All debtors are not created equal

Why should the government be spending more to fix the economy despite the increase in government debt? Paul Krugman explains it nicely. http://krugman.blogs.nytimes.com/2010/10/25/sam-janet-and-fiscal-policy/#more-13811

For my pot loving and/or nmeeding friends in Cali

http://motherjones.com/politics/2010/10/california-medical-marijuana-pot-card

I needn't have worried. Soon enough, I found Price-Less Evaluations, "the most trusted medical marijuana evaluation center in San Francisco," whose site features a photo of a model in a lab coat and a coupon for a "420 special" (good for a $20 discount on April 20, 2011). Many California pot doctors will ask patients to bring in medical records that prove that their problems are legit (though they don't always check them). But the woman who answered the Price-Less 24-hour info line assured me that despite my lack of documentation, "the doctor can just evaluate you, and he'll decide whether you qualify or not."
.,.....
The receptionist led me back into a hallway, where I saw a stooped, white-haired man in a rumpled pullover—the doctor. "Come on in," he mumbled. I stepped into an office and sat down at the edge of his desk. "So, can cannabis help you in some ways?" he asked, pen poised over a recommendation form. "I think so, yeah," I replied, trying to sound confident.
"So how does it help you?" he asked as the ink dried. "Well," I offered, "I have periodic pain from typing a lot, and in my lower back, and it could help me with that." He smiled. "Good. It's signed right there." The entire conversation had taken less than 90 seconds.

Vagina Coast Guard

out of laziness i steal content

From Krugman:

What’s striking about the you’re-so-ignorant critics, however, is their tendency to get all confused about very basic things – to insist that the savings-investment identity somehow implies that government spending can’t increase demand, that the Euler condition is somehow a causal relationship implying that low interest rates cause deflation, that Ricardian equivalence means that even a temporary rise in government spending will be fully offset by reduced consumption.

I believe that what we’re looking at is people who know their math, but don’t know what it means: they can grind through the equations of their models, but don’t have any feel for what the equations really imply.

http://krugman.blogs.nytimes.com/2010/10/04/math-models-and-mystification/

Tyler Cowen, another supply sider with tired talking points

So via Kevin Drum I saw this post by Chicago School economist Tyler Cowen:

Yet Keynesian theory has a no less serious problem, namely that workers take a "stupid voluntary vacation" during the downturn, due to their stubbornness on nominal wage cuts......Aggregate demand macroeconomics works in many cases and it almost always "works" (predicts well) when the macro forces are pointed toward destructive ends.  We are not sure why it works at all, or if it always works, and yet we see a great fervor of belief in it and a demonization of those who are skeptics.

steny hoyer is a fucking moron

that is all.

OKCupid tells us what white (and not white) people like

I pass this along without comment. for now.
http://blog.okcupid.com/index.php/the-real-stuff-white-people-like/

a video of me cooking and eating balut

which is a duck fetus egg.  

Wow, this chick is stupid

From an old episode of Politically Incorrect with the Tea Party senate candidate Christine ODonnell. (h/t Think Progress)

IZZARD: What if someone comes to you in the middle of the Second World War and says, ‘do you have any Jewish people in your house?’ and you do have them. That would be a lie. That would be disrespectful to Hitler.
O’DONNELL: I believe if I were in that situation, God would provide a way to do the right thing righteously. I believe that!
MAHER: God is not there. Hitler’s there and you’re there.
O’DONNELL: You never have to practice deception. God always provides a way out.

I think its interestng that she imagines god will save her from having to tell a lie, but somehow failed to save all the jews who actually got killed. Apparently the "way out" he provides is often death.

OK, Mr. Brooks

Credit where its due. After my previous post skewering him, I feel obliged to say his latest colum makes some good points. http://www.nytimes.com/2010/09/14/opinion/14brooks.html?_r=1

Diverse Tea

So the Tea Party wants to diversify, http://tpmdc.talkingpointsmemo.com/2010/09/tea-party-group-wants-jews-african-americans.php?ref=fpb.

"We are black, brown, and white. We are Jew and gentile. We are from different communities, various backgrounds, and all races, colors, and creeds.
We will Take America Back, not from Democrats or Republicans, but from an arrogant political class that puts its interests before those of all Americans."

Ha!

I wonder if i could manage to not vomit long enough to become a member and get a look at what goes on among the rank and file Tea partiers.

BASEL III is complete

And the results seem pretty good at first glance. I never understimate the ability of accountants to game the system, but hopefully regulators will enforce this stuff. Here's the details: http://bis.org/press/p100912.htm

The gift that keeps on giving - Santorum

HAHA! Thank you Dan Savage.

