Thursday, January 31, 2008

 

Wicked Borrowers. Professor Mankiw points me to a NY Times article by Tyler Cowen that has lots of good facts, including this:
There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also five times as likely to go into default. ...

In other words, many of the people now losing their homes committed fraud.

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Wednesday, January 30, 2008

 

Wicked Judges. Oxford has a number of bad judges. Here is a Julian Hall story:
... a 58-year-old former teacher at the Cothill School in Oxfordshire was charged recently with abusing a number of boys in the 1970s. But the judge, Julian Hall, declared earlier this year that "this is the stalest case I have been asked to try" and threw it out.

"I think the best thing that should happen to people who behave in this way," Hall told Oxford Crown Court, speaking of the former teacher, Jeremy Malim, "is that they should get a very brisk elbow in the ribs at the time or be rejected."

And here's more about Julian Hall:
Judge Hall, criticised last year for saying a 10-year-old rape victim dressed provocatively, gave a Berinsfield teenager three years' probation for molesting a five-year-old girl.

The 17-year-old - who Judge Hall banned the Oxford Mail from naming - had also abused a seven-year-old boy....

Last year, Judge Hall sent Blackbird Leys window cleaner Keith Fenn to prison for just two years after he raped a 10-year-old.

He also told a 71-year-old man who sexually abused a six-year-old to compensate her with money for a new bike....

Judge Hall told lawyers in court: "At the moment, the defendant is probably not dangerous."

The girl's mother, who was sitting in the public gallery, shouted out: "Tell that to my daughter!"

Judge Hall told the teenager: "What you did was dreadful and it is the sort of behaviour which affects people rather badly and for a long time.

"You are going to have to attend courses to help you sort out your attitude to sex and children younger than you."

He granted the teenager anonymity and said that he was too young to be identified publicly for his crimes.

And here's a story about Charles Harris:
A JUDGE who likened growing cannabis to tomato plants criticised Oxford City Council as he dismissed an Antisocial Behaviour Order.

The city council had wanted Phillip Pledge thrown out of his home and banned from Blackbird Leys for two years after police seized £3,400- worth of cannabis from a flat in Evenlode Tower where he was temporarily living.

But Judge Charles Harris - who caused controversy last week during the Asbo hearing when he said it was no more offensive to neighbours to grow cannabis than tomato plants - threw out the case.

Judge Harris said at Oxford Crown Court: "Oxford City Council applied for the order because the defendant caused harassment, alarm or distress.

"I have considerable reservations. There is no evidence at all to show anyone had been caused alarm, had been harassed or could be distressed. "It is not appropriate to seek orders with potentially very serious consequences without producing evidence to justify them.

"It is alleged the defendant was growing and selling cannabis in his flat. This is a criminal offence and he could have been tried in the criminal courts.

"For some reason the Crown Prosecution Service has not charged Mr Pledge, although the police have reason to justify charging him.

"It is not for the local housing authority in civil proceedings, via an Asbo, to provide a substitute for criminal proceedings."

The court heard Mr Pledge was jailed in 1998 for possession of cannabis and fined in 2000 for cultivating it.

Mr Pledge, of Strawberry Path in Blackbird Leys, had been living in the flat temporarily due to an arson attack on his home.

The 38-year-old was in rent arrears of £1,479.64, but told Judge Harris he had arranged to pay that back. ...

Judge Harris did not give leave for the council to appeal against his decision against an Asbo or to evict Mr Pledge.

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Tuesday, January 29, 2008

 

The Ugly Environment. Steve Sailer points us to the NY Times article, "Why Are They Greener Than We Are?". The article is about how architects are trying to design buildings that are ``green'' and "sustainable", if I may use the misleading buzzwords. What struck me, though, is how uniformly ugly they are. (The buildings, not the architects). They are eyesores, insults to their environment.
"Historically, Germany’s industrial waste flowed down the Rhine to be deposited in Rotterdam’s harbor. “We are the main collecting point for all of Europe’s pollution, its garbage dump,” he said with a smile.

Like many of his contemporaries, Neutelings doesn’t see this landscape as ugly. Nor does he see the creation of bold industrial forms and a sustainable environment as necessarily in conflict. Neutelings and Riedijk’s recently completed Shipping and Transport College, which rises at the edge of an aging industrial pier, looks perfectly at home. The building’s cantilevered top evokes a gigantic periscope; its corrugated metal skin brings to mind the stacked shipping containers still scattered around the port."

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Monday, January 28, 2008

 

Clinton Ethics Again. I wonder what all the Clinton admirers think of the Clintons trying to rally white voters against black ones to beat Obama in South Carolina and beyond. It is sassy strategy-- to unethically rally the white vote by claiming Obama is unethically rallying the black vote. The AP says:

Each side accused the other of playing the race card, sparking a controversy that frequently involved Bill Clinton. "They are getting votes, to be sure, because of their race or gender. That's why people tell me Hillary doesn't have a chance of winning here," the former president said at one stop as he campaigned for his wife, strongly suggesting that blacks would not support a white alternative to Obama.

