Rolling US Economy Into The Shitbin Thread

lil primer on the irish economy http://www.nytimes.com/2009/01/04/business/worldbusiness/04ireland.html

That deal amounted to 54 million euros an acre, one of the highest amounts ever paid for land in Europe. His subsequent architectural plan featured a soaring Dubai-like office tower cut in the shape of a diamond that anchored a futuristic community of expensive houses and glamorous shops, and the price tag of one billion euros shocked Dubliners with its gall and ambition.

dubailin

i hate my generation and everyone in it - http://www.economist.com/business/displayStory.cfm?story_id=12863573&source=hptextfeature

Charlotte Gardner, a 25-year-old Californian who was made redundant by a financial-services firm in November, has since been using online job and social-networking sites, as well as micro-blogging services such as Twitter, to promote her skills to potential employers. Ms Gardner, who is optimistic she will find another job soon, describes herself as “a glue kid” — someone who can get different kinds of people to work well together.

lol

the straw that stirs the drink, i'm sure...

its really just like the dotcom crash except so much worse

michael lewis on what happened http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html

and hoe to fix it http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html

david einhorn rules too I watched a youtube of him for give a talk for like 30 mins and am thinking about checking out his book

mr. einhorn certainly deserves the "LOL-ing up his sleeve" award for 2008 for his bulldogish stance on Lehman Bros. shame that the folks who mattered didn't pay him as much mind as they should've.

ya well for most of these dudes banking $100m was a more attractive proposition than being called smart after all fell down

frankly i would rather have $100m than be called smart

something kind of fucked up happened during my generation that becoming a federal civil servant seems almost like a punk rock thing to do

hahaha

of course, some federal civil servants see it as a backdoor route to scoring some mad cash later in life (particularly and not coincidentally with respect to gigs @ the SEC) -- so there are some billy idols sprinkled in with the ian mackayes in that punk rock scene.

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

Krugman today predicting grt depression II

I wouldn't say he's predicting as much as showing how it could happen

or how it will happen unless the democrats grow a goddamn spine from the stem cells of murdered babies

or how it will happen if republicans don't stop being little twerps

or how it will happen if republicans don't stop being little twerps

the laws of gravity will be repealed by God before that happens ... they were twerps during the 1930s as well (which Krugman has also written about).

i'm more worried about the "blue dog democrats" who will try to scuttle any Obama-led economic recovery package on the grounds of bloating the deficit and national debt. we can debate how much of that comes down to ideology or self-interest.

yeah those crazy people who worry that adding a trillion in deficit or debt, as if it could negatively affect our economic stability in the long term.

http://moreorlessbunk.files.wordpress.com/2008/01/hoover.jpeg
o hai don ;)

worth a read:

http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?_r=1

― Ed, Sunday, 4 January 2009 22:11 (Yesterday)

I came to my own conclusion at least several years ago, with no real background in economics or statistics or math, that mathematical risk models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that it's human nature to think a catastrophe is less likely than it really is, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo complexity. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive investors that sophisticated tools were being used to manage their money. That's most of what Wall Street is really about.

Don where have you been with that attitude every time tax cuts have been proposed, eh? We could have used you!

Hurting I thought that article was fascinating but 1) the endless paragraphs about Mr Black Swan were pointless and irritating and 2) the defenders of VaR kind of have a point when they say it's a model for 95% or 99% of situations and actually it performed exactly as expected. This is a 1% situation we're dealing with and the fact that managers and executives didn't have plans for dealing with it has nothing to do with VaR itself. Of course if he'd said that in the beginning of the article he wouldn't have reached his 9000 words or whatever it was, and wouldn't have got to fawn over "NT" - as I call him. One last quibble with it - when you promise an anecdote it should be snappy and tellable in a pub. He takes two pages to get around to it.

http://www.motherjones.com/kevin-drum/Blog_WSJ_Retail_Bankruptcy.gif

I'm not sure letting this amount of businesses fail is going to do much for our long-term economic stability either.

