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Assorted links
1. One defense of "too big to fail" banks.
2. Krugman responding to Scott Sumner?
3. Behavioral economists study sex toys.
5. Do caring doctors help you recover?
Posted by Tyler Cowen on November 14, 2009 at 12:11 AM in Web/Tech | Permalink
Comments
1. He's arguing against the words "too big to fail" which aren't the right words anyway. The actual words are "the government is too candy ass to allow markets to pause long enough to change managements." That is the actual debate. I don't think anyone really believes we should flush the assets down the nearest toilet. They need to have a clear succession plan.
He could just as easily argue for a separation of market-making and ownership (holding risks). With new technology there is less and less frictional reason why things can't be spread across smaller players and the major need for complex hedging (didn't work anyhow) is to keep the big big (raise your hand if you currently hold a derivative!). In fact, long-term profitability undercut from competition may have played a minor role in undercutting the bigs. It was long-term profitability on the balance sheet side that played a major role in the short-term debt spiral.
The unwisdom of government euthanasia is why I didn't like mark-to-market or the stress tests, but a few distressed sales would have been okay. Banks are always illiquid. But, only a few big players actually went insolvent and the government peed their pants on the prospect that the markets would take the rest. But, they didn't actually remove all the cataclysm catalysts under their own purview.
His main benefits for huge market makers is low borrowing costs and the liquidity to use mark-to-market accounting. Both are really sweet in a boom. Borrowing costs are too low BECAUSE the banks are illiquid.
Posted by: Andrew at Nov 14, 2009 4:21:49 AM
I... can't... keep up... with... so many... links...
Posted by: myself at Nov 14, 2009 5:52:11 AM
"Efforts to reach Ariely and others in charge of the research project were unsuccessful..."
That's got to be a first.
From the comments I liked this:
"I'm a feminist who thinks that this behavioural study is no problem at all--the participants are volunteering rather than being forced. If you're offended by it, then don't take part."
I'd like to not take part, but I'm a taxpayer so I'm compelled. It's kind of like breakfast. The chicks are involved, but the bacon is committed.
Posted by: Andrew at Nov 14, 2009 6:40:57 AM
#4 - "...quotes an expert speaking about an “igon value”"
lol
Posted by: William at Nov 14, 2009 8:38:02 AM
A doctor who combines acute diagnostic ability
with a high empathy quotient (genuine, not
faked) is bound to make a difference.
Posted by: Candadai Tirumalai at Nov 14, 2009 9:57:07 AM
@candadi
with doctors i think what should be compared are arrogant domineering insensitive assholes on one hand and mechanically patient somewhat condescending nice guys. that's because you can't easily teach empathy but you can teach people to rein in antisocial behavior.
Posted by: babar at Nov 14, 2009 10:49:44 AM
#3: Predictably Controversial.
Posted by: Alex Tabarrok at Nov 14, 2009 10:57:41 AM
3. "My understanding is there is a concern on campus about promiscuity," Vetter said.
College kids are fucking? I too am troubled.
Posted by: rob at Nov 14, 2009 11:32:33 AM
4. Gladwell. The great white Oprah.
Posted by: rob at Nov 14, 2009 11:48:51 AM
Yglesias' recent Pirate Radio post is not linked above but seems marginally economically relevant. He raises a great point that today's commercial radio is profoundly inferior to pirate radio (and I don't think you can blame the FCC for all of this). This raises a question I have had for a while: does the free market sometimes work EVEN BETTER when it is not, um, free? (Can a blackmarket offer rewards that a free market cannot?)I think of "gypsy cabs" in Manhattan in this context. Does their illicit existence give a consumer more choices than if their existence were licit?
Posted by: rob at Nov 14, 2009 4:16:50 PM
The following comment from Gmorbgmibgnikgnok on the Yglesias post gets to the heart of my point:
"When the medium is centrally controlled, and you need permission to get on it, anything subversive is fun.
There’s no such tension on the internet. Unsurprisingly, some of the biggest recent successes are not all that edgy."
What we lose in a free market is the rewards of subversion.
Posted by: rob at Nov 14, 2009 4:35:56 PM
I don't know. It seems like criticizing them for playing radio that people like is like criticizing McDonald's for selling too many hamburgers and not experimenting with peppers on them.
We aren't all music innovators. I hate college radio. I don't expect other people to come innovate with me in the lab. In fact, I hope they don't.
Posted by: Andrew at Nov 15, 2009 5:26:54 AM
Here is a counterpoint to #1.
http://emac.blogs.foxbusiness.com/2009/11/03/break-em-up/
I'm not excited about a political breakup. However, I do wonder about a system that is big enough to trick all the little people into taking on too much debt while at the same time not being able to control the fact that if you lend to enough insolvent homeowners you have the tiger by the tail. It turns out the old adage that if the bank lends you enough money, you own the bank works in the aggregate. It's just that the gov't has a funny way of ownership.
Posted by: Andrew at Nov 15, 2009 6:09:07 AM
#2: It's one of Krugman's better posts. He's still insisting bizarrely that "Washington is caught up in deficit phobia, and there doesn’t seem to be any chance of getting a big enough push." The only thing I can think is that he personally wants the sort of goods fiscal stimulus is likely to produce, such as green technology and health care. At least he admits that if the Fed were credible, we could use monetary policy.
Posted by: azmyth at Nov 15, 2009 6:42:20 AM
It's nice to see Pinker take Gladwell down a notch. I read about half of one of Gladwell's books once before throwing up my hands in frustration at the irksomely high ratio of authorial self-satisfaction to actual knowledge/insight. He's mildly entertaining, but it annoys me that people who read his books think they're getting smarter.
Posted by: Jeff at Nov 15, 2009 11:53:51 AM