Clinton campaign strategists denied any intentional effort to stir the racial debate. But they said they believe the fallout has had the effect of branding Obama as "the black candidate," a tag that could hurt him outside the South.

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Sunday, January 27, 2008

 

Sin. I'd benefit from understanding sin better. Evangelicals are to content to say something is sinful simply because the Bible tells us so. That's fine for a start, and a good "reduced form" as we say in economics. And I agree with Ockham that it is God saying something is sinful that makes it sinful, rather than God looking at something, seeing it is independent sinful, and therefore so naming it. Murder is because God says it is; God doesn't necessarily say it is sinful because it is. But there are also natural law reasons for why most sins are sins, reasons not based on divine revelation. Murder is an example-- there are good natural law reasons for it to be considered bad. But we should also look at lust, gluttony, sodomy, greed, sloth, and so forth.

Gluttony is an overlooked sin. Why is it sinful? What is it, exactly? Here are three possibilities.

1. Gluttony is poor stewardship. If I eat a lot, somebody else doesn't get to eat as much.

2. Gluttony is bestial. I degrade my humanity, and pollute God's image, by stuffing myself and by making myself fat.

3. Gluttony is distracting. I put food before God, both in my attention and when it comes to conscious tradeoffs.

These all have different implications. Thin people who don't eat much can be guilty of Type 1 and 3 gluttony.

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Saturday, January 26, 2008

 

Giclee (pronounced "zhee-clay") reproductions were originally developed in 1989 as a plate-less method of fine art printing. The word Giclée is French for "to spray " and is a registered trade name of The 'IRIS' Printer. ... www.artloft.com/terms.htm

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Friday, January 25, 2008

 

Perks or Perqs? Merriam Webset: perk, a noun from 1824: perquisite --usually used in plural.

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Thursday, January 24, 2008

 

Varietal Eggs. I hadn't seen these in America. Free-range eggs are a big deal in England, for both humanitarian and epicurean reasons. I am skeptical of the difference according to either reason. Chickens are very stupid creatures and bred for contentment in small cages. Eggs are rather distant from everyday chicken functions, and I wonder whether eating bugs and getting exercise really affects them. But I could be wrong. My wife says free-range eggs do have a different color of yolk.
Breed-Specific (Varietal) Eggs

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Wednesday, January 23, 2008

 

Charity vs. Investment. Suppose people in Atlantis increase their charity to the poor by 1% of GDP but people in Lemuria increase their investment rate by 1%. In which country will the poor be better off? In the short run, it will be the Atlantians, of course. In the long run, though, Lemuria will grow faster and-- a tricky bit-- the poor will get richer.

Let's suppose the poor do no investment and consume all the charity they receive. two separate cases are (a) when the current non-poor might have poor descendants-- who will inherit some of their investment-- and (b) when they do not. We'll use assumption (b). Let's assume zero taxes, so taxes on investment income play no role. The social discount rate is very important, so let's assume it's zero, leaving it out of the picture. We'll just do some comparisons of the next 200 years. The benefit to the poor from investment might come from (a)increased information production/process innovation, (b) increased product innovation-- new goods, consumer surplus, or (c) an increased marginal product of labor due to the bigger capital stock, and hence higher wages.

I'll ask macro people about this.

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Tuesday, January 22, 2008

 

Global Warming Experts. I just came across some good evidence for why you can't trust the experts when it comes global warming. The Royal Society has a report which relies on claims of authority and accusations of biased funding, omits key facts, and so forth.
There are some individuals and organisations, some of which are funded by the US oil industry, that seek to undermine the science of climate change and the work of the IPCC. They appear motivated in their arguments by opposition to the United Nations Framework Convention on Climate Change and the Kyoto Protocol, which seek urgent action to tackle climate change through a reduction in greenhouse gas emissions.

Often all these individuals and organisations have in common is their opposition to the growing consensus of the scientific community that urgent action is required through a reduction in greenhouse gas emissions. But the opponents are well-organised and well-funded. For instance, a petition was circulated between 1999 and 2001 by a campaigning organisation called the Oregon Institute of Science and Medicine (OISM), which called on the US Government to reject the Kyoto Protocol. The petition claimed that “proposed limits on greenhouse gases would harm the environment, hinder the advance of science and technology, and damage the health and welfare of mankind”.

These extreme claims directly contradict the conclusions of the IPCC 2001 report, which states that “reducing emissions of greenhouse gases to stabilize their atmospheric concentrations would delay and reduce damages caused by climate change”....

