Links 3/16/08

Put young children on DNA list, urge police Guardian. No matter how bad you think our loss of civil liberties is here (and I do not mean to understate how serious a matter it is in the US), it’s worse in the UK. “Primary school children should be eligible for the DNA database if they exhibit behaviour indicating they may become criminals in later life.”

Playing Bridge While The Ship Sinks George Borjas

SAR #8076 Some Assembly Required. I’ll confess I found this site because it picked up on one of my attempts at irony, and it looks like a keeper. It has a nice selection of black humor comments, mainly on matters financial.

Is Suburbia Turning Into Slumburbia? SFGate

TSLF James Hamilton, Econbrowser. Hamilton works through the scenario that has some hot and bothered: what if the collateral that the Fed is taking turns out not to be so hot?

Are You Happy? Sue M. Halpern, The New York Review of Books

Antidote du jour. Reader Joe sent me some more cute photos, but he had one of a decidedly different type that seemed fitting.

This is what the Fed sees when it looks at Wall Street:

We’ll return to our usual pix tomorrow…

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  1. doc holiday

    LOL! That is the best pet picture ever!!

    Try this one:

    Alternative Instruments for Open Market
    and Discount Window Operations

    Federal Reserve System Study Group
    on Alternative Instruments for System Operations

    Board of Governors of the Federal Reserve System, Washington, D.C., December 2002 Bo…t_instrmnts.pdf

    If the Federal Reserve was to conduct the bulk of its operations in assets other than Treasury securities, the risk of
    affecting relative prices across private assets could be significant…

    The Federal
    Reserve’s current approach limits its credit risks by confining its holdings to Treasuries
    and other perceived high-quality assets, as well as to repurchase agreements and
    collateralized discount window loans that represent secured credit exposures to strong
    counterparties. Thus, the Federal Reserve has been able to maintain both liquidity and
    high credit quality. As the pool of marketable Treasuries shrinks, judgments about how
    much credit risk to bear and how to employ diversification to manage such risk will
    become more critical. Among debt instruments, a portfolio of higher credit quality and
    greater diversification often tends to be more liquid under a broad range of conditions
    than a portfolio of lower credit quality and lesser diversification, but the relationship is
    not ironclad.7 Nonetheless, efforts to minimize credit allocation effects may be reason to
    hold a portion of the portfolio in less liquid, less high quality assets.
    Whatever its appropriate level, credit risk should be well managed and should not exceed
    what is necessary to meet the Federal Reserve’s monetary objectives. One important
    reason for much prudence is that knowingly accepting excessive credit risk, like engaging
    in credit allocation, can be thought of as an action exercised more appropriately by the
    fiscal authorities than by the central bank. Moreover, significant credit problems might
    give rise to misunderstandings of the rationale behind the Federal Reserve’s asset
    allocation policies and possibly to political interference in these policies. Transparency
    about strategy and tactics can reduce the risk of misunderstanding but probably cannot
    fully eliminate it.

    Purchasing assets with greater credit risk also would raise practical issues. The potential
    for credit losses, which often can occur at or just after cyclical troughs, would require the
    Federal Reserve to adjust the way it values its portfolio. With risky assets, it would make
    sense to place some portion of earnings into a credit loss reserve and conduct frequent
    reviews of the portfolio to assess the adequacy of the reserve. Indeed, systematic
    reserving and prompt write-downs over a large, highly diversified portfolio should be an
    expected part of managing such a portfolio. With risky assets, the Federal Reserve also
    would need to develop standards for acquiring and retaining such assets. Higher (that is,
    narrower) standards would reduce the total asset pool available to the Federal Reserve
    and could make diversification more difficult

  2. Anonymous

    Re: Happiness.

    Anyone who spends time in that section of the stacks is likely to cheer Jerome Kagan’s transcendent (hopeful, gracious) and courageous (brave, valiant, courteous) request:

    Let us agree to a moratorium on the use of single words, such as fear, anger, joy, and sad, and write about emotional processes with full sentences rather than ambiguous, naked concepts that burden readers with the task of deciding who, whom, why, and especially what.

    All’s well that ends well. In this case the article was saved by last few words.

    It makes me smile to think I’m miserable, thank you for asking!

  3. russell1200

    I was happier with the funny-cute animal pictures. My 4 year old would prefer dinosaurs.

    Since you have displayed a concern for a happiness:

    More cute animal pictures and some dinosaure pictures as well.

  4. Yves Smith

    Believe me, I much prefer the cute photos, that’s why I relegated the shark to a weekend, when traffic is lower. Hadn’t thought about dinosaurs, if I see any suitable “pix”, will be sure to use them.

  5. Anonymous

    OT: Todd Barber, NASA’s lead propulsion engineer on the project, says the transmission signal from the unmanned probe was received at 10:01 p.m. ET Wednesday and “everything looks great.”

    The probe was expected to be at a height of nearly 120 miles above the surface of the moon Enceladus as it sweeps through the edge of the geysers and measures their chemical makeup.

    The carefully orchestrated event will take Cassini “deeper than we’ve been before,” mission scientist Carolyn Porco of the Space Science Institute said in an e-mail.
    Of particular interest is whether the plumes contain ammonia, which can keep water in liquid form and would bolster the theory that liquid water lies beneath.

    Just imagine what America could have done with the Trillions wasted on Iraq and the obvious ramifications of all the cash wasted in the subprime Homeownership Society boondoggle! These types of spacecraft cost maybe $200 million, thus we could have sent out thousand of R&D missions and opened a new era of discovery…..but as John Belushi would have screamed…….but NOOOOOOOOO..

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