AIG Bailout Trial Judge Rebukes Fed for Overstepping Its Powers but Awards No Damages
The long-anticipated verdict in the AIG bailout trial came yesterday, and the Fed is not happy.
Read more...Category Archives: Dubious statistics
The Empirical Shift in Economics
What’s at stake: Rather than being unified by the application of the common behavioral model of the rational agent, economists increasingly recognize themselves in the careful application of a common empirical toolkit used to tease out causal relationships, creating a premium for papers that mix a clever identification strategy with access to new data.
Read more...David Leonhardt Links Two-Parent Families to Low Social Mobility, Without Taking Race and Socio-Economic Status Into Account
Leonhardt reinforces the myth that family form causes low social mobility, a disservice to the real debate about what causes family change
Read more...Bill Black: Geithner’s Ghost Writer and the Parable of the River of Risk
Bill Black flags a new stunning bit of bank propaganda, that risk is an unavoidable natural condition that is futile for regulators to control.
Read more...“The Notion of the Competitiveness of Countries is Nonsense”
A 2004 book by Martin Wolf provided the intellectual foundation for the competitiveness fad. Ironically, Wolf debunked his own thesis in it.
Read more...Cathy O’Neil: If You Redefine “Performance,” Magical Things Happen
A new study tries to justify high pay for supposedly top performers. But all it really does is prove that feedback loops are powerful.
Read more...The Persecution and Assassination of the People of Greece as Performed by the Inmates of the Troika, Under the Direction of the Eurogroup
A new paper shreds the myths that justified the misguided application of austerity and wage-rate reduction policies in Greece and the Eurozone.
Read more...Ilargi: Sucking Spoilt Milk From A Bloated Dead Sow
Ilargi describes why the US is not a democracy, it is not the supreme leader of the world, and the American economy is not in recovery.
Read more...How Shale Is Becoming The Dot-Com Bubble Of The 21st Century
The parallels of the dot com era with the shale boom are simply stunning as most E&P companies need to spend well over their operational cash flow.
Read more...Investors Like CalPERS and New York City in the Dark About Private Equity Fees
This anodyne-seeming section from a video at Privcap on The Future-Proof LPA [Limited Partnership Agreement] contains a real bombshell
Read more...Bill Black: How the “Super Crunchers” Became the “Super Torturers” of Finance Data
Many of the concerns about Big Data focus on the surveillance apparatus used to collect it, or on the naive modeling approaches, like attributing causality to mere correlations. Here Black addresses an established problem: that of deliberate abuse of models.
Read more...Michael Pettis: Will China’s Asian Infrastructure Investment Bank Eventually Matter?
The financial media has attributed considerable importance to the fact that many of America’s close allies, including the UK, Australia, and Israel, have joined China’s new infrastructure bank against the clearly-stated desires of the US. While these moves seem to signal America’s declining influence, it does not necessarily follow that the infrastructure bank is destined to become a major international institution any time soon.
Michael Pettis deflates some of the hype surrounding this initiative, arguing that it is less significant from a geopolitical and practical perspective than virtually all commentators assume. China is simply not about to become the issuer of the reserve currency any time soon, and that limits how much financial clout it will have.
Read more...‘National Competitiveness: A Crowbar for Corporate and Financial Interests
We’ve regularly derided the notion of “national competitiveness” as a an inevitable accompaniment to the oversold notion of “free trade”. Economists are aware of, yet choose to ignore, the Lipsey-Lancaster theorem, which says when an idealized state cannot be attained, moving closer to it may not be an improvement; it can often produce worse outcomes. You need to evaluate the “second best” options specifically and not go on faith.
But economists and policy makers treat “free trade” as an article of faith, and with that comes the idea that countries must compete to find customers overseas. There is too little consideration of the fallacy of expecting countries to be competitive and by implication, seek to be exporters. It is impossible for all countries to be net exporters. Moreover, countries are often better served to design their policies primarily for the benefit of domestic workers and markets, and to promote export-oriented programs only to the extent that they do not undermine conditions at home, or will clearly produce a net benefit.
Read more...Bill Black: We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers?
One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.
Read more...Uncertainty and Morality in a Dynamic Economics
This post makes some very good observations about the nature of uncertainty and the value, as well as the cost, of additional information. But it uses a personal pet peeve as the point of departure for the article, that of the so-called Trolley Problem. The people who pose it argue that the two options (saving four lives by throwing a lever that results in five people being saved at the cost of another person dying, versus saving four lives by throwing a fat man off a bridge) are morally equivalent, yet the fact that most people say they will throw the lever but will reject throwing the fat person off the bridge is a cognitive bias.
Hogwash. They aren’t comparable. The throwing a fat person off a bridge (to stop a train) is presumably meant to eliminate the “what about me jumping off the bridge” option. Second, I’d wonder if I could in fact succeed in shoving someone over. And third and potentially the most important, if you do succeed in pushing the fat person in front of the train, you are unquestionably guilty of first degree murder. Tell me how you talk your way out of it if you are caught. You were knowingly planning to have the man serve as a human brake to the train and that that would be fatal. By contrast, if you flip the lever, you can say “I was trying to save five people” and profess uncertainty as to what would happen to the other person who winds up getting killed.
In fairness, the article does treat the two cases as representing more differences from an informational perspective than most who use it as an device do, but not as pointedly as I’d like. So please try to take the horrible Trolley Problem in stride and focus on the meat of the article.
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