Supremely Bad Judgment - NYTimes.com

Supremely Bad Judgment - NYTimes.com:

"Christine O’Donnell may not believe in the separation of church and state, but the Supreme Court does not believe in the separation of powers."

http://www.nytimes.com/2010/10/24/opinion/24dowd.html?th&emc=th

A Perfect (Accidental) Argument For Net Neutrality

Internet a Weapon in Fox-Cablevision Dispute - NYTimes.com:

“When we realized we were affecting non-Cablevision video subscribers, we quickly altered our position,”

"A Hulu spokeswoman did release a statement to the technology news site All Things D: “Unfortunately, we were put in a position of needing to block Fox content on Hulu in order to remain neutral during contract negotiations.” Hulu refused to comment further.

But for reasons that remained unclear, the blockade did not work in all Cablevision households. Furthermore, within hours, the News Corporation realized that by blocking Cablevision subscribers’ computers it was also blocking some people who pay Cablevision for Internet only and pay competitors like DirecTV for television. Those people were “caught in the crossfire,” Ms. Wright said.

The News Corporation reinstated access in a matter of hours.

The action was hotly debated within the company, according to three people who were aware of the conversations. While some executives said it had helped in the negotiations with Cablevision, others said it had backfired because it stirred up questions about net neutrality, according to people who insisted on anonymity."

http://www.nytimes.com/2010/10/20/business/media/20hulu.html?_r=1&th&emc=th

Econbrowser: The "Ever-Expanding" Government Sector, Illustrated (Part II)

Econbrowser: The "Ever-Expanding" Government Sector, Illustrated (Part II):

"Notice that government transfers as a share of GDP looks particularly high because of the collapse of GDP in the Great Recession which started in 2007Q4. Normalizing by potential GDP highlights the fact that, while the ratio is the highest over the last forty three years, it is only slightly higher than that recorded in the mid-1980s, during the Reagan administration.

Normalizing government consumption and investment illustrates that overall spending by the government in purchases of goods and services is not particularly high. Even dividing by nominal GDP indicates that we are only (almost) back to the levels of 1990. Normalizing by potential GDP indicates that we are still only back to the levels of the early 1990's (this spending includes defense)."

http://www.econbrowser.com/archives/2010/10/the_everexpandi_1.html

Lies, Damned Lies, and Medical Science - Magazine - The Atlantic

Lies, Damned Lies, and Medical Science - Magazine - The Atlantic:

"Simply put, if you’re attracted to ideas that have a good chance of being wrong, and if you’re motivated to prove them right, and if you have a little wiggle room in how you assemble the evidence, you’ll probably succeed in proving wrong theories right."

http://www.theatlantic.com/magazine/archive/2010/11/lies-damned-lies-and-medical-science/8269

Make Wall Street Risk It All - NYTimes.com

Make Wall Street Risk It All - NYTimes.com:

William D. Cohan on Wall Street and Main Street

"The days of privatizing the profits for Wall Street and socializing the risks must end."

“ As radical as this sounds, in truth it would be no different from when — before 1970 — Wall Street was a series of private partnerships.We can’t turn back the clock: Wall Street’s big firms will never again be private partnerships.

Create a new security for each Wall Street firm that represents — and is secured by — the entire net worth of its 100 top executives.

Instead, I propose that each large Wall Street firm create a new security that represents — and is secured by — the entire net worth of its 100 top executives. This security would be subordinated to all other creditors as well as to all preferred and common shareholders; in other words, if a firm goes bankrupt, this security is the first to be wiped out.Had such a security existed at the time of the collapse of Lehman Brothers, the net worth of the top 100 Lehman executives — no doubt totaling several billion dollars — would have been collected after liquidating everything they owned and paid to Lehman creditors, who under the current system will be lucky if they get back 10 cents on the dollar.