It is crazy to say that skeptics are better funded than proponents, who have entire governments behind them, and the liberal sentiments of environmental scientists, not to mention all the environmental lobbying groups. It is also irrelevant.

Misleading arguments 3. There is little evidence that global warming is happening or, if it is happening, it is not very much. Some parts of the world are actually becoming cooler. Increased urbanisation could be responsible for much of the increase in observed temperatures. Satellite temperature records do not show any global warming. If there has been global warming recently, it would not even be a unique occurrence within the past 1000 years. Europe has been much warmer in the past....

The IPCC report recognised that “temperature changes have not been uniform globally but have varied over regions and different parts of the lower atmosphere”. For instance, some parts of the Southern Hemisphere oceans and parts of Antarctica have not warmed in recent decades. The report also noted that there have been two major periods of warming globally: 1910 to 1945 and since 1976. It concluded that “it is virtually certain that there has been a generally increasing trend in global surface temperature over the 20th century, although short-term and regional deviations from this trend occur”.

Europe has indeed been much warmer in the past-- in medieval times, for example. And the world did cool, from 1945 to 1976. And is it just *parts* of Antarctica that have not warmed (as opposed to "have cooled"-- as I recall, there isn't much change, but some of the tiny change is cooling).

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Monday, January 21, 2008

 

Motherhood. My sister forwarded me this email, which is funny and wise.


WHY GOD MADE MOMS

Answers given by 2nd grade school children to the following questions:

Why did God make mothers?

1. She's the only one who knows where the scotch tape is.
 2. Mostly to clean the house.
 3. To help us out of there when we were getting born.

How did God make mothers?

1. He used dirt, just like for the rest of us.
 2. Magic plus super powers and a lot of stirring.
 3. God made my Mom just the same like he made me. He just used bigger parts.

What ingredients are mothers made of?

1. God makes mothers out of clouds and angel hair and everything nice in the world and one dab of mean.
 2. They had to get their start from men's bones. Then they mostly use string, I think.

Why did God give you your mother and not some other mom?

1. We're related.
 2. God knew she likes me a lot more than other people's moms like me.

What kind of little girl was your mom?

1. My Mom has always been my mom and none of that other stuff.
 2. I don't know because I wasn't there, but my guess would be pretty bossy.
 3. They say she used to be nice.

What did mom need to know about dad before she married him?

1. His last name. 
2. She had to know his background. Like is he a crook? Does he get drunk on beer?
 3. Does he make at least $800 a year? Did he say NO to drugs and YES to chores?

Why did your mom marry your dad?

1. My dad makes the best spaghetti in the world. And my Mom eats a lot.
 2. She got too old to do anything else with him. 
3. My grandma says that Mom didn't have her thinking cap on.

Who's the boss at your house?

1. Mom doesn't want to be boss, but she has to because dad's such a goof ball.
 2. Mom. You can tell by room inspection. She sees the stuff under the bed.
 3. I guess Mom is, but only because she has a lot more to do than dad.

What's the difference between moms & dads?

1. Moms work at work and work at home and dads just go to work at work.
 2. Moms know how to talk to teachers without scaring them.
 3. Dads are taller & stronger, but moms have all the real power 'cause that's who you got to ask if you want to sleep over at your friend's. 
4. Moms have magic, they make you feel better without medicine.

What does your mom do in her spare time?

1. Mothers don't do spare time. 
2. To hear her tell it, she pays bills all day long.

What would it take to make your mom perfect?

1. On the inside she's already perfect. Outside, I think some kind of plastic surgery.
 2. Diet. You know, her hair. I'd diet, maybe blue.

If you could change one thing about your mom, what would it be?

1. She has this weird thing about me keeping my room clean. I'd get rid of that.
 2. I'd make my mom smarter. Then she would know it was my sister who did it and not me. 
3. I would like for her to get rid of those invisible eyes on the back of her head.

 

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Sunday, January 20, 2008

 

Alpha Course. My son wanted me to take a picture of this Alpha Course pamphlet, which is indeed striking.
An Alpha Course Pamphlet

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Saturday, January 19, 2008

 

The CIA, Tenet, Iraq, and Al Qaeda. Gabriel Schoenfeld says in Commentary in The CIA Follies:

As leader of the CIA, Tenet fought for more resources, more manpower, and better technology. But he never began to address the fundamental problems of the agency either in the age of Clinton or in the age of Bush. Indeed, he was, or became, part of the problem himself. At a juncture of history when the agency’s real, crying need was to penetrate, or at a minimum to study closely the thinking of, adversaries like Iran or North Korea or Iraq—three countries where its coverage and understanding had been chronically inadequate— he now permits himself to boast that he “made it a priority to enhance the agency’s record on diversity” and to have “its workforce reflect a broad cross-section of our population.” In other words, he saw it as the CIA’s most pressing “business need” (his term) to turn its affirmative-action program, at least, into a truly “well-oiled machine”—albeit one running inside a government bureaucracy now indistinguishable from any other.

