Assorted links
1. Angus Madison has passed away.
3. Make that PHIIGS?
4. When is a coded license plate objectionable?: the case of 14CV88.
5. Second Life economy at record high.
6. The Gini coefficient among writers, from Charles Stross.
Germany fact of the day
In essence, the Germans have already tried a lending bailout of Greece:
Add this to the list of reasons German taxpayers are unhappy about having to lend Greece money to ease its debt crisis: In effect, they already have.
Germany’s financial institutions hold some 28 billion euros, or $37 billion, in Greek bonds, according to estimates by Barclays Capital, extrapolating from International Monetary Fund data.
Germany’s regulators and many of its banks do not disclose precise figures, but an informal survey on Wednesday of the largest banks indicates that about half of that debt – rated as junk by Standard & Poor's since Tuesday – appears on the balance sheets of institutions that are owned or controlled by the German government.
And so Germany’s exposure to Greek debt already exceeds, by far, the $11 billion the country would lend to Greece as part of an initial European Union plan to help the country avoid default on its debt…
The full article is here. On a related note, EU officials are complaining about the downgrades coming from the credit rating agencies; at this stage of the game that is a stunning and instructive development. A lot of regulators simply do not want "honest" credit rating agencies and never will want that.
Charity markets in everything, Star Wars edition
It could very well be the ultimate car-obsessed/Star Wars fanboy fantasy. What is this latest object of our geekery? How about a car wash carried out by a gaggle of Princess Leias? And not just any Princess Leia, mind you, but slave Leia.
There is a photo (safe for work), about which you will have mixed opinions, and also videos. The full account is here and I thank John Thorne for the pointer.
Chickens coming home to roost
In 2000 Dudley Hiibel was arrested and convicted of a crime solely because he refused to identify himself to a police officer. Hiibel argued that in a free country people don't have to produce their papers just because the police demand them and he argued that his arrest was unconstitutional. The case, Hiibel v. Sixth Judicial District Court of Nevada, went to the Supreme Court and Dahlia Lithwick, Slate's legal correspondent, made fun of libertarians who supported the plaintiff calling them hysterical and loopy. She wrote:
It would be easier to credit the Cato and ACLU arguments if we didn't already have to hand over our ID to borrow a library book, obtain a credit card, drive a car, rent videos, obtain medical treatment, or get onto a plane. So the stark question then becomes this: Why are you willing to tell everyone but the state who you are? It's a curious sort of privacy that must be protected from nobody except the government… [Yeah, it's curious that people want to protect themselves from the one organization in society that can legally deprive them of life and liberty. AT]
The slippery-slope arguments–that this leads to a police state in which people are harassed for doing nothing–won't really fly.
Well in Arizona, it's flying now.
Russ Roberts on the financial crisis
His new paper is now on-line. He summarizes his argument as follows:
1. It isn't "too big to fail" that's the problem, it's the rescue of creditors going back to 1984, encouraged imprudent lending and allowed large financial institutions to become highly leveraged.
2. Shareholder losses do not reduce the problem even when shareholders are the executives making the decisions
3. These incentives allowed execs to justify and fund enormous bonuses until they blew up their firms. Whether they planned on that or not doesn't matter. The incentives remain as long as creditors get bailed out.
4. Changes in regulations encouraged risk-taking by artificially encouraging the attractiveness of AAA-rated securities.
5. Changes in US housing policy helped inflate the housing bubble, particularly the expansion of Fannie and Freddie into low downpayment loans.
6. The increased demand for housing resulting from Fanne and Freddie's expansion pushed up the price of housing and helped make subprime attractive to banks. But the ultimate driver of destruction was leverage. Either lenders were irrationally exuberant or were lulled into that exuberance by the persistent rescues of the previous three decades.
The full paper is here. Arnold Kling offers comment.
Why carbon tax proponents should talk more about deregulation
After nine years of regulatory review, the federal government gave the green light Wednesday to the nation’s first offshore wind farm, a highly contested project off the coast of Cape Cod.
The full article is here. But wait, whoops!, I left out one part:
Several regulatory hurdles remain, and opponents of the wind farm have vowed to go to court, potentially stalling Cape Wind for several more years.
Sentences to ponder
Portugal is still slotted to loan money to Greece at a rate very far below its own borrowing costs!
That's from Angus, who also suggests that the Greeks sell their part of Cyprus to Turkey.
Assorted links
1. Steve Teles reviews Daniel Carpenter on the FDA.
2. Early views of Canada, a wonderful photo archive.
3. The culture that is Japan: dating by blood type.
Which Americans are “best off”?
I know that is a tricky concept, and I wouldn't personally use those words, but if you consult human development indices the answer is Asians living in New Jersey. The standard is:
The index factors in life expectancy at birth, educational degree attainment among adults 25-years or older, school enrollment for people at least three years old and median annual gross personal earnings.
What does New Jersey do right? How much of that is selection?:
Across the 50 states and the District of Columbia, Asian Americans were worst off in Louisiana. Their New Jersey counterparts lived an average of nine years longer and earned more than twice that of Asian Americans in Louisiana.
Overall Asian-American life expectancy is 86.6 years. Here's a scary sentence:
Washington, D.C. offered the highest level of human development among whites.
African-Americans fare best in Maryland, which also may be a DC effect. There is this too:
Latinos outlive whites, on average, by over four years, and in all but four states
The full blog post is here and for the pointer I thank DavidMWessel.
Comparable risk
The yield on Greece’s benchmark 10-year bonds soared 1.4 percentage points to 11.1 percent – more than three times that of benchmark German bonds and just below those issued by Pakistan.
There is more here. The assessment seems to be this:
What a growing number of investors suggest is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail.
