Category Archives: Social values

Bill Black: Arnold Kling’s Cunning Hairdresser Theory of the Financial Crisis

Yves here. I have to confess that I love this title. It serves as a reminder that the meme that lenders in the crisis were somehow victimized by borrowers is a lame defense of rank incompetence or worse. The basic rule of lending is that all you have is downside from a credit perspective. The borrower is never going to perform better than the terms of the agreement, and he may well do worse. Any competent lender knows that borrowers can be overly optimistic, naive, unlucky, or downright crooked. Lenders therefore need to take prudent measures to protect themselves from these well-known borrower foibles, the most important being not lending to obvious bad risks, and adding enough margin to your cost of borrowing to cover debtor bad luck and your own miscalculation. So to have a huge explosion of borrower defaults, including a meaningful swathe of subprime borrowers defaulting in the first 90 days, is proof not of massive borrower chicanery, but massive lender incompetence or corruption (as in presuming they could dump the dodgy loan on the next fool in the securitization pipeline).

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Obama, Republican Leadership Groping to Break Shutdown Impasse, Revive Grand Bargain-Type Deal

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The two sides in the budget staredown have finally agreed to talk.

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Big Brother Wants You

Yves here. The public is still digesting the implications of the Snowden surveillance state disclosures. Quite a few press reports have mentioned the degree to which the NSA uses contractors, usually to shake fingers at “how could they not expect businesses to cut corners and hire a guy like Snowden?” But there’s been less discussion of how these contractors fit into the surveillance ecosystem. This piece by Prajat Chatterjee helps fill that gap.

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Ilargi: Gordon Gecko Moved To London To Finish Where He Left Off

Last week I saw a headline in the Daily Telegraph that got me thinking. It encapsulates a lot of what poses as philosophy in our world today, as a valid way of thinking and a relevant approach to all the crises we live through simultaneously at the moment. One which, when you look longer and closer, appears at least at first glance to lack all philosophical value – since it doesn’t actually weigh any pros and cons -, and turns out to be a rehash of a hodge-podge of the very failed old theories that have led us into our crises.

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How One Likely Budget Compromise Will Promote More Congressional Corruption

The current posturing by both the Democrats and Republicans over the debt ceiling impasse is that both sides are digging in for a long shutdown. Whether that proves to be the case or not, the resolution is likely to involve some face-saving concessions offered by each side. One that is up for grabs is the provision that allows Congressmen and their staffers to continue to have their own Congressional policies. This plan has been attacked as generous, with the Wall Street Journal describing features like doctors on site at Capitol Hill.

This is basically a long-standing plot to try to persuade the public that they can get a free lunch, even when what they are getting is rancid cooking.

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Give Until It Hurts, or They Will Take It Anyway

The author of this post is an anonymous Washington insider

The Federal exchanges on Obamacare don’t work. They just don’t. I don’t mean they don’t serve the interests of keeping people healthy, I mean they literally can’t serve pages that allow people to sign up. This is directly due to faulty IT processes, which Naked Capitalism was all over months ago

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Harvard Business School’s Garbage In, Garbage Out “Gender Equity” Experiment

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Readers may have taken note of a long article by Jodi Kantor in the Sunday New York Times magazine celebrating an experiment on the Harvard Business School graduating class of 2013.

The project was deemed a winner. More women students than ever graduated with academic honors. Student satisfaction levels also rose. Unfortunately, if you dig deeper, this “experiment” looks like a “garbage in, garbage out” exercise.

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Was Money Created to Overcome Barter?

Yves here. Many readers have either read or are generally familiar with David Graeber’s book Debt: The First 5000 Years. Graeber shows how debt preceded money and confirms the work of Modern Monetary Theory proponents that the standard account presented in economic texts of how money originated is all wet.

This article by Reyold Nesiba gives a short summary of this evidence, which is helpful to those new to this issue or interested in explaining it to brainwashed skeptical friends and colleagues.

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