_____________

 

Tenet’s obtuseness on this narrow but noteworthy point goes hand in hand with a fundamental incoherence on the subject of national security. On the opening page of the book, setting the stage for much that is to come, he tells us how he went to the White House on the day after September 11, 2001, full of foreboding about the possibility of a “multi-pronged assault” on the United States. As he was entering, he writes, he encountered Richard Perle, a member of the Pentagon’s Defense Board and “one of the godfathers of the neoconservative movement.” As the two crossed paths,

we made eye contact and nodded. I had just reached the door myself when Perle turned to me and said, “Iraq has to pay a price for what happened yesterday. They bear responsibility.”

Tenet’s response: “I was stunned but said nothing.”

This opening sequence with Perle is just the starting point of a theme that winds its way across the book, according to which various American neoconservatives, “fixated” on or “obsessed” with Iraq, are said by Tenet to have drawn non-existent links between al Qaeda and Baghdad in order to justify a war against Saddam Hussein. But in fact, as has been widely noted, Richard Perle was stranded in Paris on September 12 when the White House conversation with Tenet allegedly took place. Although Tenet has subsequently acknowledged his error in dating, he has tried to buttress the substance of his charge by citing comments Perle made to Robert Novak on September 17 and a September 20 letter to the President signed by Perle and 40 others—in both of which, he says, Perle attributed direct responsibility for September 11 to Saddam Hussein.

Neither of these sustain Tenet’s charge. Both make a different point: that, in the words of the September 20 letter, “any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power.” This naturally raises the question of how Tenet himself did, and does, understand the ties between al Qaeda and Iraq. Or, to put it differently: were the neoconservatives irrationally “obsessed” with the issue, or was this murky but vitally important subject one that the CIA had neglected?

In his memoir, Tenet does acknowledge Saddam Hussein’s deep involvement with terrorism:

[T]here was no doubt that Saddam was making large donations to the families of Palestinian suicide bombers and was known to be harboring several prominent terrorists, including Abu Nidal, a ruthless killer responsible for attacks on El Al ticket counters in Rome and Vienna in 1985, resulting in 18 deaths and injury to 120 people. Saddam also gave refuge to one of the individuals still being sought for the first World Trade Center bombing.

In a passage that speaks volumes, Tenet then also concedes that the CIA “had devoted little analytic attention to [this issue] prior to September 11,” and was therefore “not initially prepared for the intense focus that the administration put on the Iraq-al Qaeda relationship. ” Instead, he offers in apparent extenuation, the agency had been “consumed with the very hot war with Sunni extremists all over the world.”

This is confounding. A high proportion of those Sunni extremists were Palestinian suicide bombers whose families Saddam Hussein was rewarding. Abu Nidal himself, notwithstanding the secular ideology he came to embrace, was a Sunni. The individuals who carried out the first World Trade Center bombing, one of whom Saddam was sheltering, had been Sunni extremists. Not only were they Sunnis; they were the germ of the al-Qaeda organization. Yet Tenet, as if these dots could not be readily connected, blithely asserts that the CIA, “consumed” with “a very hot war with Sunni extremists all over the world,” did not find it worthwhile to study the relationship with Iraq. Incoherence seldom gets more incoherent than this.

It was only after a great deal of congressional and administration prodding that, nearly a year after September 11, the CIA finally began to look seriously at Iraq’s links to al Qaeda. In his memoir, Tenet now downplays what it found, claiming that the “intelligence did not show Iraq and al Qaeda had ever moved beyond seeking ways to take advantage of each other” and that “[w]e were aware of no evidence of Baghdad’s having ‘authority, direction, and control’ of al-Qaeda operations.”

_____________

 ...

Though Tenet disingenuously omits mentioning it in his memoirs, in October 2002, six months before the American invasion of Iraq, he wrote a letter to Bob Graham, the chairman of the Senate Select Committee on Intelligence. It stated (emphasis added throughout):

We have solid reporting of senior level contacts between Iraq and al Qaeda going back a decade.

Credible information indicates that Iraq and al Qaeda have discussed safe haven and reciprocal non-aggression. Since Operation Enduring Freedom [the military operations that commenced shortly after September 11, 2001], we have solid evidence of the presence in Iraq of al-Qaeda members, including some that have been in Baghdad.

We have credible reporting that al-Qaeda leaders sought contacts in Iraq who could help them acquire WMD capabilities. The reporting also stated that Iraq has provided training to al-Qaeda members in the areas of poisons and gases and making conventional bombs.

Iraq’s increasing support to extremist Palestinians, coupled with growing indications of a relationship with al Qaeda, suggest that Baghdad’s links to terrorists will increase, even absent U.S. military action....

