James Madison once said...

"If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy."

The last decade has been terrible of civil liberties in this country. Last I checked its been over 10 years since anyone died at the hands of terrorists in the US. We don't exactly have enemies knocking down the gates. I understand that extraordinary times call for extraordinary measure but those times are clearly past. But we're still holding enemy combatants without trial, we're still spending hundreds of billions nation building and we're trying to pass a new Patriot Act. Worse still, the latest National Defense Authorization Act has some scary stuff in it. The language is sufficiently vague that it could be used to justify jailing anyone anywhere in the world (including US citizens in the US) without due process. My heart sank when I read this:

http://www.economonitor.com/blog/2011/11/another-bill-before-congress-pushing-the-usa-further-into-the-dark-of-endless-war-stripping-away-our-liberties/

At least Obama has threatened to veto the bill. I'm really glad McCain (one of the authors of the bill) isn't president right now.

My job

Good article from Chance Magazine pretty much sums up the work I've been doing for the last few years. It's titled Model Risk and the Great Recession.

Performance enhancing drugs

Forget EPO, cigarette smoking can increase serum hemoglobin and hematocrit levels, increase lung volume and stimulate weight loss. Ken Myers makes a pretty convince case in this paper while demonstrating the dangers of medical review literature.

h.t. Infectious Greed

Articles like this drive me nuts

The title definitely roped me in, Why We Spend, Why They Save. But the explanation is thoroughly unsatisfying, the author just lays all the blame/credit at the hands of the government. Though I don't doubt that government plays a roll in the savings/spending debate but he doesn't even offer another single explanation. What about the fact that its much more difficult to buy a house or get a mortgage in Europe? That's the biggest source of debt for most people and many young Europeans live at home or rent because its basically impossible to afford housing in the big cities. The demographics in Europe (higher ratio of old to young people) also favor savings. The author portraits Americans as materialistic, debt addicted and in need of government to save us from ourselves. Give me a break.

The one thing I did learn from this article is that I should stop reading op-eds.

Congress is more popular than Fidel Castro

But less popular than communism, banks, BP during the oil spill and Nixon during Watergate.

http://www.washingtonpost.com/blogs/the-fix/post/congress-approval-problem-in-one-chart/2011/11/15/gIQAkHmtON_blog.html#excerpt

Maybe we should just let banks run the country. Oh wait, too late.

The psychology of political parties

A great blog post from earlier this year discusses potential psychological roots behind extreme partisan politics. The title itself summarizes the argument: "Are liberals driven by a desire for novel pleasure and conservatives by fear of pain?" Its an interesting argument with some compelling research to back it up. The author clearly doesn't like the current state of partisan politics in the US (who does?) He argues that such extreme rhetoric on both sides really discredits the whole political process. Both extreme fear and affinity for change will lead us to make bad decisions. I also like the Buddhist plug at the end.

Wealthy Chinese want out and it has me worried

A recent survey found that half of Chinese millionaires are looking to emigrate.

http://www.reuters.com/article/2011/10/31/us-china-immigration-idUSTRE79U2CG20111031

They cite problems with government, pollution and over-crowding as primary reasons. Also it might have something to do with the fact that interest rates and investments are largely controlled by the state. The government basically mandates negative real return on savings. And if the government finds itself in a bind sometime soon and needs money guess who will be footing the bill? Yes they do have a couple of trillion in reserves but they've got a lot of bad loans on their books. And if they start selling any assets en masse they will depress prices and find they're sitting on a lot less than the full 2 trillion. In short a hard landing for the Chinese will be disastrous for the newly wealthy class there. So that has me thinking, what are they seeing that I'm not? The fact that so many Chinese are looking to take their wealth abroad has me worried about the prospects in the short / medium term. Official Chinese economic data is notoriously unreliable and even that data admits growth is slowing down. How bad can things get over there? Occupy Beijing could grind their economic machine to a halt.

If the wealthy Chinese want to come, I say let them in (after some background checks etc). Anyone who wants to get away from a communist regime is OK in my book. Plus there are some great deals on houses in California right now, plus they'll need cars and will probably take a trip to Vegas. Sounds like an easy way to generate a few billion in extra economic activity / tax revenue.