I came to my own conclusion at least several years ago, with no real background in biology or zoology or chemistry, that evolutionary models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that nature can evolve organisms of incredible complexity spontaneously, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo science. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive believers that sophisticated facts were being used to explicate God's creations. That's most of what "science" is really about.

Ritholtz has some things to say.

1) the endless paragraphs about Mr Black Swan were pointless and irritating and 2) the defenders of VaR kind of have a point when they say it's a model for 95% or 99% of situations and actually it performed exactly as expected. This is a 1% situation we're dealing with and the fact that managers and executives didn't have plans for dealing with it has nothing to do with VaR itself. Of course if he'd said that in the beginning of the article he wouldn't have reached his 9000 words or whatever it was, and wouldn't have got to fawn over "NT" - as I call him. One last quibble with it - when you promise an anecdote it should be snappy and tellable in a pub. He takes two pages to get around to it.

― Tracer Hand, Monday, January 5, 2009 10:13 AM (11 minutes ago) Bookmark

Yeah, agreed. TBH I got through about half the article and put it aside.

I came to my own conclusion at least several years ago, with no real background in biology or zoology or chemistry, that evolutionary models were probably mostly bunk. It only takes intuition to realize that it's not possible to model the unpredictable, that nature can evolve organisms of incredible complexity spontaneously, and that models are exactly the kind of thing that lull people into a false sense of security with their pseudo science. Sometimes I'm tempted to think that they were an outright fraud designed, or at least used, to convince naive believers that sophisticated facts were being used to explicate God's creations. That's most of what "science" is really about.

― Lamp, Monday, January 5, 2009 10:19 AM (8 minutes ago) Bookmark

Touche, I guess. But economics, unlike evolutionary theory, actually IS a pseudo-science.

We weren't talking of trillions of dollars of debt or deficits with tax cuts. The magnitude of proposed spending being bandied about is unprecedented. Oh, and yeah, Barry wants to cut $300B in taxes, so am I supposed to cheer for that? Okay, rah rah rah.

What worries some people is that in a frantic infusion of spending, money will not be carefully spent. And judging from TARP and Paulson's lying giveways, I'd say there's a reason to have healthy skepticism.

there were shitload of people who knew they were abusing these models but would rather hav $100m than get fired - im kinda w/the guy whos all u cant get mad at math - the whole situation is more of a regulatory failure than anything imo

which isnt to say the black swan argument isnt relevant or fascinating and can basically applied to everything cause it is and can - it was kinda lame how the author kept being all what abt the ONE% and then towards the end is all offhandedly of course they had models to deal w/the fat taild black swan

btw i saw black swan taleb on charlie rose recently and he was really unconvincing - not a v good speaker

i thought the article was pretty cool if not essential tho

that black swan dude is jerk when i was school i wrote an article questioning some of his stats work and he sent me the most condescending and assholish email about what and idito i was - this from someone that cant even fuck with bayesian analysis. maybe he is some kind of genious but fuk him.

that article annoyed me like CRAZY it had some retarded assumptions the first of them being that VaR is the be all and end all of risk modelling. my first job as lol 18 y.o. was working in risk mgmt and we were doing non-VaR modelling esp on swaps and hedges which lol credit derivatives. and i mean cmon my old bank never went bust and its not like we were all that brilliant we just had a more risk-adverse executive than the wall st. dudes. and when i left my job in 2006 we were writing reports about credit risk in part because some of the macro models had been red alerting for 18 months.

any model is only as good as the ppl using it. so this whole "they went with their gut!" thing is moronic. when the lehman hedge-fund managers "went with their gut" it meant ignorning advice from internal advisers, tweaking models to get more favourable results and just generally ignoring data due to greed. the market feels like an elaborate three card monte right now and plenty of ppl misjduged and mismanaged. the models WERE faulty but that's means that data-driven mgmt is worthless???

dude do u still hav the email post it here plz

lol i looked i dont have my school account anymore i might be on his website tho i think he has a section called "morons who dont get my towering intellect".

and look the post above is evidence that i'm an idiot dont get me wrong but if even i could tell that things were bad in 2006, enough that i even went out and changed careers, then i dont know if the models are the problem.