In other words, having supplied the administration with building blocks of the case for war, Tenet now acts as if none ever existed.

One can understand why: among those building blocks, the most shoddily constructed was the CIA’s erroneous finding regarding the presence of weapons of mass destruction in Iraq. Tenet’s ex-post-facto explanation for this particular error is that, “[i]n many ways, we were prisoners of our history. . . . Inevitably, the judgments were influenced by our underestimation [emphasis added] of Iraq’s progress on nuclear weapons in the late 1980’s—a mistake no one wanted to repeat.”

He is right about that. His analysts were prisoners of the past, their fingers burned by opposite misjudgments made by the CIA prior to the first Gulf war. But that hardly excuses him or the agency he headed a decade later for failing to perform its assigned job of assembling facts and laying out what it knew of them to be true, and, more crucially, what it did not know.

Laurence Silberman, the federal judge whom President Bush asked to investigate the CIA’s prewar performance, has put the issue well: “It would have been eminently justifiable [for the CIA] to have told the President and the Congress that it was likely that Saddam had weapons of mass destruction based on his past use, insufficient indications of destruction [of previously existing stocks], and his deceptive behavior” (emphasis added). Instead, piling uncertainty on top of guess, and conjecture on top of blunder, the CIA pronounced itself highly confident in its appraisal.

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Friday, January 18, 2008

 

Is Obama a Black Nationalist? I met two people yesterday who were starry-eyed about Obama being a reconciler and unifier. That's not consistent with his past church choice, as Steve Sailer notes, which was to pick a pastor known for his racism. If a Republican candidate had belonged to a church run by an admirer of the KKK, it would be commented on, but Obama doesn't get that kind of attention. Yet.
After all, an enormous amount of talk has been devoted to, say, Mitt Romney and his church, even though Romney was born into being a Mormon. In contrast, Obama knew dozens of Chicago pastors through his ethnic organizing job, but, when he figured out that he had to belong to a church to have an effective political future on the South Side, he shopped around and chose Rev. Wright's church. It's not exactly a secret that Obama's Rev. Dr. Jeremiah A. Wright, Jr. is a radical leftist black racialist. After all, Rev. Wright went with Louis Farrakhan to Libya to meet Col. Gadaffi in 1984, and just last November Wright gave his Lifetime Achievement award to Farrakhan at a big gala at the Chicago Hyatt Regency. Wright calls his stance "black liberation theology" and relates it to Nicaraguan Marxist liberation theology. But I doubt if 2% of the voters know that. The media haven't been in any hurry to alert the voters, perhaps because Obama's supporters have tried to brand the Scarlet R on anyone who mentions anything about Obama other than that he will bring us together to bring about change. (Just as there has been more coverage of Romney's great-grandfather's polygamy than of Obama's father's polygamy... Furthermore, reading Obama's account in his autobiography (for an overall analysis of Obama's 1995 memoir Dreams From My Father: A Story of Race and Inheritance, see my American Conservative article "Obama's Identity Crisis"), it's evident that Obama's concern was not whether Wright was, say, the far left blowhard that he appears to be, but whether Wright's church was leftist enough for Obama... In other words, Obama is wondering, in effect, whether Wright can help him reconcile his black racialism with his vaguely Marxist class-strife ideology. See, the "problem," as Obama saw it in 1987 (and in 1995 when he wrote his autobiography) is that some blacks are getting ahead in the America, which lessens racial solidarity among blacks, and raises contradictions between racialism and socialism, both of which the young Obama wants to believe in.

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Thursday, January 17, 2008

 

The Simple Life. Something worth thinking about are the transactions costs of daily life. Should we make, or buy? Coase (1937) pointed out the importance of this choice. If we make it ourselves, we avoid transactions cost, which are especially onerous if we have to think about the transaction each time. If we buy, we get better division of labor-- in the household, or the firm. Have people thought about this in the context of the household? (surely! both are Old Chicago favorites). Hiring a nanny means determining quality, doing tax forms, etc. It is simpler for the mother not to work. Hiring a plumber is a hassle too. Simpler for father to spend twice as long as the plumber would and do it.

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Wednesday, January 16, 2008

 

Northern Rock bank nationalization. I posted on Northern Rock some time ago. Now it seems the government is thinking of nationalizing it, because it can't find a private buyer at a good enough price.

Something I proposed in my earlier post was giving small creditors, including depositors, priority in bankruptcy. Suppose a bank had 1 billion in equity finance, 5 billion in bonds, and 10 billion in small deposits. It starts with 16 billion in assets, but the value of the assets goes down to 12 billion. The government steps in (or the bondholders), and the payout would be, under my scheme, 0 to equity, 2 billion to bonds, and the full 10 billion to deposits. If the government steps in reasonably quickly, deposit insurance is redundant, though we could still have it.

