Monday, September 29, 2008


Bail out fails? Yay? (Updated)

Looks like the bailout failed.

Now it's time to see if I was right that the market will right itself. Expect a few more lending institutions to fail, but the market was bloated and depositors will be ok. (I am ok with supplementing the FDIC as needed, just not with, well, lots of stuff in the Paulson / Dodd / Pelosi / Frank plan)

The "crash" of the stock market (smaller percentage wise than lots of other crashes) is being compared to size of the bailout to argue that we would've saved money by the bailout. For example, on Charlie Gibson I saw the 7.7% decline in the stock market listed as equivalent to a $1.1 trillion decrease in the stocks (which looks correct) followed by the statement that we just threw away $400 billion by not passing the bailout.

In a word, this is horsepuckey.

The money taken out of the stock market is still in the world economy. It's just doing something other than adding to the price of stocks, which means nothing has been lost, it's only been moved to different investments.

Interestingly, the movement from stocks to other investments will likely lessen any liquidity problems as some fraction will move into CDs, money markets, and savings accounts which would ... increase operating capital for lending - in theory, what the bail out is trying to do.


Saturday, September 27, 2008


Throwing good money after good

(Polyscifi - all bailout all the time!) Another bail plan I think is much better is this one by Arnold Kling (it's a little way down there):

The right policy response to a surge in demand for this "money" would seem
to be to exchange "money" for bonds, which in this case means issuing Treasuries
and buying private securities. If that's the right policy, then I would have the
government invest in bond mutual funds rather than mortgage securities. First,
that would give you diversification, instead of putting all your chips on house
prices. Second, it would allow you to undo the trade easily if market psychology
changes in favor of corporate bonds. Third, there would be nothing magic about
$700 billion. Maybe it takes a lot less to nudge corporate bond rates

In short, if the problem is rising prices in the bond market for otherwise good companies / organizations, then we can lower the price by buying bonds. From my perspective, this has two major advantages over the current plans (though I can think of others):
  1. You directly address the potential main street contagion problem (in theory, the argument is "We would let Wall Street burn, but doing so would hurt Main street).
  2. You're not buying a pig-in-the-poke (what exactly are the distressed properties worth? Who knows, but some pretty bad adverse selection issues seem likely)


Friday, September 26, 2008


Simple drinking game for McCain Obama debate

1 shot for every use of the word "change"



Thursday, September 25, 2008


Wahoos and Russert


[Luke] Russert, 23, said about [UVA]: "The smartest kids in the state go there so it is leaning a little bit toward Obama.

Dem be fightin' words. Intellectual pistols at daybreak to resolve this once and for all - round-robin quizbowl tournament between UVA, VT, WM, JMU, GMU, ODU, and LU. Cage match rules apply.

More seriously, I think it would be cool (and awesome publicity) if VTACO could set up the "Luke Russert 2008 Invitational Tournament" for the VA colleges perhaps for this weekend (before it gets stale and with the football team in Lincoln). Invite Russert to moderate, the Today Show to film, and see if NAQT will throw in some questions at the last minute.


A less bad bailout plan

Is in this Andy McCarthy post:

Wouldn't it be better to make this taxpayer money available for loan, let the institutions buy them at whatever price the market will bear, and take back collateral as was done with AIG? I realize this will mean companies holding truly worthless paper will fail, but shouldn't they fail anyway?

And won't they eventually fail anyway (i.e., wouldn't propping them up just postpone the inevitable)?

NB: I didn't say "good", just "less bad." From my perspective, "Good" plans would be to prosecute what fraud there may have been (I think to a lesser extent than most folks, but it should be identified and prosecuted1) and otherwise leave it alone or if *something* must be done, modify Fannie Mae regulations to do what the market is doing anyways, i.e., increase downpayment requirements, tick up interests rates to reflect more realistic default probabilities, and let the companies that screwed up take their knocks.

This is partly ideological (my priors are a disposition towards leaving the free exchanges of free people alone) and partly because I don't think there's a credit crunch.2,3

So why link to the less bad plan if I think it's inferior to what I think should be done? Because my plan (the minimalist plan) has little to no chance of happening and "less bad" is preferable to bad.
1. I think this is a consensus position, though in what might not be consensus, I think that neither a borrower nor a lender should be free of investigation. (to spin Polonius's advice)

2. See, e.g., this MR post where Alex notes the currently growing retail loan markets which is inconsistent with a credit crunch.
"As Robert Higgs points out consumer loans are up, commercial and industrial loans are up, even real estate loans are up. Overall, total bank credit is up with just a slight sign of leveling off in recent weeks. So where is the credit crunch?
3. The argument that there will be a run on the banks is slightly more compelling, but only slightly. Because what is meant is not banks qau banks (i.e., what will impact "Main Street"), but money markets. But to me, this argues for providing the option of FDIC - like insurance for other deposits (moving forward), not a $700 billion bailout.


Wednesday, September 24, 2008


What the?

McCain suspends campaign for the bailout.

Althouse and McQ seems to like it ok, but I think it makes McCain look unstable. Then again I'm almost as opposed to the bailout as one can be, so I might be a bit biased.1

1. Only almost, because, honestly, Preethi makes me look like an opposition piker. Lots of yelling at the TV in the Neel household.


Tuesday, September 23, 2008


It's simply awesome that Biden gets so much exposure

(link) Joe Biden:
"When the stock market crashed, Franklin Roosevelt got on the television and
didn't just talk about the princes of greed," Biden told Couric. "He said,
'Look, here's what happened.'"

Jesse Walker:
"And if you owned an experimental TV set in 1929, you would have seen him. And
you would have said to yourself, 'Who is that guy? What happened to President

Joe Biden: so wrong in oh so many ways, but oh so funny.


The enemy of my enemy is my ???

I approve the main idea of VoteNoBailOut.org as I think the $700 billion bailout is a greased pole ride to full-blown socialism, but it seems counter-productive to protest the bail out via ANSWER who wants the country to be riding *their* greased pole ride to full-blown socialism.


Friday, September 05, 2008


Jennifer Government, meet Chad Ocho Cinco

So, the reports are that the NFL has issued the new jersey. (This notwithstanding the fact that they haven't made the change on their website.) The Bengals home page has made the change on their official roster. So has Yahoo. So where could this possibly still be a controversy?

That's right - those nerds on Wiki...I mean, those Wikipedians. Note that for true and representative entertainment, I've linked to the Talk page and not the article.


This is for those of you who scratched your head at the title. Don't worry - I haven't read it either.

(No, it's not ironic that I grabbed a Wikipedia page to explain things. Move along, nothing to see here.)


BALTIMORE (AP)—Chad Johnson has changed his name, but his jersey remained the same Sunday.

The Cincinnati Bengals receiver legally changed his name from Chad Johnson to Chad Ocho Cinco, but the NFL decided against allowing him to put his name on his jersey.

“While the NFL has recognized the legal name change of Chad Johnson to Chad Ocho Cinco, the league informed the Bengals today that certain issues remain to be resolved before Ocho Cinco will be permitted to wear his new surname on his jersey,” the league said in a statement.

“He will wear the name Johnson on his jersey today and will be referred to as Chad Johnson on the official play-by-play sheet,” the statement said. “Further questions should be directed to the league office.”

Contacted Sunday by The Associated Press, NFL spokesman Greg Aiello said, “He has a financial obligation to Reebok, which produces the jerseys available to fans. That has to be resolved before the on-field jersey can be changed.

“The same obligation exists for any player that changes his number or name."

So there it is: money does make the world go 'round


Thursday, September 04, 2008


Won a caption contest

with my normal level of class. See here.


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