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Tom Maguire
I'm a former Wall Streeter with many kids, most of them younger than my blogging counterparts.
Recent Activity
"Pretty in Pink" came out in 1986 so that is when America was class conscious? Hmm, speaking as a Jersey Boy here, "Rag Doll" went to #1 in 1964: Everybody! "When she was just a kid, her clothes were hand-me-downs (Hand-me-down) They always laughed at her when she came into town Called her rag doll Little rag doll, such a pretty face should be dressed in lace Ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh, ooh (Shag rag doll) I'd change her sad rags into glad rags if I could (If I could) My folks won't let me cause they say that she's no good..." If I had a theory it would be that the Vietnam era, especially the domestic protests, temporarily concealed a lot of that class consciousness. But I bet with a bit of thought we could dredge up plenty of pop culture references to the boy or girl from the wrong side of the tracks. What is teen angst without a thwarted love?
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Regarding the notion that Zimmerman ignored the police dispatcher: The dispatcher's suggestion does not have the force of law. But more importantly, it is not clear that Zimmerman ignored him - it was only after he got out of the car that the dispatcher noticed that GZ may have gotten out of the car. From the transcript: Dispatcher: Are you following him? Zimmerman: Yeah Dispatcher: Ok, we don't need you to do that. Zimmerman: Ok Zimmerman says he headed back to his car and was jumped by Martin. As to the truth, well, it was rainy and I wasn't there; nor was anyone who saw and survived the entire fight, except Zimmerman. But the state does not even seem able to prove that Zimmerman ignored the legally irrelevant 'suggestion' from the dispatcher.
I am concerned that if you have to ask you are one, but... For "Derp" we need to take our talents to South Park: "Derp" (verb) Created by: Matt Stone and Trey Parker (Creators of South Park) First word ever used: BASEketball (movie, 1998) The Cross-Eyed origin: South Park Season 3 Episode 3, The Succubus, 1999 (Character Mr. Derp, Mr. Derp hit himself in the head with a hammer until his eyes crossed for a moment) Their own Definition: (The Succubus Commentary, 2003) Matt Stone: Derp is a term we came up with when we were shooting for BASEketball for all the dumb jokes, it was a "Derp Joke" Trey Parker: Like someone if a joke sort of like in The Animal or any of those Rob Schneider movies when someone like bumps into a wall or whatever it's like "Deeerrrpp" Matt Stone: You could like see the joke coming like miles away. Trey Parker: There was a lot of Derp in BASEketball too we were kind of embarrassed about it. Matt Stone: We call them "Derp Jokes" END EXCERPT Derpy Hooves of My Little Pony got in on the act because she is cross-eyed, but accept no imitations.
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As to what the bill implicitly acknowledges, I would wait until we could see the draft of the bill. If it opens with a clear explanation of Congressional intent as of 1996 *not* to allow trillion dollar platinum coins, continues with a technical correction, and closes with an assurance that the new bill is only to silence the rare knuckleheads who can't read and don't think our judges have the sense God gave them, well, I am not sure it will implicity endorse trillion dollar coins.
Toggle Commented Jan 7, 2013 on Mint the Platinum Coin? at Economist's View
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Nice to see the concept of "i" make the transition from physics to politics. And hands up - did anyone actually make it to the end of the Noonan piece? I thought she had 3 paragraphs stretched into 19+7i.
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Re the streamlined refinancing proposal: "Hubbard estimates (pdf) that the average borrower would save $2,800, and that the total savings would come to $70 billion." Well, then, Maguire estimates that the total cost to investors (some of whom may be foreign) would be $70 billion. "It would function, effectively, like a $70 billion tax cut, albeit one that actually makes Fannie and Freddie money. Most studies suggest that tax cuts have a stimulative multiplier, meaning the economy would grow by more than $70 billion. " And Maguire estimates that the $70 billion of income lost to investors would function like a tax increase. It may be that the mix of foreign and high-net worth investors whose high coupon mortgages are unexpectedly re-fied away have a lower propensity to consume than the beneficiaries of this wealth transfer, but the net effect will be much less than a $70 billion tax cut.
Toggle Commented Aug 1, 2012 on 'Fire Ed DeMarco' at Economist's View
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A serial sock puppeteer whining about a sock puppet mocking him. Irony is running thick. Can't tell the players without an IP address. Sometimes even then.
Toggle Commented Apr 29, 2012 on Feed The Beast at JustOneMinute
Seems odd not to be talking about Ben but regarding the GZ Leagal release: While the rules do state that discovery is due 15 days from demand, that is a right which George Zimmerman enjoys, and it is up to his defense team to decide how to handle these matters. Surely under Florida disclosure rules the press and public have a separate interest? I mean, they aren't suing on behalf of GZ.