I'd like to find out more, but apparently that's not the Northern Rock picture, though. Instead, it was something like this (all numbers are totally imaginary, even in scale-- I use them because concrete numbers are easier to follow than X, Y, Z where X>Z, etc.). The bank had 1 billion in equity finance, 5 billion in overnight loans from other banks, and 10 billion in small deposits. It started with 16 billion in assets, but the value of the assets went down to 12 billion. The other banks noticed first, and refused to re-loan their 5 billion. Instead, Northern Rock sold 3 million in assets and the government lent it 2 billion. Now, Northern Rock is left with 1 billion of equity finance, 2 billion in government loans, 10 billion in deposits, and 9 billion in assets. My scheme would not be any help, because the big creditors have already gotten out their money.

Nor would my scheme have helped even had the government not made the emergency loans. Here is a story for what might have happened then. The bank had 1 billion in equity finance, 5 billion in overnight loans from other banks, and 10 billion in small deposits. It started with 16 billion in assets, but the value of the assets went down to 12 billion. The other banks noticed first, and refused to re-loan their 5 billion. Instead, Northern Rock sold 3 million in assets for 3 billion, and another 8 billion at the fire-sale price of 2 billion to repay the 5 billion in short-term money. Northern Rock would then be left with 1 billion of equity finance, 10 billion in deposits, and 1 billion in assets.

The solution seems simple: don't let banks borrow more than their entire equity capital in the short-term markets. But I don't know banking-- maybe they have to to operate. Later the same day. I found a Reuters page which has the Northern Rock balance sheet info. I expect thsi includes the 20 billion or so pounds of government emergency funding. It looks as if deposits actually *are* a small part of funding, and that the assets would easily pay back the depositors. (I haven't included the asset numbers here because I don't think they're reliable--- on the books they seem to exceed liabilities comfortably, so they must not be written down enough).


 *The bank uses four sources for funding. Balances for each
segment were:

 --Retail 24.4 billion pounds (23.2 percent of total)

 --Securitisation 45.7 billion pounds (43.6 percent)

 --Non-retail 26.7 billion pounds (25.5 percent)

 --Covered bonds 8.1 billion pounds (7.7 percent).

 *The bank had total customer account liabilities of 30.1
billion pounds, consisting of retail balances of 24.4 billion
and other customer accounts of 5.8 billion. ...
 

 

 *Bank liabilities totalled 110.1 billion pounds, including:

 --Customer accounts 30.1 billion pounds

 --Debt securities in issue 71 billion pounds

 --Deposits by banks 3.7 billion pounds

 --Derivative financial instruments 2.9 billion pounds.

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Tuesday, January 15, 2008

 

McCain's Record. For a list of problem's conservatives should have with McCain's record, see this Mark Levin article in NRO.

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Monday, January 14, 2008

 

Pork Scratchings. This British version of the pork rind is very good. All four older children like them (they're too tough for a baby). The package says, "Authentic Black Country Pork Snacks." There is a site called Pork Scratching World that ranks this brand as 7, the second highest category.
MS Pork Scratchings

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Sunday, January 13, 2008

 

The Name of God. I looked again at my notes on the Tetragrammaton today. They are in sad shape, but the jumble has interesting material in it. The question is how the 4 consonants of the name of God, הוהי or JHVH, ought to be pronounced. What vowels should be added? Jehovah is traditional. Modern scholars use Yahweh. I think they're wrong. My young scholar told me that he thought V was more correct than W. The Y is clearly wrong for English-- we translate the Hebrew Yod as J in Joshua, Jehu, Jehoram, etc. The only big issue remaining is whether there should be a vowel between H and V.

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Saturday, January 12, 2008

 

Ancient Coins. The Tantalus Online Coin Registry is a good idea. People can put up pictures, descriptions, and comments on their coins, and sell them there too. I guess once they're sold, they can stay on the registry, and they'd then be easy to re-sell, with a provenance established too, at least for a few years. It's great fun browsing there. And Roman coins are cheap. I found the site because I went to the British Museum today and found poor-condition Roman follis's for sale across the street for 2 pounds each.
 

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Friday, January 11, 2008

 

Illegal Immigrants and Crime. Steve Sailer has recent posts on that topic here and here, with sources. He doesn't have much that's new to me, but I'll make a note of it. I have an earlier weblog post that can be searched for that has more on the topic, which needs to be investigated.

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Thursday, January 10, 2008

 

Men and Women. My wife told me about a comparison she had heard. Women are like spaghetti on a plate; men are like waffles. A woman's thoughts are in touch with lots of things at once, intricately coiled, and you never know where the end will be. A man's thoughts are compartmentalized. Thus, a man is bothered when a woman starts off by talking about the plumbing and ends up talking about her niece's wedding; he wants to separate things out and resolve one problem at a time.