Wall Street’s first reaction to this idea — aside from profanities — will be that it cannot possibly be done. Or that it would somehow threaten the sanctity of our capital markets.But, in fact, it can and should be done. Indeed, Wall Street has all the intellectual capital it needs in its own archives to construct such a security: in the old partnership days every partner signed an agreement requiring him (and rarely her) to put his net worth on the line every day. Surely, clever Wall Street lawyers can draft a 21st-century version of the old partnership agreement.

What’s more, Wall Street should take the initiative to do this unprompted. As John Whitehead warned, the banks’ failure to show responsibility will only invite more government intervention.If, however, the firms balk, the S.E.C. should require this sort of accountability from the senior managements as part of its new regulations governing Wall Street compensation. Or Congress should take advantage of the still-brewing outrage against Wall Street to force the creation of such a security.

Pretty harsh, right? Maybe, but Wall Street deserves no sympathy. Had this security, or something like it, been in place at every Wall Street firm five years ago, there would have been no mortgage bubble, no financial crisis, no deep and unsettling economic recession with nearly 10 percent unemployment, no need for the Troubled Asset Relief Program, and no need for Dodd-Frank or Basel III.
Why? Because human beings do what they are rewarded to do — especially on Wall Street —”

http://opinionator.blogs.nytimes.com/2010/10/07/make-wall-street-risk-it-all/?nl=opinion&emc=tya2

Don't They Know Ayn Rand Wrote Fiction?

Economics and Politics - Paul Krugman Blog - NYTimes.com:

"Keynesian economics won, hands down."

“So: first of all, the other side in this debate generally adheres, more or less, to something like what Keynes called the “classical theory” of employment, in which employment and output are basically determined by the supply side. Casey Mulligan has been most explicit here, coming up with increasingly, um, creative stories about how what we’re seeing is a choice by workers to work less; but the whole Kocherlakota structural unemployment thing is similar in its implications.

Oh, and the Cochrane-Fama thing about how a dollar of government spending necessarily displaces a dollar of private spending is basically a classical view, although there doesn’t seem to be a model behind it, just a misunderstanding of what accounting identities mean.

Once you have a more or less classical view of unemployment, you naturally have the classical theory of the interest rate, in which it’s all about supply and demand for funds, and something like a quantity theory of money, in which increases in the monetary base lead, in a fairly short time, to equal proportional rises in the price level. This led to the prediction that large fiscal deficits would lead to soaring interest rates, and that the large rise in the monetary base due to Fed expansion would lead to high inflation.

You can see the classical theory of interest and the soaring-rate prediction clearly in Niall Ferguson’s remarks:

After all, $1.75 trillion is an awful lot of freshly minted treasuries to land on the bond market at a time of recession, and I still don’t quite know who is going to buy them … I predict, in the weeks and months ahead, a very painful tug-of-war between our monetary policy and our fiscal policy as the markets realize just what a vast quantity of bonds are going to have to be absorbed by the financial system this year. That will tend to drive the price of the bonds down, and drive up interest rates

and, of course, in many WSJ op-eds, in analyses from Morgan Stanley, and so on.

Meanwhile, you can see the high-inflation prediction in pieces by Meltzer andLaffer — with the latter helpfully titled, “Get Ready for Inflation and Higher Interest Rates”.…

So, how has it turned out? The 10-year bond rate is about 2.5 percent, lower than it was when Ferguson made that prediction. Inflation keeps falling. The attacks on Keynesianism now come down to “but unemployment has stayed high!” which proves nothing — especially because if you took a Keynesian view seriously, it suggested even given what we knew in early 2009 that the stimulus was much too small to restore full employment.”

Their theories are just plain nuts.

They never, ever, let reality get in the way of belief.

So, they ‘pledge’ to return to faith based economics, to unleash business via faith based nonregulation and they'll pay down the deficit with faith based income.

The hungry will eat by and by, work all day, live on hay. There'll be pie in the sky when they die.

Not much while they live, but man doesn't live by bread alone!

http://krugman.blogs.nytimes.com/http://krugman.blogs.nytimes.com/2010/10/02/how-the-other-half-thinks/