Brilliance from the Onion

God Distances Self From Christian Right

“What these people are saying betrays a worldview that is, frankly, completely different from my own, and it embarrasses me to even hear my name mentioned alongside theirs,” God told reporters, emphatically. “For example, I’m not into capital punishment at all, or really killing in general, so I’m not sure where that whole talking point came from."

Amen.

Living on $250 a day

Article in the NYT about long term health care and what will happen to it under the Romney-Ryan budget.

http://www.nytimes.com/2012/09/07/health/policy/long-term-care-looms-as-rising-medicaid-cost.html?pagewanted=all

I don't understand how people can expect Medicare or Medicaid to pay for this - living at $250 a day is a pretty lavish lifestyle. Before taxes you've got to be earning close to $150k to live that kind of life. Now I get it, those who need long term care are typically in pretty bad shape - if you can't bathe or feed yourself life kind of sucks. So if people or their families want to pay $250 a day themselves for this type of care then they should be free to do so. I only take issue with the fact that with regards to health care the government is handing out Porsches when Hondas will do. I hate to say it but the Republican idea makes some sense here - cut spending by a third. If the cost were $80 per day that's almost exactly in line with the lifestyle of an average American - $250 per day will bankrupt future generations. To me that sounds like a very reasonable and very fair compromise between the old and the young (and especially the unborn).

Higher Taxes and More Regulation

At heart I'm a libertarian, I believe the government should interfere with my life as little as possible. But today I am advocating higher taxes and more regulation. Why? Because at some point more freedom actually results in less freedom. The richest people in this country have a significant capacity to endure higher taxes, especially on capital gains and dividends. Its ludicrous how income derived from labor is treated differently than income derived from capital. On the whole jobs are created by new, small companies not large existing ones. What large and established companies are good at is generating lots of profits and to some extent innovation. Neither of these functions will be hurt by higher taxes.

http://www.ritholtz.com/blog/2012/07/picking-on-the-job-creators/

With regards to regulation, it has become clear that the only thing that the only institution that can protect us from reckless and fraudulent corporations is government. Many American corporations are so large that they control more assets than entire sovereign states! That's far too much power going unchecked. We have the military to protect us from foreign invaders, comparatively how little do we invest in protecting ourselves from domestic enemies?

http://www.theatlantic.com/politics/archive/2012/07/only-government-intervention-can-stop-corrupt-capitalism/259687/

To maximize our freedom and to keep markets fair we need government - or more accurately, we need a functioning government. Big banks, big pharma have advocated deregulation for years and while that has meant more freedom for them it has resulted in less freedom for us. By freedom I mean the freedom from exploitation. We have learned the hard way that we cannot trust these companies to be honest. Perhaps through no fault of their own - there will always be bad apples. I trust the vast majority of the people employed at these companies are honest. But because of their size and their impact we need to make sure they're not in a position to exploit the public.

Dear Atlantic I thought you were better than this...

In general I'm a fan of the Atlantic, their articles are quite often interesting and thought provoking and presented at a level that accessible to non-experts. But last week there was an article which commits the worst logical errors I've seen them make - correlation does not imply causation. In fact part of me thinks this article is a satire. The author argues that graduation rates would improve if more students take out debt. His whole argument is based on a study which found that 29% of students who take out loans drop out while 44% of students who don't take out loans drop out. But there are a thousand reasons why this might be the case! Making the leap to "students should take out more loans" is an outright logical fallacy! It's like saying people who drive luxury cars are rich so if you want to be rich buy a luxury car.

http://www.theatlantic.com/business/archive/2012/06/more-student-debt-please-why-college-students-dont-borrow-enough/258205/

I don't say this a lot...

...but this is quite possibly the most idiotic article I've ever read. Or at least the most idiotic since the last time I went to foxnews.com

http://www.marketwatch.com/Story/story/print?guid=5690DE5A-B033-11E1-AB8D-002128049AD6

Thank you Mr. Farrell for making the world just a little bit dumber.