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Wednesday, January 9, 2008

 

Elasticities in Regressions. (update of old post)Here are how to calculate elasticities from regression coefficients, a note possibly useful to economists who like me keep having to rederive this basic method:
  1. The elasticity is (%change in Y)/(%change in X) = (dy/dx)*(x/y).
  2. If y = beta*x then the elasticity is beta*(x/y).
  3. If y = beta* log(x) then the elasticity is (beta/x)*(x/y) = beta/y.
  4. If log(y) = beta* log(x) then the elasticity is (beta*y/x)*(x/y) = beta, which is a constant elasticity.
    (reason: then y= exp(beta*log(x)), so dy/dx = beta*exp(beta*log(x))*(1/x) = beta*y/x.)
  5. If log(y) = beta*x then the elasticity is (beta* y )*(x/y) = beta*x.
    (reason: then y = exp(beta*x), so dy/dx = beta*exp(beta*x) = beta*y.)

  6. If log(y) = alpha + beta*D, where D is a dummy variable, then we are interested in the finite jump from D=0 to D=1, not an infinitesimal elasticity. That percentage jump is

    dy/y = exponent(beta)-1,

    because log(y,D=0) = alpha and log(y, D=1) = alpha + beta, so

    (y,D=1)/(y, D=0) = exp(alpha+beta)/exp(alpha) = exp(beta)

    and

    dy/y = (y,D=1)/(y, D=0) -1 = exp(beta)-1

    This is consistent, but not unbiased. We know that OLS is BLUE, unbiased, as an estimator of the impact of the dummy D on log(Y), but that does not imply that it is unbiased as an estimator of the impact of D on Y. That is because E(f(z)) does not equal f(E(z)) in general and that ultimate effect of D on y, exp(beta)-1, is a nonlinear function of beta. Alexander Borisov pointed out to me that Peter Kennedy (AER, 1981) suggests using exp(betahat-vhat(betahat)/2)-1 as an estimate of the effect of going from D=0 to D=1, as biased, but less biased, and also consistent .

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Tuesday, January 8, 2008

 

Best Betting Cardgame. I made up a cardgame to play with the kids. Each person antes one toy soldier (or coin or chip) onto a piece of paper (to keep things tidy) and is dealt three cards. You then bet in turn, as in poker. You can match previous bets, drop out, or match the previous bets and then raise up to 5 soldiers. If you drop out, you show your cards. When nobody wants to raise anymore, those remaining in the game show their cards and the high card wins. My 5-year-old and 7-year-old both like it, and even the 4-year-old played for a while. I like it because there is some strategy involved regardless of the level of the other players, and this is far easier for kids than poker would be.

I've thought of a solitaire version too. The player is dealt three cards, and so is the bank. Each antes two soldiers. The live player then can bet one, two, or three more soldiers or drop out. After his decision, the bank's cards are revealed and either the bank or the player wins.

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Monday, January 7, 2008

 

Poetry to Memorize. Jough Dempsey has a good poetry page, good both for its selection of memorizable poems, for its poems as poems, and for his commentary.
One of the best aspects of learning a poem by heart is that you get to take a poem inside of yourself. It becomes a part of you. That sounds touchy-feely, but it’s true. When you memorize a poem it is no longer just a poem, but your poem. It’s in your head, and you can call it up from memory as you would any other experience.
He has “Stopping By Woods On A Snowy Evening” by Robert Frost, “For Whom The Bell Tolls” by John Donne, “Musée des Beaux Arts” by W. H. Auden, “Tears, Idle Tears” by Alfred Lord Tennyson. They aren't easy to memorize, but they are good poems.

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Sunday, January 6, 2008

 

Here's a Bible story from Judges 10 that I just learned about. Abimelech killed all his brothers, who were the rulers of Shechem, except for Jotham. Jotham told this story to the men of Shechem before he fled.
[7] And when they told it to Jotham, he went and stood in the top of mount Gerizim, and lifted up his voice, and cried, and said unto them, Hearken unto me, ye men of Shechem, that God may hearken unto you.

[8] The trees went forth on a time to anoint a king over them; and they said unto the olive tree, Reign thou over us. [9] But the olive tree said unto them, Should I leave my fatness, wherewith by me they honour God and man, and go to be promoted over the trees? [10] And the trees said to the fig tree, Come thou, and reign over us. [11] But the fig tree said unto them, Should I forsake my sweetness, and my good fruit, and go to be promoted over the trees? [12] Then said the trees unto the vine, Come thou, and reign over us. [13] And the vine said unto them, Should I leave my wine, which cheereth God and man, and go to be promoted over the trees? [14] Then said all the trees unto the bramble, Come thou, and reign over us. [15] And the bramble said unto the trees, If in truth ye anoint me king over you, then come and put your trust in my shadow: and if not, let fire come out of the bramble, and devour the cedars of Lebanon.