Toggle Commented Apr 29, 2012 on Feed The Beast at JustOneMinute
There are no real norms of behavior like in public or even privately (i.e. guest in your home) Back in the day I used to aspire to the "guest in the home" standard - if you wouldn't say it to someone's face at a dinner party (and I have been at some wild dinner parties) don't say it here. Obviously, Ben is more from the "if I would scream it on a street corner I will scream it here" school. And he seems to think this is his blog and he should control the content and direct the conversation, which is another aspect of the problem. An ongoing puzzle...
Toggle Commented Apr 29, 2012 on Feed The Beast at JustOneMinute
No, I would like to hear from people as to how to deal with this. I have been deleting Ben pretty regularly for what seems like a while but (a) he/she/it hasn't gone away and (b) people keep taking whatever bait he/she offers. I have seen what letting him run at the mouth after he goes off his meds leads to, and that is not cool. So I am open to ideas. I do think that the new registration technology (combining Twitter, Facebook, etc) is a lot more accessible and less inconvenient than whatever was available a few years back.
Toggle Commented Apr 29, 2012 on Feed The Beast at JustOneMinute
FWIW, Ben Franklin has a new IP with just about each comment, so static IP banning is not working. I didn't start blogging lo these many years ago just to have to spend an hour a day dealing with an obvious sociopath, so we are going to have to experiment with other techniques for encouraging people to abide by normal social conventions. Well, I say "normal", but obviously norms for the internet are still developing. Still, I think it is safe to say that Ben has no objective other than to, in his now-deleted words, crap on this blog. I assume that if it inconveniences the rest of us sufficiently he/she/it will consider it a victory and move on. Typepad Blogs really aren't designed to thwart a determined jerk, so here we are.
Toggle Commented Apr 29, 2012 on Feed The Beast at JustOneMinute
"This is the study" links to a article about the study - very meta, but has anyone actually seen the study itself? (The abstract is here.) I am just curious, because I thought that IQ tests were culturally biased and measured nothing meaningful. Unless libs like the results, I guess. I am also hazy as to their definition of "socially conservative". Seems to relate to authoritarianism rather than, for example, taxes or abortion. And since the President of the US just opened his State of the Union with an exhortation to the rest of us to emulate the values of the US military, dare we ask for his "social conservative" score? Go, Sparta.
Toggle Commented Jan 27, 2012 on Going to Be a Scream at Whiskey Fire
Sorry, I typed the html code for the link; let me try again: http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter4.shtml
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"...you need to recognize that federal income taxes have been decreasing for decades." I do? Per this cool CBO chart, in 1970 Federal income taxes were about 8.5% of GDP. That rose to maybe 9.5% in 1980-81, fell to maybe 8% after the Reagan tax cuts, crept back to 10% during the Clinton capital gains boom, and then swooned under 7% around 2004. By 2007/8 (last year pre-bust), Federal income taxes were back to about 8.5% of GDP. Not so strong a trend that I can recognize it. And per the CBO projections (which include the expiration of the Bush tax cuts and the expiration of some AMT fixes), Federal income tax will sail past the Clinton peak of 10% of GDP by 2015.
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From Krugman: "One is that you have to beware of the old trick of saying “taxes”, then slipping into “income taxes”. Most Americans pay more payroll than income taxes..." I am not sure why this is a "trick", since the Social Security and Medicare programs are defended (in other contexts) as earned benefits with a progressive tilt. Unlike many other government programs, there is a pretty clear match between what people pay into Social Security and what they later get out. Why is it a "trick" to exclude Social Security from the tax burden calculation if actuaries agree that lower-earners benefit from Soc Sec over their lifetimes? (As an example, I can't imagine how one might do a similar calculation for the defense budget.)
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"If you look beyond you binders, Mrs. Obama has both hands outstretched, ready to grasp the person. " I am pretty sure that is a Ninja move designed to tear out a person's liver. Well, I base my expertise on "Crouching Tiger, Hidden Dragon-Lady". Broadly speaking, I believe that even Obama's supporters have complained from time to time that he can be a bit aloof (hence the Mr. Spock nickname.) And all but the most ardent Bush-loathers have noted that Bush does seem to have a politician's bonding ability.
Am I alone in remembering Newt Gingrich and the role of the Republican Congress during the 90's? We had a Congress that wouldn't spend and a President that wouldn't cut taxes,so the result was fiscal prudence (and frustration on both sides). Who else remembers the government shutdowns of Nov 95-Jan 96? Gingrich wanted a balanced budget in 7 years; Clinton claimed it would trigger End Days to attempt to balance it in less than ten years. Eventually, windfall capital gains receipts and an employment/tech bubble led to surpluses in 3-4 years. I did not take from that era the lesson that liberals natural inclination is to favor a balanced budget over new social spending, but maybe others did.