What worries some people is that in a frantic infusion of spending, money will not be carefully spent.

Republicans Some People are perfectly within their rights to be Worried about this. They were also worried about FDR's plans too - the WPA was vilified before it even existed, as a vast feeding trough of corruption and wastefulness. Luckily the oversight programs of these things were so stringent that little if nothing in them was ever found to have been embezzled, funnelled or otherwise recoagulated, which is pretty amazing given the amount of money on hand. Obama needs to try and match this obv.

That's a totally different issue than whether deficit spending is a good idea long-term though, which is what I thought your problem was.

i think he has a section called "morons who dont get my towering intellect"

Ecce Dumbo

You guessed my problem was deficit spending--there wasn't really a need to make that assumption, or to even conflate that assumption with tax reduction--but in fact what worries me is the recent example of TARP and virtually every other federal cash extravaganza (the auto bailout, the bailout of Wall Street, widespread abuse in Katrina funding, Iraq, etc. etc. etc.) I'm excited that you think there will be stringent oversight but I am much more dubious than you.

There's plenty of reason to worship at the altar of Keynes when it comes to deficit spending but before I sign off on something this big I'd love to see a historical comparison of, say, The New Deal numbers vs. what's being talked about right now.

haven't we discussed mr. black swan before (in this thread or somewhere else), and haven't many of us concluded that our current economic lol shitstorm ISN'T a black swan? in that there were plenty of people as far back as the beginning of this decade who were discussing the real estate bubble, and later on people who were looking cockeyed at the obtuse financing and modeling techniques that allowed it to swell?!? whether those folks were in a position to do anything constructive about it is another question.

also, don, no-one is saying that the kind of fiscal stimulus that obama is thinking about is not to be questioned, deserves no oversight (yes, especially after paulson's blatant attempt to appoint himself Economic Czar after the lol lehman/aig debacles and his ham-handed oversight of TARP), or even that if passed it will have no long-term economic consequences (some of them potentially bad). to be simplistic, i simply think that excessive handwringing about it right now is like worrying about water damage to buildings just before the firemen try to put out a three-alarmer that's threatening several city blocks.

well one thing that might give hope for better executed spending than tarp etc is http://obamarama.org/wp-content/uploads/2007/03/obama-wants-you-to-sign-up-for-obamarama.jpg http://streetknowledge.files.wordpress.com/2008/01/george-bush-sour.jpg

indeed

also, don, no-one is saying that the kind of fiscal stimulus that obama is thinking about is not to be questioned

Really? I'm not sure how you explain this, then:

i'm more worried about the "blue dog democrats" who will try to scuttle any Obama-led economic recovery package on the grounds of bloating the deficit and national debt.

Is it too much to ask to see a serious discussion of the impact of massive federal stimulus? Are we supposed to trust Obama to do this for us? What's excessive handwringing, anyway? I'm just supposed to trust Congress--after their fuckups in TARP and everything else to just dole out trillions more dollars?

Er no you're supposed to insist on stringent oversight. No one is arguing with you.

The opposite of "not pass any Obama plan" isn't "pass any Obama plan", like.

My argument is that it is the height of sanity to have any program like this vigorously debated in Congress and the hallways of academia before signing off. Oversight is worthless if we have no idea what the possible long term economic consequences are. And again, the past history of Congress is dismal oversight.

^^^ this. the handling of TARP so far has been egregious - little oversight, no direction, frequently counterproductive. i hope obama and his team do better but that doesn't absolve us of responsibility. the more scrutiny and debate the better.

to be simplistic, i simply think that excessive handwringing about it right now is like worrying about water damage to buildings just before the firemen try to put out a three-alarmer that's threatening several city blocks.

i think its worth considering whether whats in the buckets is water or oil

OK sure let's have a "debate", as long as it's not like the climate change "debate" or the creationism-vs-evolution "debate".