Stimulus Gone Bad Paul Krugman, New York Times. Krugman’s ability to present economic ideas simply without compromising accuracy is a rare skill indeed.
The iPhone Meets the Fourth Amendment Adam Gershowitz. Absrtact:
Imagine that police arrest an individual for a simple traffic infraction, such as running a stop sign. Under the search incident to arrest doctrine, officers are entitled to search the body of the person they are arresting to ensure that he does not have any weapons or will not destroy any evidence. The search incident to an arrest is automatic and allows officers to open containers on the person, even if there is no probable cause to believe there is anything illegal inside of those containers. What happens, however, when the arrestee is carrying an iPhone in his pocket? May the police search the iPhone’s call history, cell phone contacts, emails, pictures, movies, calendar entries and, perhaps most significantly, the browsing history from recent internet use? Under longstanding Supreme Court precedent decided well before handheld technology was even contemplated, the answer appears to be yes
Housing drags economy down the sink Merrill Lynch. This is the report that called for a further 20% to 30% fall in housing prices. It gives an overall US forecast and some grist for thought.
The Two Faces of Bill Gates Econospeak. Contrasts Gates’ call for kinder capitalism (which is a scary echo of “compassionate conservatism”) with Microsoft’s efforts to develop tools to monitor employees that would make Big Brother green with envy.
Some People Never Learn The Future of Things.
This is mixing market losses with frauds and intermediate types of miscalculations.
So far, this appears to be an intermediate case, although SocGen is presenting it as a fraud. An authorized trader exceeded limits and lost more than he was supposed to be able to lose. SocGen claims the trader fraudulently concealed the losses, but this is a common claim after large losses, and one that is rarely substantiated later. Even in the relatively clear-cut case of Nick Leeson, some people believe that knowledge of the trades went beyond Nick himself.
BCCI was a clear fraud, about 50% bigger than this one (and that was in 1990 money). If you aggregate all the fraud in the US Savings and Loan industry in the mid-80’s, you get something two orders of magnitude larger. But there has never been a concealed trading problem this big, or at least, there has never been one that became unconcealed. It’s wise to remember that we have never seen a story of outsized concealed trading gains. Since you figure half the rogue traders guess right about the market, and far more than half should make money given that they can costlessly double-up after losses, you should remember that you are looking at censored data.