All Italy all the time

Crony capitalism is bad in the US but the Italians have it down to a science. The government routinely appoints the management at many of the largest Italian companies. In fact they arbitrarily change laws to entrench management! It appears the whole system exists to enrich the privileged and the connected and that system doesn't want to change. This sounds very similar to Wall Street circa 2007 - can Italy be saved from itself?

http://www.ft.com/intl/cms/s/0/a9b07fb8-0b75-11e1-9a61-00144feabdc0.html#axzz1dD5bzYTK

Dr Doom was right / another one bites the dust?

5 years ago Nouriel Roubini (Dr Doom) was making all kinds of dire predictions, the housing market would collapse, the world would experience massive global recession and the EU would break up. Two for three, so far. Everyone called him crazy at the time, insisting he was a permabear. Now many of those people call him a sage. On his blog he wrote a detailed analysis of why in 5 years Italy (the world's 7th largest economy) could cause the collapse of the EU.

http://www.economonitor.com/nouriel/2006/01/28/italys-tremontis-temper-tantrums-on-emu-in-davosa-sad-embarrassing-episode-for-italy/

This is one of the best explanations of the EU's current problems that I've read - and it was written 5 years ago! Basically every problem he wrote about is now front and center. For good measure he also mentions problems in Greece, Spain and Portugal.

Steve Jobs and Television

Steve Jobs once said:

When you’re young, you look at television and think, There’s a conspiracy. The networks have conspired to dumb us down. But when you get a little older, you realize that’s not true. The networks are in business to give people exactly what they want. That’s a far more depressing thought. Conspiracy is optimistic! You can shoot the bastards! We can have a revolution! But the networks are really in business to give people what they want. It’s the truth.

He makes it sound like something out of Brave New World. I don't think there's nothing wrong with TV intrinsically, there are certainly some fantastic shows out there. But when I was in New York I went through the list of some 300 cable channels trying to find the NFL game. Its unreal, there's a channel to satisfy any whim. Part of me thinks this is an incredible accomplishment of capitalism. Another part of me (maybe the Steve Jobs hippie in me) finds this terrifying. Are there really so many people watching this channel to justify its existence? The statistics on how much most people watch TV are quite mind blowing - 5 hours per day! I realize its a cheap and easy form of entertainment but I agree with Steve its kind of depressing.


h.t. Infectious Greed

In case anyone isn't feeling the urge to travel...

Then watch this video of time lapse landscapes, it is incredible!

http://vimeo.com/29950141

What's the point of all this education?

School has been on my mind a lot recently. The cynic in me says school is mostly about taking a vacation from the real world. The economist in me says its all about labor market signalling, i.e. "this prestigious university thinks I'm awesome, so give me a job." The idealist in me says its all about the pursuit of knowledge and for the betterment of self and society. Reflecting back on my UofC experience it was definitely some of both - lets face it, few people major in Econ so they can make the world a better place. That is unless they're doing God's work as one of Lloyd Blankfein's acolytes.

An article by (economist) Alex Tabarrok gave me a new perspective. Maybe school is all about what you make of it. If you want a vacation you have plenty of opportunities to take easy classes and screw around. If you want to signal and network there are plenty of opportunities for that too. And if you want to become a better person that too is possible. So the question really shouldn't be "what can I get out of school?" but rather "what do I want to get out of school?" If I go into it without knowing why I'm doing it then it'll likely turn into an (expensive) vacation.

http://news.investors.com/Article/588637/201110191813/College-Has-Been-Oversold.htm

Bleeding Heart Liberals

So I don't agree with the sentiment of this article but the argument is one of my favorites. Most of those people complaining about income disparity and the 1% are actually in the top 1% of income earners in the world. What does it take to be in the top 1% worldwide - $34,000. Some people need to be reminded we're lucky to be complaining about such first world problems. I don't mean to discredit the argument of Occupy Wall Street, over the past decade Wall Street / Congress has been doing a lot to threaten our wealth and security. Certainly something a lot to change before we end up like Iceland or Greece. But I am always sympathetic to the view that when you look at a lot of problems in the US from a worldwide perspective they seem insignificant.

http://www.fool.com/investing/general/2011/10/28/attention-protestors-youre-probably-part-of-the-1-.aspx