Rick Santorum would very much like to be president. For the past few years, he has been diligently appearing at the sorts of conservative events—the Values Voters Summit, the Conservative Political Action Conference—where aspiring Republican candidates are expected to show up. But before he starts printing "Santorum 2012" bumper stickers, there's one issue the former GOP senator and his strategists need to address. You see, Santorum has what you might call a Google problem. For voters who decide to look him up online, one of the top three search results is usually the site SpreadingSantorum.com, which explains that Santorum's last name is a sexual neologism for "the frothy mixture of lube and fecal matter that is sometimes the byproduct of anal sex."

http://motherjones.com/politics/2010/08/rick-santorum-google-problem-dan-savage

http://www.spreadingsantorum.com/

well, we at least have economic consensus

unfortunately the consensus very bad, and the fed seems like it ain't gonna do anything substantive while the whitehouse and congress probably can't do anything because of republican opposition. ugh. http://motherjones.com/kevin-drum/2010/08/fed-sadistic

now i can carry 8 movies in my pocket

just got my new 8gb lacie usb key. i can't believe no one else designs them to fit on a key ring. its ballin'. http://mrmatt57.org/the-ultimate-usb-key-drive-lacie-iamakey-8gb/

What happens when the republican party drives their crazy base into a frenzy of hate and bigotry? This: http://www.ny1.com/?ArID=124338


(and yes,i know you can't prove this has anything to do with the mosque controversy or republicans blah blah. i'm willing to make a bet on it though)

David Brooks: The Master of False Equivalencies

I usually avoid reading Brooks NYTimes column because its become so predictable and usually completely wrong or pointless. He's made a career out of pretending there's always a correct and moderate middle ground between the right and left in American politics and that he's the guy who sits in that perfect spot. Self-righteous and psuedo-intellectual, thy name is brooks.

So today i was reading the physical paper, which is rare, so i read the brooks column since i already had the page open and didn't really care about bob herbert's childhood hero. And not to disappoint, brooks was formulaic as usual.

1) Start with some random, archaic story which no one cares about but has emotional impact. this makes one seem smart and well read, while keeping the reader both interested and distracted from facts or logic. in this case he out did himself by writing several paragraphs about a woman undergoing a mastectomy while fully conscious and with no pain killers. i would call is disturbing at best.

2) Make a tortured analogy between the random story and some political or social event of today. In this case its a particularly tortured (pun intended) analogy between the woman's ability to endure pain and modern folks' inability to overcome confirmation bias. Or something like that. It really doesn't make any sense, but it does make Brooks think he sounds smart.

3) Present loosely two related examples of the thesis from step 2 from the Left and Right and create a false equivalence between them. This allows brooks to sound moderate, while falsely making it seem like both sides are wrong. In this case he compares the mindless bigotry, demagoguery and blatant lies of those who insist Obama is a Muslim with the reasonable and thoughtful (if in retrospect incorrect) opposition to the Iraq troop surge. We all know (those of us who are sane) the Barak Obama is Christian and American. At the time leading up to the "surge" in Iraq, the country was in a shambles, we'd spent years trying to prob up a government that seemed hopelessly corrupt and various factions within Iraq were busily murdering each other. I, for one, thought it was hopeless to try to occupy and rebuild the nation on any time frame acceptable to the American people. I thought adding more troops would be a waste of lives and money while inflaming anti-American sentiment around the muslim world. It turns out the surge so far has been successful (though i still harbor serious doubts about the long-term benefit and stability of Iraq once we complete withdrawal) but that does not mean my position was driven some mindless, partisan, anti-Bush sentiment. Unless you're David Brooks and its the time of the week when you need a fake left-right equivalency.

4) Close with something that sounds both pretentious and profound. Today's example

To use a fancy word, there’s a metacognition deficit. Very few in public life habitually step back and think about the weakness in their own thinking and what they should do to compensate. A few people I interview do this regularly (in fact, Larry Summers is one). But it is rare. The rigors of combat discourage it.

Of the problems that afflict the country, this is the underlying one.

http://www.nytimes.com/2010/08/24/opinion/24brooks.html?_r=1&hp=&adxnnl=1&adxnnlx=1282676448-72MalTqO59Ks1CpmWcUKoA

And that's how you write a New York Time Column.