For better or worse, I do not expect such a figure is forthcoming. I also do not see how such a figure would do more than postpone the basic problem, which is that several European economies have been pretending to be much wealthier than they really are and to make financial plans on that basis.
*Lifecycle Investing*
That's the title of the new book by Ian Ayres and Barry Nalebuff and the subtitle is A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio. Their point is simple: if diversification across asset classes is so good, why not also seek greater diversification across time periods? In other words, you should want to hold stocks for longer periods of time and to do this when you are young you should incur additional debt to play the market.
Yikes!
They propose a fifty percent down payment on stocks when you are young, with the rest financed by leverage. At another place in the book, they mention aiming to spend a constant fraction of lifetime savings on stock.
But is this less risky? To what extent is this multiplication of risks (adding more time periods) and to what extent is it subdivision of risk (spreading a given sum of money across more stocks or across more time periods)? To what extent does early investment sidestep the price risk of later periods, if you're holding the assets through that period anyway? The authors do present various simulations where this strategy works out well. They also argue that if you are pessimistic you should invest less in stock, but still spread out your investing over time.
If I were a young man, I would not take this plunge, mostly out of fear that a historically unique equity premium configuration was doing the major work of the argument. Still, I found this to be a stimulating and well-written book with a clearly demarcated proposal for betterness.
It was published by Basic Books, which also is putting out Jeff Miron's Libertarianism: From A to Z.
How to control your impulse reading
Scott Golder reports:
Even after a merciless purge, my Google Reader still has over 90 feeds in it, which generates several hundreds of things to read every day. After a quick skimming and culling, there’s at least a dozen or two dozen articles or long blog posts a day I’d like to read. Combine that with the things my Twitter followees post (a higher signal/noise ratio than the RSS feeds) and it’s more than I can responsibly spend time on.
Today I thought of a nifty hack to control my “impulse reading” – things that I read on a whim during a bout of web surfing. It adapts a popular trick from personal finance to control impulse spending, which is to wait 30 days before making a purchase.
When I encounter an article I’d like to read, I open it in a new tab in Firefox and leave it there. Right now I have about a dozen tabs open. Some of them have been there for days. Invariably, when I make my way back through them, I read maybe 1/3 of them. Most of them just don’t seem as interesting anymore.
Here is Scott's blog. Scott also sometimes blogs at Permutations, which covers mathematical sociology.
The demand for privacy markets in everything
This story is about Abramovich's private yacht:
Infrared lasers detect the electronic light sensors in nearby cameras, known as charge-coupled devices. When the system detects such a device, it fires a focused beam of light at the camera, disrupting its ability to record a digital image.
The beams can also be activated manually by security guards if they spot a photographer loitering.
The yacht also has a missile defense system. For the pointer I thank Daniel Lippman.
Sentences to ponder
About a quarter of Indonesian boys aged 13 to 15 are already hooked on cigarettes that sell for about $1 a pack or as little as a few cents apiece, according to WHO. A video on YouTube last month prompted outrage when a 4-year-old Indonesian boy was shown blowing smoke rings and flicking a cigarette. His parents say he's been smoking up to a pack a day since he was 2.
And this:
According to a 2008 study on tobacco revenue in Indonesia, smokers spend more than 10 percent of their household income on cigarettes; that's three times more than they spend on education-related expenses such as school fees and books.
Indonesia remains one of the last places in the world where cigarette TV commercials still run, featuring rugged men and beautiful women smoking. Billboards plastered above four-lane highways encourage motorists stuck in Jakarta's notorious traffic jams to "Go Ahead" or "Become a Man" or let Marlboro Lights "Style Your Party."
Leggy women in short skirts and strappy heels promote cigarettes at events, sometimes even giving out discounted or free samples to "taste."
The full story is here and I thank Daniel Lippman for the pointer. How many of you will bite this bullet?
On Tolerance
“Tolerance” is a feel-good buzzword in our society, but I fear people have forgotten what it means. Many folks are proud of their “tolerance” for gays, working women, Tibetan monks in cute orange outfits, or blacks sitting at the front of the bus. But what they really mean is that they consider such things to be completely appropriate parts of their society, and are not bothered by them in the slightest. That, however, isn’t “tolerance.”
“Tolerance” is where you tolerate things that actually bother you.
Robin Hanson is correct that few people are truly tolerant but peculiarly for Robin he calls for more true-tolerance anyway. I'm all for more tolerance but Robin's own examples suggests that social change is not much driven by changes in tolerance.
As I suspect Robin would acknowledge, gay rights have not advanced because of more tolerance per se, i.e. they have not advanced because more people are willing to accept behavior that bothers them. Advance has occurred because fewer people are bothered by the behavior. Note, for example, that if the former were the case we would not see more gays and lesbians on television, as we do today.
When we are required to confront things that bother us we sometimes (often?) reduce
cognitive dissonance by changing our preferences so that we are no longer
bothered. Thus libertarians and other true-tolerants may play a role in encouraging the intolerable to come forward, thereby forcing the intolerant to reduce cognitive dissonance by accepting what was formerly intolerable. In this sense, a few more true-tolerants might help to tip society towards acceptance of some variant practices.
But since few people are or ever-will-be truly-tolerant, tolerance by itself probably can't get us very far towards a society of peaceful variation. Instead, we will have to argue that variant practices are normal, not bothersome or a subject of indifference. The route to drug legalization, for example, is to encourage more normal people who "smoke pot and like it" to come out of the closet. Kudos to you, Will Wilkinson! In the case of marijuana, I think this is possible but for many of the present and future variant practices mentioned by Robin, the limitations of tolerance put a big constraint on those that will ever be "tolerated."