Wednesday, December 31, 2008

Financial Reporting and the "$62 trillion" securitization market

I do have to say that economic reporting on the financial crisis has been amazingly good. Sure I've had my gripes but venues (especially This American Life's Planet Money) have done on the whole pretty well.

One failure though is the failure to note the winners along the way. The millions of people who were able to purchase a home who otherwise wouldn't have.

The other failure is just accounting, making the $62 trillion notional value of the credit default swap market sound like a big deal. It is a meaningless number.

Two reasons in particular.

1) Many of the trades are double, triple, etc. counted. It's like if I sold a pen to R- for $1, who sold it back to me for a $1, and then we repeated this 1 trillion times. That would create $1 trillion of notional value, but no real value. The swap market is counted this way.

2) The trillion is the notional value, but it is not representative of how much money is changing hands. You can think of these as insurance contracts. Taking out $1 million in life insurance doesn't mean $1 million is changing hands, far less. Just the premium. The insurance company is not taking up a $1 million obligation.

Tuesday, December 30, 2008

Two Tiered Teacher Contract

An interesting "innovation," separate high ability teachers from low ability teachers by offering a choice of two contracts, one with low powered incentives that low ability folk take, and one with high powered incentives that high ability teachers will select into. Something you learn in day 1 of a (econ) contract theory class (contract theory means very different things in poli sci and different again in law). And then you spend the rest of the semester learning far more complicated contracts. So it amusing that actually using that day 1 invention is considered novel enough to be an idea of the year.

Amusing, but not surprising.

Sunday, December 28, 2008

Tv in 2008 Sucked

After what many were calling the best season for tv ever, we now seem to have the worst. I thought maybe it was just the shows I watch but others and magazines seem to confirm heroes has gotten off track, house has gotten tired, grey's anatomy has gotten eh, entourage as well.

New shows also. the first episode of hbo's much new touted perfect for my demographic, Trublood was awful. the new shows (half with the premise about talking to dead people) haven't really been interesting. i tried watching fringe, but it was eh. mentalist was ok, but again, just a new take on Numbers which is just a minor variation from the standard police/detective drama. all of the new stolen from UK shows seem to have flopped.

Of course, it could just be the end of the season. bsg and lost have not made an appearance.

Or it could be the aftermath of the writer's strike. or just a simple reversion to mean after a great year. or the economy?

Saturday, December 27, 2008

Ny Times Food Article from May 16, 1909

Found this ancient nytimes article randomly googling. Fascinating stuff. The writer (Laura Smith) writes to explain to ny times readers what a Menu is. Apparently the concept of menu was freaking people out, as something french and newfangled. Whereas previously, I guess patrons had no choice in what food they got. She also was defending the adoption of french food in US restaurants and hotels, which many Americans apparently were taking offense at. To think of a time when French was new-fangled. Yet, the author is still impressively cosmopolitan. She is familiar with Chinese and Japanese food. And expects the reader to know what curry is.

She also makes the interesting/good point that we find it natural to use italian for music terms (We still do today) why not french for food terms.

Even the title is interesting: "Why the French Menu Has Become So Universally Popular; American Woman Tells Why They Should Continue in Favor. Easy to Understand Even If One Does Not Know French."

I remember reading the Jan 1, 2000 nytimes, which reprinted the front page from Jan 1, 1900. Which had a front page story about a poor manhattan women who got lost across the brooklyn bridge and spent an afternoon lost in brooklyn before a nice policeman helped her find her way home.

Tuesday, December 23, 2008

A visit to the Museum of Modern Art: van Gogh and Miro

So I've been in New York City every week for the past 6 months or so, but haven't been to MOMA once. I guess once it is so accessible, the urgency of seeing all the sites goes away. But I had to get my car fixed, so I had a couple hours to kill in midtown, so I wandered over to see the new Van Gogh show and Miro show. It's nice, I've missed it.

It was also neat that they now have free Wifi access to their audio guide, coupling pictures to the recordings, that integrates perfectly with the iPhone. A neat tech-y addition.

Shows are nice, because they provide a nice narrative. My art history prof in Paris did his dissertation on how museums put together exhibits, and especially for shows, they really do a nice job. The Van Gogh was about the genesis of Starry Night. Interesting to see all the other styles that Van Gogh played with before developing the style (weird perspective and insane brush stroke) that museums have decided define Van Gogh. Nice to see his older work which is more traditional like Lorraine, or more standard impressionist like Monet, or more Urban like Renoir or Cassatt or graphic like Toulouse Lautrec, or the Matisse cutouts or the Nabis. And nice to see such a diverse range of styles over just a couple years. Also nice to come back to older paintings, after having been focused on more modern art. Was especially neat to see his letters, where he describes his thoughts behind the paintings. And his quest to capture starlight on canvas.

The Miro show was nice too. I've long used Miro as my answer to favorite artist, though I've mostly known his work purely only for its aesthetics and childlike whimsy. It was nice to see his work put into an (art) historical context, on his 10 year quest to destroy painting. In some ways you can dismiss Miro for just being derivative of 70's style Hallucinogenic psychedelic whimsy (like Yellow Submarine) except he predated by half a century, and it is a testament to his craft (as noted in the audio guide) that he gets such clean geometric lines and colors using the traditional oil medium, to properly capture otherworldliness. A highlight was his collection of paintings that derived from collages. He made collages from catalog diagrams (much like DuChamp) but it was neat to see how those collages inspired the weird organically abstract magical forms for which he is famous.