I am now a fan of Current TV

They had the Current channel at my hotel last week and its amazingly good. check out Viral Video Film School, its like Tosh.0 for the east coast liberal elite

-

and That's Gay -

- a show making fun of gay trends in the media.

testing my blog twitter feed

lets see if this works

--UPDATE: it does not. twitterfeed is garbage and/or i'm a moron.

here come the terrorist babies from the future!!!

http://www.cnn.com/video/#/video/bestoftv/2010/08/10/ac.birth.terroism.tourists.cnn?hpt=C2

Two things i like about this clip. One when cooper asks her if she has any proof and the crazy lady says "in the initial conversation with your producers i wasn't told i'd be grilled to produce any evidence of what i'm saying is true". Second is that her botox makes her look like the crypt keeper - only her mouth moves and the rest is wrinkled and dead looking. Love it.

P90X update

ok, its been a couple weeks since the last post. i'm still not really completing any of the routines, but i talked to others who are doing p90x and neither have they. and these are people who've been working out regularly for awhile before starting. but i have kept up 6 days a week plus some bike riding for 5 or so miles a couple times.

so anyway, results have been good. i feel better and everyone i haven't seen in a few weeks or longer says i look thinner. i also put on a belt today which i had to cut an extra notch in when i bought it. now i don't need that notch and can wear it about 1.5 or 2 inches tighter. The only downside is i don't feel like i'm building much muscle mass so far. that could be my fault because i'm not completing the workouts, or because i only have 25 lb dumbbells. the 45 lb pair of quick adjust dumbbells was like 300 bucks so i just spent 120 on the 25's. They're actually really nice. I got them from Walmart. I forget the name but you can find them easily, they have square plates and are nice to use as pushup handles as well. i'll probably weigh myself soon too and check body fat somehow. i usually range from 167-172 (pre p90) and am 5'10''.

so the current conclusion is its working, try it if you want to lose wieght, tone and get some video motivation.

sometimes you just really want chicken nuggets

http://www.bbc.co.uk/news/world-us-canada-10922428

h/t to Gabe http://gabegodin.com/home.html

Zandi Blinder paper

There's be a lot of talk about the Zandi-Blinder paper on the effects of fiscal and monetary stimulus which was recently released. Basically they say that the government stimulus measures were very successful and prevented a depression 2 scenario with 16+% unemployment, continued negative GDP growth through 2011 and serious deflation. So here's the link http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf .

I don't have enough of a background in economic forecasting to really dissect the paper's conclusions but I'll point out that Zandi is not a liberal economist, and in fact was a McCain economic adviser. Also, as I understand they used pretty standard models to make their analysis and it is relatively consistent with related alalysis from the CBO.

But the main reason I read the paper wasn't for the stimulus analysis but because i was interested in exactly how the Moody's Analytics economic model works and that's touched on in Appendix B of the paper. It talks about inputs to the model such as credit spreads (TED, LIBOR etc), household cash flow, mortgage rates, treasury yields, Federal Reserve asset values, undewriting standards on lending, business cost of capital (corporate bond yields), labor supply (based on full employment level of labor), and other capital stack input factors, FOMC's inflation target and several other factors. This is covered starting on page 18 of the paper. If anyone knows more about the nitty gritty of how this model functions please add a comment.

Elizabeth Warren and the CFPA

Likewise, having the formidable, and seemingly strong priored Warren at the head of CPFA is dangerous. She seems to have strong beliefs and the analytical ability to plow through anyone in her way.
http://modeledbehavior.com/2010/07/29/the-confirmation-bias-of-e-warren/

Its very strange to me that many seem to think its critical that the head of the consumer finance protection bureau not be too interesting in protecting consumers. and more so that they think its a convincing argument to anyone who's not out to support the financial industry over the rest of the country. And as many others have said, the politics of it before the midterms make the appointment a no brainer. sure the financial industry is gonna be pissed and they might weaken support for democrats in the future. but they're already pissed and many are already publicly blaming obama for economic weakness in spite of the unprecedented stimulus measures he's pushed through. so i'm operfectly happy to piss them off and try to keep our congressional majorities with a great, publically popular pick for CFPA.

By the way, there's more to Karl Smith's criticism of Warren, which is why I linked it, but it basically boiled down to she's too tough and she will have "confirmation bias", ie she thinks to banks need agressive regulation already and therefore will agresively regulate the banks even if the data doesn't warrant it. Well, lets just say i'm not too worried about the banks or their overregulation right now. After a couple decades of deregulation and growth in the financial industry's wealth and influence, i think they, their lobbyists and their pawns in congress are perfectly capable of looking after their interests.