Moral Hazard Bitches

JP Morgan just announced a $2B trading loss with more certainly to come as they unwind their positions. Given how big this loss was the size of their position must be tremendous. Blood on the Street.

http://online.wsj.com/article/SB10001424052702304070304577396511420792008.html

Who in the world approved this? Actually a quick Google search yields an answer:

http://money.cnn.com/galleries/2011/fortune/1109/gallery.highest_paid_women.fortune/8.html

And more importantly why in the world are too big to fail banks still prop trading?!?

And what if we don't listen to you?

Spain recently announced that they're not even going to try to meet the EU's required 4.4% deficit, instead they think 5.8% should be good enough. Over the last decade there has been no punishment for the Greeks, Portuguese and others who have blatantly disregarded the EU's rules about debt and deficits - so why should this time be any different? In fact the worse they act the more free German money they get. What could go wrong? And this is exactly why I think the EU bailouts are doomed to failure. If EU doesn't make an example out of someone, no one is actually going to follow the rules.

http://www.foxbusiness.com/markets/2012/03/02/spain-defies-brussels-on-deficit-target/?intcmp=obnetwork

I just looked up moral hazard in the dictionary...

and it said "See Freddie Mac":

http://www.propublica.org/article/freddy-mac-mortgage-eisinger-arnold

I'm sure a lot of the folks doing these Freddie Mac deals are the same geniuses that traded CDOs 5 years ago. And I'm not using genius ironically here, they are actually very smart people who know how to take advantage of the system. The problem is (and has been for the past decade) that legal and moral aren't necessarily the same. Traders at Freddie Mac stand to gain billions if homeowners who are stuck in high interest rate mortgages are unable to refinance their mortgages. If a hedge fund made this trade I'd have no problem with it - its a perfectly legal transaction and helps the market price mortgage securities. My problem is that Freddie Mac determines whether these borrowers qualify to refinance or not. That completely messes up the incentives, this trade lets Freddie Mac profit by excessively tightening its refinancing standards. If that weren't bad enough Freddie Mac is now owned by taxpayers. Think about this for a second, our own government is giving Freddie Mac about $2 billion per month so that they can force thousands of homeowners to pay above market rates and collect bonuses. I'm less offended by the people doing this than the legal system that allows this to happen.

Revolving Door

I shouldn't be surprised by public servants who aren't serving the public interest. But I just hoped that a man's price would be higher. Chris "I will never be a lobbyist" Dodd is now chairman and CEO of the MPAA, earning $1.2 million per year and a key supporter of SOPA. Chris "I'm a devout supporter of freedom" Dodd has argued that we should use the Chinese as a model for how intellectual property can be guarded on the internet. Last I checked I thought Chinese IP theft was part of the problem?

http://www.salon.com/2012/01/18/chris_dodds_paid_sopa_crusading/singleton/

Anti-war = Pro-terrorism

Back in 2002 the FBI used terrorism to justify spying on people attending an anti-war rally in Pittsburgh. Later on the Inspector General called it "an ill-conceived project on a slow day." So apparently the government can label anything terrorism and use that as justification to violate the Constitution... I hope I don't end up in jail for the rest of my life without trial because its a slow day at the FBI.

http://www.washingtonsblog.com/2010/09/big-brother-has-come-to-the-birthplace-of-america.html

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.

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

Kill kill kill kill... the quants?

Quants have been taking a lot of heat in recent years, first it was all those CDOs that went bust, now every blip in the market is blamed on high frequency traders. Certainly there's some truth to it, but this guy is really taking it too far:

http://www.thestreet.com/story/11229935/1/kill-the-quants-before-they-kill-us.html

This guy makes it sound like there was no such thing as volatility before HFT came along - come on! First of all the quants do the research and make the models, they're not the ones who decide to leverage 30 to 1 putting the financial system at risk. Second, who is really hurt by a 6% move in the stock market? If you can't stomach the occasional 50% loss then you shouldn't be investing in stocks anyway.