Friday, December 19, 2008

I programmed today and it was glorious: Musings on a road not taken

I had some data work on my medical malpractice project that needed to be done today. I probably should have delegated the work. The guy from our statistics office even offered to do this. But I have learned that delegation often takes more work than doing it yourself, due to transaction costs (moral hazard, sticky information, delays). It was about 2 hours of repetitive manual data manipulation and I decided to write a perl program to do it myself: it was glorious.

I haven’t written any code in years. I had forgotten how satisfying it was. It made me consider the road not traveled. I could have been a programmer. I really love it. And I used to be damn good. Which sounds awful to say, but there’s that 10,000 hour theory, that it takes 10,000 hours to get really good at something. And my mom started me programming when I was 5. So sure, it was mostly print statements and for loops and copying programs out of the back of Boy’s Life magazine for years, but by 9th grade I was taking college level classes, and by college, I was getting commendations and breezing through graduate classes almost as an afterthought. I had gotten three calls from google over the years for interviews each of which I turned down.

In the end, writing the program took two and a half hours, but I have no regrets. It was far more fun than repetitive data manipulation and I am left with more capital that can be used in the future (a working computer program and programming human capital). And even if I had gone the programmer route, it probably wouldn’t have lasted. It seems like most programmers spend much of their career resisting the pull into management, a battle that inevitably they lose. So no regrets. But just fun to ponder.

(I also wonder if I would start my kids on programming at age 5. In some ways, the ability almost seems antiquated like buggy whip making. Though so is geometry and we still teach that.)

Tuesday, December 16, 2008

Heroes (somewhat) Redeemed

So Heroes, as part of the tepid Fall 08 tv season just ended its 3rd volume on an up note. Still not great, but reasonably rounded up the theme of volume 3, that there is a very fine line between good and evil, much better explored in Batman: the Dark Knight, and Frank Miller's original Batman Dark Knight Returns. Volume 4 looks to be a tepid rehash of the perennial X-men plot line of mutant registration == japanese internment / holocaust.

One upside is Ando's power is pretty cool. A meta-power. Aside from Sylar (which I've already said has a pretty genius power and perfect for the villain), Ando's is the only other power where I can't immediately name an X-men counterpart. It fits his personality, and augments in fundamental ways the power of others, like the crystals in Final Fantasy, but gives the writers a whole new set of powers to explore without needing to introduce new characters. Nifty.

(wow, I just passed my 200th post on blogger. though there were probably 50-100 more before I started using blogger and here, plus all the photoblog stuff)

Monday, December 15, 2008

High School Drama on 20/20: A This American Life Knock Off

Watching 20/20’s Drama High: the making of a high school musical on ABC, which is the behind the scenes story of real high school musical. It is a blatant knock off of an early This American Life show, and not as good, but still such a great idea that I’m watching it anyway.

Reminded me though that that was the show that got me hooked not just on This American Life, but also on NPR. I hadn’t heard of either at the time (this was sometime in college), and my knowledge of talk radio was limited to bloviating talk show hosts like Rush or Imus. When I first accidentally flipped to the channel, the story telling style was totally foreign, but the honest portrayals of the little unheralded life stories that make life wonderful, the hallmark of This American Life has kept me hooked to this day.

(wow, that was from the first season of the show, which was I guess my freshman year back in 1996.)

Friday, December 12, 2008

Celebrity Sighting: Noxema Girl

From Celebrity Sightings
A spate of celebrity sightings these past couple days. Happened upon celebrity chefs Ina Garten (Barefoot Contessa) and Marcus Samuellson (of Aquavit) yesterday, we happened to visit crate and barrel and zabar's where each was doing a book signing.

At lunch at Sarabeth's (reputedly best brunch in New York, though I'm not so sure) I overheard the conversation at the table next to mine, where someone was talking about how she got the giggles on stage recently, so I looked over, and saw "noxema girl" (aka Rebecca Gayheart)

Noxema has had many spokes-people over the years, but only one "noxema girl." She dropped off celebrity radar shortly afterwards, with a brief stint on my radar in the very shortlived sci-fi show Earth 2. She starred in a lot of noxema commercials in the early 90's, and everyone I knew just called her "noxema girl" years before I ever saw it in print. And that was back in the day when hardly anyone used the Internet (kind of hard to imagine today) so pretty neat how the meme of her nickname spread somehow.

I always wondered about meme spreading in the pre-Internet age. Like childhood games like Wall-ball and all the variants of tennis ball and wall that kids played during unsupervised time, the same way in the many elementary schools I went to. Or "circle circle dot dot, now I got a cootie shot" which also someone seemed universally known.

This, I was pondering after surreptitiously taking a photo, while pretending to check e-mail on my phone. Afterwards I turned back to my New York Times magazine, where a few pages later I found this quote in a Jennifer Aniston interview:

Q: How much do you hate cameras on phones?