So my body has continued to deteriorate

from alcohol and i was developing hypertension, a gut and was always pretty exhausted in the morning or after minimal exertion. So i decided to try the infomercial P90x shit. It was the only tv workout system that looked like it would work since it seemed really hard and aweful. Well, it is really hard and aweful. I've been kinda doing it for about 2 weeks, and by kinda i don't mean halfassing it. Ive been working out 6 days a week till i can't continue, but that takes about 30-40 minutes doing tony i'm-an-asshole horton's crazy workouts. They are actually about an hour long, plus another 13 minutes for an ab workout some days. No way anyone coming in to this out of shape can complete a full workout (or maybe i'm just a pussy). But it seems to be working. I have more energy, i'm definitely feeling better and most important I can recover from a hangover much better. so I'll update in a couple more week on how its progressing. maybe by then i'll actually be able to finish a complete workout.

BASEL III - nerdy finance stuff you don't care about

So a friend asked me to write up a post on the BASEL bank regulations which i thought i'd crosspost here.

The Basel Accords are a set of international banking regulations which were created by the BASEL Committee, made up of members of the Group of 10 (G10) nations to provide regulatory consistency and stability for banks worldwide. BASEL I was triggered by the collapse of 2 major banks in 1974, Franklin National Bank and Bankhaus Herstatt. The first BASEL accords were published in 1988 and enactred in the G10 in 1992. This coherent, unified regulatory code increased confidence and transparency for banking across borders and also promoted competition by ensuring similar costs and requirements across the globe. The BASEL committee does not possess any direct regulatory authority, and its up to individual nations to enact and enforce the BASEL standards. In the US, for example, the recent financial reform legislation contained language to automatically adopt the requirements of BASEL III, which is being negotiated currently.
One of the most important and highly debated issues in the currently BASEL III negotiations is capital requirements. Capital requirements are regulations controlling the ratio of a bank’s capital to its risk weighted assets. This basically means banks much be able to absorb the unexpected loss of value to risky assets (think subprime mortgage loans, MBS’s, etc) with cash or highly liquid, non-risky assets they have. To be more specific:

“To be adequately capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 4%, a combined Tier 1 and Tier 2 capital ratio of at least 8%, and a leverage ratio of at least 4%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. To be well-capitalized under federal bank regulatory agency definitions, a bank holding company must have aTier 1 capital ratio of at least 6%, a combined Tier 1 and Tier 2 capital ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels.”
Wikipedia.org - http://en.wikipedia.org/wiki/Regulatory_capital

Tier 1 capital refers to shareholder equity, retained profits, and some other assets. Tier 2 capital is undisclosed reserves, revaluation reserves, general provisions, hybrid instruments and subordinated term debt. (whatever the hell those are).
The big problem with the current capital requirements as defined by BASEL II is that it just doesn’t include lots of risky assets. These assets are called “off balance sheet”. This was apparently partially adressed in BASEL II but not implemented in the US till 2007, after the bubble was built on the back of overleveraged banks and other financial institutions with short term financing (often as short as overnight on REPO markets). But even after 2007, there remained the possibility to hide risky assets in off-balance sheet entities. Here’s an excerpt from a research paper explaining how a bank could take securitized MBS’s and hide them to circumvent the capital requirements, thus increasing leverage and risk for the institution and increasing the possibility of default and bankruptcy.

“One way to understand where and why possible frictions might have occurred is
to consider an idealized securitization transaction whereby the originator, bound by
capital adequacy rules, sells a pool of assets to an off-balance-sheet entity. What is of
critical importance, however, is the issue exactly what kind of an off-balance sheet
entity takes control over the assets. It may be a special purpose vehicle (SPV), i.e. what
Gorton and Souleles (2005) call a bankruptcy remote, “robot firm,” with no employees,
no physical existence, and no capacity to make substantial economic decisions. SPVs
typically carry out predefined tasks of tranching pools of receivables obtained from the
originator into asset-backed securities which are then sold on the market in much the
same way as described above. Alternatively, the originating bank could set up an offbalance-
sheet conduit called structured investment vehicle (SIV), a physically existing,
managed and leveraged financial company whose purpose will be to undertake arbitrage
by buying long-term fixed-income assets from its sponsors to fund them with short-term
liabilities such as asset-backed commercial paper (ABCP).
As Shin (2008) astutely observes, the critical difference between SPVs and SIVs
stems from the fact that selling a loan is entirely different from issuing liabilities against
it. While the former – to the extent that loans are indeed passed down the chain –
contributes to spreading credit risk around the whole economic system, the latter keeps
it concentrated around the very bank that originates the loans and only hides it from the
regulators. As recognized by the IMF (2008, p. 69) in one of its latest reports on global
financial stability:
…SIVs and commercial paper conduits, are entities that allow financial institutions
to transfer risk off their balance sheet and permit exposures to remain mostly
undisclosed to regulators and investors; to improve the liquidity of loans through
securitization; to generate fee income; and to achieve relief from regulatory capital
requirements.”http://www.ijesar.org/docs/volume2_issue1/impact_basel.pdf

So banks don’t want these requirements because it limits their ability to leverage and take risk and thus make tons of money. The biggest banks in particular believe they will not be allowed to fail and even if they are, the executives will still be rich and taxpayers or investors will take the hit. And the latest news is that the latest draft of BASEL III is watered down, weak tea.

