Last year, we put America on Banana Republic watch, and sadly, things appear to be playing out as we feared: I’m certain you’re familiar with the expression “death wish.” I am beginning to wonder whether America has a banana republic wish. The country has been taking steps towards being a small-minded, elite-dominated, sham democracy. Mind […]
Read more...Readers may have seen that we cast aspersions on the CBO’s estimate that the Fannie and Freddie rescue program would “probably” cost taxpayers $25 billion. We had noted that the estimate was only through 2009 because that’s how far the authorization extends, but there is no way that Fannie and Freddie will ever be cut […]
Read more...In a TheStreet.com($) story with the above headline (hat tip reader MIchael), Doug Kass noted that the price increase in the Financial Select Sector SPDR was 13%, an 11 standard deviation event. According to Kass, the odds of an eleven standard deviation event is equivalent to the world ending – between three and four times. […]
Read more...Reader Michael called to my attention a wide-ranging interview with Nassim Nicholas Taleb, author of the Black Swan and professional iconoclast, in the Times of London. The article is colorful, wide-ranging, and a bit long, so I’ve excerpted some of the most provocative bits. Needless to say, I am particularly taken by his dim view […]
Read more...One of our pet interests has been how the use of mathematics and models can unwittingly enable people to fool themselves. We see this regularly when working on deals. The model for the target business’ performance somehow becomes more real than the company. When the numbers don’t work, if you can come up with a […]
Read more...In “Japan may be rigid but it is not inefficient,” David Philig takes issue with metrics that find Japan’s service economy to be woefully inefficient. The commonly used yardstick is labor productivity, and Japan allegedly scores badly due to its tendency to have high staff ratios (for instance, those ladies in hotels who walk you […]
Read more...The Wall Street Journal reports on another sign of how bad the credit crunch has gotten: banks fudging on what they are reporting as their short-term cost of interbank borrowing, out of fear of revealing how stressed they are. So the Libor becomes less useful as a guide. That in turn means that the so-called […]
Read more...The New York Times has finally deigned to report on the fact that the Bureau of Labor’s unemployment rate (aka “headline unemployment”) does an incomplete job of capturing the proportion of the population out of work. The article by Floyd Norris, “Many More Are Jobless Than Are Unemployed,” is less than complete. Despite its professed […]
Read more...Wolfgang Munchau, who writes for the Financial Times as well as the blog Eurointelligence, ruminates about inflation statistics and argues that economists and statisticians may be going down the wrong path in dismissing consumers’ subjective perceptions. He also has considerable doubts about hedonic adjustments (basically, the methodology for adjusting for the fact that computers and […]
Read more...All About Alpha, which is a fine site for all things hedge fund related, has an excellent piece today by Dr. William Shadwick of Omega Analysis. Shadwick has the unusual distinction of being a serious mathematician (he established Fields Institute for Research in Mathematical Sciences) who writes well. He also entered the finance industry relatively […]
Read more...An article in Bloomberg, “Credit Swaps Thwart Fed’s Ease as Debt Costs Surge ,” focuses on a noteworthy phenomenon, but does a lousy job of explaining it. I’m posting it nevertheless in the hopes that a reader in the relevant markets might shed some light. The story tells us that corporate borrowers, even AAA ones […]
Read more...As the economy weakens, some of the authoritative media outlets are beginning to question some government statistical releases. We noted over the weekend (“Surprise! It’s Rough Out There in the Job Market“) that a New York Times seemed caught aback by weakness in the labor market. It had, like most of the media, focused on […]
Read more...We’ve long complained that you have to take a lot of the statistics put out by our government with a handful of salt, but even worse is simply deep-sixing information that makes it look bad. Outsourced to Think Progress: The U.S. economy is faltering. Family debt is on the rise, benefits are disappearing, the deficit […]
Read more...Forbes and Bloomberg discuss Labor Department statistics that show that the hours worked by the self-employed fell at a 15.5% annualized rate in the third quarter of 207, the steepest drop in 15 years. The subprime crisis may be the big culprit, since construction workers and mortgage brokers are often in the ranks of the […]
Read more...An excellent post by Elizabeth Warren at Credit Slips reviews some of the canards that have been successfully presented to promote the interests of various business interests against hapless consumers. The latest involves payday lending. The very fact that the Pentagon has come out against payday lending (they’ve proposed a usury ceiling of 36%) should […]
Read more...