A: My favorite move is when people pretend that they’re on the phone and they kind of dial and take the picture at the same time. You hope they’re doing it for themselves — that they’re not thinking, I’m going to dine out on you.

Wednesday, December 10, 2008 The Brightest Are Not Always the Best

An interesting and somewhat potentially ironic column by Frank Rich, on the rise of the technocratic meritocracy in Obama's economic team. Rich warns that Obama's choice of the technocratic elite may not be the best for the country, as the elite may be out of touch with the concerns of everyday folk.

The contrarian in me has long made that argument in defense of Republican politicians, including Bush amongst others. The latest and perhaps most extreme example being Sarah Palin whereas everyone around me (even the McCain supporers) seemed to hate her, despite the fact that nearly half of americans thinks she's great.

It is ironic that Rich, who undoubtedly hates Palin, now raises the same argument to attack Obama's economic team.

It may be odd for me to be suspicious of the meritocracy, when I am a product of that system, and a highly ranked player in that game. But the skeptic in me has to ask whether it is the best way to run a country.

Saturday, December 06, 2008

Starbucks Redeemed

I was always of the opinion that Starbucks was a last option. Another chain, I associated with McDonalds, that was on my avoid list. That was precisely the attitude that Starbucks in the past year has set out to change in their much advertised new corporate strategy. And at least for me, it has worked. I have been forced back into Starbucks for a few reasons. 1) Amazingly, the most comfy coffee shop in Ithaca is a Starbucks. By comfy I mean clean, bright, open, with comfy chairs. Believe me, I refused to believe that a college town like Ithaca wouldn't have a better one, but having tried many, I finally conceded Starbucks the victory. Gimme! still has much better coffee, but Starbucks was still nicer. 2) That from the front door of our apartment in the Upper West Side, you can see at least three Starbucks, but basically no other coffee shops exist. I searched long and hard, and didn't really find any. So I gave in. 3) The free wifi with purchase is a nice touch.

And having gone there, I am generally impressed. Service is nice, one day they offered a free coffee tasting of different beans, and the guy was very knowledgeable. Other times, free samples are nice. Their new House blend is actually quite good, both regular and decaf. Though their espresso is still dull. I started thinking about this in a quite nice Starbucks in Buffalo, where I got a free coffee for filling out a survey, which asked how they were doing. And I had to say, they were doing quite well.

(my one complaint is that a couple of the Starbucks in my neighborhood in New York smell unpleasant from time to time, though the smell I discovered is always correlated with the arrival of a couple of their unwashed regular patrons, which I guess you can't help in New York City)

Thursday, December 04, 2008

Obama's Economic Miracle

I made this call on my facebook page on election day, but figured I'd elaborate on it here. Obama will get credit for both the inevitable economic recovery and the end of the Iraq war (both of which would have happened regardless of who is President), which should likely guarantee a second term.

It is annoying that president's get credit for just standard movements along a business cycle that are out of their control. Reagan won re-election because of it, Carter lost for largely the same reason.

More broadly, Obama like Clinton will benefit from a large peace dividend. Clinton likes to claim credit for balancing the federal budget, but more credit should go to an intransigent Newt Gingrich led Congress, balanced budget laws passed under his predecessor, and military spending (as % or GDP) that had halved in the past 10 years.

Tuesday, December 02, 2008

Greg Mankiw's Blog: The Sociology of Economics

Greg Mankiw's Blog: The Sociology of Economics

This is an awesome post. Basically, it was a letter by a medical resident at Harvard noting that at interdisciplinary conferences economists are

0) Always has something to say regardless of discipline of talk, present better papers, and are less likely to be caught off guard by questions.

1) The most aggressive. (Probably responsible for part 0)

2) The most willing to engage with statisticians.

3) Will readily attack other disciplines on questions of causality and selection bias.

4) Economists are smarter

5) Economists have more rigorous training

6) Economist believe more in science than advocacy. They are less likely to base opinion on preconceived priors.

7) The economics job market is more efficient.

I think this is stuff that every economist secretly believes but has enough humility not to say it aloud. At least I've certainly noticed it, but maybe that's because I hang out in other disciplines too much.

I think people outside economics don't appreciate that basically half of an econ phd is essentially Stats, whereas in other disciplines, from Sociology to Medicine, you tend to take one maybe two classes on stats and that's it. And usually the stats they take is helpful for experimental designs, but useless and in fact misleading for cases where you don't have experiments.

Though I wouldn't say economists are "smarter," but better at math, certainly. But as Mankiw admits, perhaps worse at social skills and other dimensions.

As my advisor liked to say, economists are better at answering questions, but that's cause they massively limit the scope of the questions they ask. (i.e. they only look for their keys by the lamp post)

And I agree very much of the fact that economists are not advocates. It is much easier for one economist to convince another to agree with you, or to conclude that "it remains an empirical question" whereas in other disciplines, people spend their careers making ad hominem attacks on opponents to make their point. Within the White House, the CEA was known as the most conservative group, because all the economists advocated essentially consensus economic opinion, even though nearly everyone at CEA was a Democrat.