“Early reports suggest that the final draft accord — agreed to by everyone except Germany so far — largely caved in on its definition of capital, which will allow banks a lot more leeway to skirt the new rules. It also, as expected, allows a long transition period before the new rules take effect. In return, it mandates a minimum leverage ratio. This would be great news except that the new minimum is 3%, or 33:1”-http://motherjones.com/kevin-drum/2010/07/are-bankers-winning-again

And that’s that.

Coverage of the oil spill

Am i the only one who's really disappointed in the coverage of the BP oil spill? All they do is talk about political posturing and blowback or how much oil might be coming out. What I want to hear, and has been almost completely absent, is a basic description of the mechnical systems down there, how they are suppowsed to work, where the damage is believed to be, why obvious solutions like pumping a bunch of cement or cement equivalent won't work, and why seemingly ridiculous things like shooting ping pong ball in to block it are even seriously discussed. And please throw in some serious diagrams, not something the art department whipped up after watching The Abyss last night. If anyone is aware of such converage, let me know and give me a link if its on the web.

some sci-fi nerd stuff

I just finished grad school and finally have some relaxation time between working and drinking, so i've been reading and watching more movies. And I found the first really good sci fi movie i've come across in years. And no, its not Moon (2009) or whatever the one was about the shitty time maching which was confusing and stupid. Both were totally overrated in my opinion. Moon has an 8 on imdb, but i'm not sure why. the plot was tedious, the "twist" obvious and the characters non-sensical in behavior and dialogue. And the one i can't remember started with a cool idea but then the plot became unnecesarrilly convoluted and it ended without clear resolution for what the fuck had happened. And yes, i "got it", in general. but there where still unanswered questions about many details and characters' motivation.

Anyway, the good movie was "Sunshine" (2007). I'm amazed i had never heard of it, but i guess it didn't have any major actors. Or at least i didn't recognize anyone except cillian murphy who was in the dark knight. I won't go intop the plot since it doesn't sound all that great. And the way the handle the very end is kinds over the top and silly. But the writing and acting are great. the characters are well developed (for an ensemble action film) and the plot makes sense and holds together well. The story starts a bit slow and i was worried that it would be a straight ahead, mission to save the world thing. But after about 30 minutes things pick up, the plots more gripping and from there things are great (till tthe kinda wierdness in the end). So go watch it.

And secondly, my latest sci-fi book is Spin, was the hugo winner in 2006 or something. Its also very good. I'm halfway though so it may end up shit (like the sequel to that decent book about the trojan war reenacted on mars with robots and various god whose name i can't remember) but so far excellent. Once again, i'm impressed by complex characters, interesting plot and novel scientific ideas. anyway, someone's bothering me so i'm done. but go read it.

The Vix

So i've been wondering for awhile now how exactly the Vix (a index that is meant to reflect volatility in the stock market) works. looked it up on wikipedia today and figured it was something interesting to post on the blog. Its based on a weighted average the prices of 30 day put and call options for stocks in the S&P500. This makes intuative sense since higher volatility (ie change in price) means a futures option will be more like to be in the money. For example a call option with a strike price of 100 and a current price of 80 will be more valuable the ,more the market expects the price to increase by the expiration date. Thus a high option prices = high implied volatility = high vix. Or that's my understanding. and just to sound smarter ill thow in "black-scholes...blah blah blah".

A very, very bad week

Tsutomu Yamaguchi
On August 6, 1945, Yamaguchi was a 29-year-old engineer, preparing to leave Hiroshima, Japan, where he had been on a business trip. That morning, the crew of an American B-29 bomber, the Enola Gay, dropped an atomic bomb on the city, killing some 140,000 people.
Yamaguchi suffered burns but survived, and made his way back home to Nagasaki -- just one day before another B-29 crew dropped another atomic bomb on that city on August 9, resulting in another 70,000 deaths.
The New York Times reports that Yamaguchi, recognized as the only official survivor of both bombings, died on Monday in Nagasaki of stomach cancer at the age of 93.