carried enough weight to be heard seriously in Berlin.
That's from yesterday's Financial Times, no…whoops, sorry! That's from Mark Mazower's Inside Hitler's Greece: The Experience of Occupation, 1941-44. It's a good book.
The One Day a Week Restaurant
Eric Crampton emails me:
Why don't we see more of this? I went to the only Ethiopian restaurant in New Zealand last night. It runs one day a week – Mondays – in a Burmese restaurant that otherwise was closed on Mondays.
http://offsettingbehaviour.blogspot.com/2010/02/one-day-week-restaurant.html
I can understand that this kind of arrangements would have risks for the host restaurant. Ideally, you'd want it from a non-competing cuisine style. But this is the first instance of it I've ever seen. Have I just not been paying attention? The story from the Dominion Post on how the place opened is very nice. The woman running the Burmese restaurant was an immigrant from Burma who later started volunteering with an NGO that helped new migrants acclimatize. She met a guy there who wanted to open an Ethiopean restaurant but had no capital; her restaurant was closed Mondays.
The other 6 days a week the Ethiopean restauranteur drives a cab.
Ezra Klein summarizes the new health care push
There's not a lot of policy news in the president's new health-care plan. The changes are pretty much what we expected: more money going to subsidies (which are now being referred to as "the largest middle class tax cut for health care in history"), an excise tax that kicks in later and affects fewer plans, a new Health Insurance Rate Authority to oversee premium increases and reject them if they're unfair, the elimination of the Nebraska deal, and so on. There's no public option, nor any significant retrenchment. In fact, the cost of the bill has increased by $75 billion, the result of more generous subsidies.
What I'd like to see — if this is going to pass — is a tougher penalty for not signing up. Ezra also discusses the politics of where it is headed.
Addendum: Megan McArdle says it won't happen.
“Three good books”
Tim Harford reports on his reading:
Tyler Cowen and Alex Tabarrok, Modern Principles of Economics (UK) – well-written, interesting, and some material not normally covered in econ. textbooks. I’ll try to find time to write more about this textbook, but guess students and professors will be the judges.
Ben Goldacre’s Bad Science. I’m a bit embarassed not to have read this until now, but the first few chapters are exceeded even my high expectations. Really very good indeed. Apparently a US edition is in the works – I’ve just been asked to blurb it. Will be a pleasure.
Jonah Lehrer’s The Decisive Moment (now republished as How We Decide). A nice science-and-stories approach to neuroscience, psychology and behavioural economics. I finished the book wanting to put it into action – not as easy as Lehrer makes out – and learned plenty I didn’t know I didn’t know.
All three are recommended.