Jotham says more to connect this to Abimelech, implying that Abimelech is the bramble and that he and the men of Shechem will come to blows later, which they do.

The main point, I think, is that you have to worry about the motives of anybody who wants to be king. It is Plato's problem of the Philosopher King stated some centuries earlier.

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Saturday, January 5, 2008

 

Penmanship. A good page on penmanship, featuring scans of old instruction books, is "Lessons in Calligraphy and Penmanship" . I was looking for a cursive alphabet page for my daughter and couldn't find any page that had all the letters in cursive upper and lower case in beautiful handwriting. "ALPHABET PRACTICE - WRITING WORKSHEETS" has good dotted worksheets for all-caps or all-small and for individual letters repeated over a page that are at least acceptable in quality.

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Friday, January 4, 2008

 

Aquinas as Utilitarian. Happiness is the end. Summa Theologica 2-1 q.90 article 2: "Whether the law is always something directed to the common good?":
Now the first principle in practical matters, which are the object of the practical reason, is the last end: and the last end of human life is bliss or happiness, as stated above (Q[2], A[7]; Q[3], A[1]). Consequently the law must needs regard principally the relationship to happiness. Moreover, since every part is ordained to the whole, as imperfect to perfect; and since one man is a part of the perfect community, the law must needs regard properly the relationship to universal happiness. Wherefore the Philosopher, in the above definition of legal matters mentions both happiness and the body politic: for he says (Ethic. v, 1) that we call those legal matters "just, which are adapted to produce and preserve happiness and its parts for the body politic": since the state is a perfect community, as he says in Polit. i, 1.

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Thursday, January 3, 2008

 

British Pantomime. I went to see Rapunzel at Chipping Norton's town theater tonight with my children. Pantomime, or Panto, is a Christmas-season tradition of live shows for children and their parents. The one we saw featured many of the conventions, which include: 1. A female character played obviously by a man, 2. Audience participation, with booing the villain, clapping, saying "No, you aren't" to contradict a character, and "hello"s. 3. The characters talking directly to the audience. 4. Lots of songs and dances. 5. One song with words put up on a banner for the audience to sing along with, and halves of the audience competing as to who can sing the best. 6. The characters throwing candy out to the audience. 7. Being able to take intermission ice cream back to the seat. 8. The story being adapted from a well-known children's story. 9. Lots of puns. 10. Slapstick.
 

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Wednesday, January 2, 2008

 

Part-Whole Bias--The Embedding Effect. ``Contingent valuation'' is a survey technique used in cost-benefit analysis for public goods. These goods are not traded in the market, so market prices cannot be used to value them. Instead, the analyst asks a sample of people how much they are willing to pay for the public good, which is often some environmental good such as wildlife preservation. Surveys are notoriously bad at eliciting true valuations, and the contingent valuation method has been much criticized. Diamond \& Hausman (1994) survey some of these criticisms, including that of ``part-whole bias'', or ``the embedding effect''. The clearest example is from a study by Desvouges, Johnson, Dunford, Hudson, Wilson \& Boyle (1993) which asked some people how much they would pay to stop the killing of 2,000 birds, some people 20,000, and some people 200, 000. The answers were all roughly the same, even though presumably it is worth spending more to save 200,000 birds than to save 2,000. Diamond and Hausman suggest that respondents were not really saying how much they valued birds, but were giving themselves a good feeling by donating, even if only in the abstract, a sum towards wildlife preservation (the ``warm glow effect'' of Andreoni (1989)). People do not view saving 200,000 birds as the addition of one-hundred 2000-bird projects. Similarly, Kemp \& Maxwell (1993) asked one group of people how much they would pay to reduce the risk of oil spills off the coast of Alaska, and found an average valuation of \$85. They asked a different group how much they would pay for a broad range of government programs, and then asked that group to divide and subdivide their willingness to pay for the various items in the package. By the time they broke it down to reducing the risk of oil spills off the coast of Alaska, the value was down to \$0.29. Asking about the oil spills separately gives it a much higher value; the whole is worth more than the sum of the parts. (For a a wide variety of other contingent valuation studies see Frederick \& Fischhoff (1998)). Surveys have their own special problems, but the embedding effect can arise in real decisionmaking too, as Bateman, Munro, Rhodes, Starmer \& Sugden (1997) found in experiments in which subjects traded restaurant vouchers. This should not be surprising. Many people devote considerable effort to budgeting their spending, and such effort would be unnecessary if we were endowed with enough brainpower to costlessly link every consumption decision to every other actual and potential one. Naturally, if we are reminded of other items we could buy-- or told of options that are entirely new to us-- that affects our decisions.

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