Newborn Babies Cry in Native Tongue Live Science (hat tip reader John D)
Understanding long term chronic pain symptoms from minor motor vehicle accidents RFK Action Front, This is intriguing.
Second Life creates virtual world for businesses Raw Story (hat tip reader John D)
Fannie Mae’s results – oh, and what if Bank of America reported the same way… John Hempton
Dollar rise *alert* FT Alphaville
Reed Apologies for Glass Steagall Repeal, Building Citigroup Bloomberg
Banks Thwarting Feinberg Pay Model by Changing Bonus Formulas Bloomberg. I’d post on this, but it has been in “story to follow” mode for three hours.
Federal Reserve Loses Expanded Powers Proposed By Obama Administration Shahien Nasiripour Huffington Post
Wells Fargo Takes Chance With a Loan Exchange Wall Street Journal. More smoke and mirrors at Wells.
Endless Summers Vanity Fair (hat tip Ed Harrison). I suggest you not read this if you have just eaten, you might lose your meal.
Goldman/Buffett/Fannie Tax Deal Inked a Month Ago Bruce Krasting
Wall Street: the Real Roadblock to Economic Recovery Ann Burger New Deal 2.0
Antidote du jour:
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Regarding the RFK Action Front piece, a write-up relating the Freeze Response to the current “Credit Freeze” would be intriguing.
Regarding former Citibank head Mr. Reed’s apology:
“We learn from our mistakes,” said Reed, who wrote an Oct. 21 letter to the editor of the New York Times endorsing a division of banking activities. “When you’re running a company you do what you think is right for the stockholders. Right now I’m looking at this as a citizen.”
One of the sad lessons from the crisis, which should have been apparent in advance, is that when companies run amok pursuing their own self-interest it produces externalities which are often more costly to society than they are a source of profits to the companies themselves.
In other words, social welfare is reduced on balance, not increased. It’s the premise that social welfare is increased that is often the justification for such strategies — as we have recently seen in the sermons to mammon issuing forth from England’s pews.
Institutional investors pay a high price for these externalities in the form of longer-term portfolio losses. The directors, trustees and other fiduciaries of institutional portfolios should be some of the most vocal critics of the financial industry, and they should manifest this dissatisfaction through aggressive shareholder campaigns to reign in the industry. Why they are so silent is almost a mystery — although somnabulence, cynical self-interert and complacency know no limit in some instances.
Regarding losing my meal after reading that dreadful article about Larry Summers, don’t feel too pregnant. I went to school with a cute little sycophant who went on to distinguish herself by doing a flowery piece for one of the local blats wherein she lionized Saxby Chambliss.
Spot On Paper!
http://www.bankofengland.co.uk/publications/speeches/2009/speech409.pdf
BANKING ON THE STATE
Piergiorgio Alessandri
&
Andrew G Haldane*
Bank of England
November 2009
“So far, so bad. But it is about to get worse, for this tells only half the story. This is a
repeated game. State support stokes future risk-taking incentives, as owners of banks
adapt their strategies to maximise expected profits. So it was in the run-up to the
present crisis. In particular, five such strategies were clearly in evidence:”
“The “St Petersburg paradox” explains how a gambling strategy which starts small but
then doubles-up in the event of a loss can yield positive (indeed, potentially infinite)
expected returns. Provided, that is, the gambler has the resources to double-up in the
face of a losing streak. The St Petersburg lottery has many similarities with the game
played between the state and the banks over the past century or so. The banks have
repeatedly doubled-up. And the state has underwritten any losing streak. Clearer
practical examples of a policy time-consistency problem are unlikely to exist.”
“Taken together, this evidence paints a consistent picture: a progressive rise in
banking risk and an accompanying widening and deepening of the state safety net.
There is a ratchet. This ratchet is evidence of a policy time-consistency problem.”
“A framework for the banking safety net: Even with systemic risk reduced, the
state is unlikely to be able credibly to stand aside when future tail risks
eventuate, as they are sure to do. Some bulwark is needed. As in other public
policy arena, a pre-defined and transparent regime can help reinforce the
credibility of ex-post actions, serving as a pre-commitment device.”
Interesting…new born babies cry in native tongue.
I wonder what tongue it would be for an English man with his recent Russian mail bride and their first born arriving at his new job in Tokyo? English? Russian? Japanese? Esperanto?
Her is on thing I personally notice about small kids and that is that in general, kids are afraid of the dark, but not silence.
Adults, on the other hand, are not afraid of the dark, generally speaking, but are afraid of silence – witness all these scared adults with their earphones on jogging, taking a walk in the park or other silent and solitary activities.
I think these adults need to grow up or at least be braver than those easily freightened kids.
You weren’t kidding about the Endless Summers article. I managed to finish the second paragraph and I couldn’t take it anymore when I read this:
“No less an authority on presidential power than Henry Kissinger once told Tim Geithner, now the Treasury secretary, that Summers should have a permanent job at the White House, solely to sort out for the president—any president—the good ideas on economic policy from the dumb ones.”
About the “article” on Summers:
1) The Cornell West affair tells us everything we need to know about the man. Summers blatantly lied to West about apologizing and West exposed him.
2) Iris Mack is just a confirmation of #1
3) Summers obviously didn’t draw a powerful enough lesson from his cancer. After all, he was the man ready to oppose the unemployment benefits under the guise that “nothing can be done” for the unemployed. How stoopid does he think everyone is?
Yet, he has plenty of apologists…go figure!
Thanks for the link Yves!
Steve2241’s comment (the first one on this post) is really intriguing too. By analogy the near collapse of the market this past year was an “existential threat” to financial institutions that triggered a freeze response (much like a gazelle in the jaws of a cheetah). Now a year later, the immediate threat seems to have passed but financial institutions are almost in a PTSD dissociative state reliving the threat as if it is still present (and not lending or doing the sorts of things healthy financial institutions are normally supposed to do). Now of course, maybe that’s putting too fine a point on it, the analogy may not hold at all. But it is interesting to think about the ways in which large institutions sometimes mirror traits we see in individuals.
The bunny photo is fantastic too!
I also started reading the Larry Summers article and stopped. Life’s too short for that kind of crap. The New Yorker’s Ryan Lizza did even better, a 12-page hagiography of the great man.
I noticed something: people who want us to believe Summers is a genius always start with how precocious he was. In the Ryan Lizza’s piece, there’s this cute story of a toddler Summers begging his mom for more math problems. It must be true that most people confuse precocity with genius. Ask yourself: how many precocious children went on be become real geniuses? 1%? 0.0001%?
It’s all part of the propaganda. Summers is a genius, our economy is in good hands.
If you read the Matt Taibbi’s piece on GS, you learn that they did the same thing with Rubin. He was a genius too. We’re so lucky!
It’s hard to decide who to hate most: politicians or mainstream journalists?