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After the shit hits the fan and the rubber meets the road, the chickens will come home to roost. My question - assuming the Treasury opts to ignore the debt ceiling, how would the Treasury market hold up while the courts process any legal action? Would all debt be under a legal cloud (for lack of authority) or only debt issued after the violation (including rolling of principal, such as on T-bills) or only specific debt issues clearly tagged as lacking authority? [Indeed it is something we really ought to avoid--which is why repealing the Gephardt Rule was such a criminal act. Seems to me that it is just those specific issues in which the authority to issue them is 14§4 as opposed to §3162 that would trade at a discount. How much of a discount? We may see...] My guess - unless the option of ignoring the debt ceiling was widely viewed as a sure legal winner (unlikely!), we would have the chaos we very much ought to avoid.
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Keith Hennesey has posted the interim "primer" at his blog. http://keithhennessey.com/wp-content/uploads/2010/12/Financial-Crisis-Primer.pdf They blame Freddie and Fannie but I didn't pick up on any CRA-bashing after a quick glance.
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"4. Tom, you must know more than you're letting on. " Gosh, I hope so. FWIW, I think the Fed is doing their job with QEII. But, being a pedestrian Keynesian, I figured that running deficits back in 2003 would probably not be so disastrous, either. My point (possibly too subtle) is that in 2003 during a weak recovery Krugman was able to discern the inevitability of future printing-press spinning (like QEII) and high inflation despite a complete lack of market indicators of same. Yet now he derides people worried about impending hyperinflation during a weak recovery and with no visible signs of inflation. I may know many things, but I don't know how to reconcile that. Other than, Republican policies=Bad, Democratic policies=Good.
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1. Let's hear froma hard-money advocate of the recent past: "[L]ast week I switched to a fixed-rate mortgage. It means higher monthly payments, but I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits." Do folks recognize Paul Krugman from March 2003? That was in the early stages of a weak recovery, and the Iraq war was going to put us on the road to banana-dom. And how would the fiscal drama end? "How will the train wreck play itself out? ...But my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt." And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future." So even though short term market indicators were for low rates, hyper-inflation was round the corner. Today, of course, the fact that rates are low now means they will be low forever. Whatever.
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Whether or not Henderson actually made the claim that incentives can be better aligned by means of insider trading, I am still troubled by this aspect of the original rebuttal: "Insider trading makes executives' portfolios' long not the company but long the volatility of the company. And shareholders don't want executives making decisions that make the value of companies they own more volatile: stock market investments are risky enough as it is without giving executives reasons to boost the volatility pot. This claim that freedom to engage in insider trading aligns executives' interests with those of shareholders is so basically wrong, so obviously erroneous, so simply stupid that--well, words fail me." I disagree as to just how obviously dumb that is, for two reasons. 1. On a one-time basis, increasing the volatility of a levered firm will transfer wealth from the bondholders to the shareholders, who are essentially long a call on the firms assets. That won't work as an on-going business strategy, since bondholders collectively have memories and won't be fooled twice. However, on the day a firm announces that it is pulling the rug out from under bondholders by taking on riskier (but still economically sensible) projects, shareholders will benefit. If Campbell Soup announces it is getting into internet start-ups and mineral exploration in Afghanistan, they might become wildly profitable, but bondholders will fall over in a faint since they share only the downside. 2. On an ongoing basis, there may me a mismatch between the risk preferences of the shareholders and the professional managers of a firm. Shareholders will view the riskiness of a specific firm in the context of their overall diversified portfolio. The gains or losses on an internet start-up as part of a much larger portfolio won't be life-changing to the investor. However, firm managers may have a disproportionate amount of their net worth tied up in one firm through, for example, stock grants, guaranteed employment contracts, or a reliance on the salary. In such a case, the manager of the Afghanistan mineral explorations firm might deem it prudent, from a personal perspective, to take some of the company funds raised for mineral exploration and have the company buy a stake in Campbell Soup. His/her personal goal would be to stabilize the firm's value, thereby assuring the value of his employment contract and protecting the value of his stock grants. He won't get as rich as if the firm strikes gold and oil in Afghanistan, but the firm won't go bust, his (personally undiversified) stock holding won't go to zero and he won't need to look for a new job. In order to incentive that manager to take more risk than he might prefer, the firm could re-think his employment contract, the board could refuse to buy a stake in Campbell Soup, or the board could give him other ways to benefit from increased volatility in the share price. Very generic agent-principal ideas reflect that, rather than monitor every decision made by the agent, the board could simply create a framework in which increased volatility benefits both the agent and the shareholders. Two ideas consistent with that would be to grant stock options (out of the money, presumably) and allow insider trading.
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Re: "Insider trading makes executives' portfolios' long not the company but long the volatility of the company. And shareholders don't want executives making decisions that make the value of companies they own more volatile: stock market investments are risky enough as it is without giving executives reasons to boost the volatility pot. This claim that freedom to engage in insider trading aligns executives' interests with those of shareholders is so basically wrong, so obviously erroneous, so simply stupid that--well, words fail me." 1. In a levered firm with long term debt, unexpectedly increasing the volatility of the firm's assets transfers wealth from bondholders to shareholders. Some indentures took to including protection against event risk for that reason. 2. As noted above, a firm's management may not be able to diversify their personal portfolios and financial situation (perhaps they own a lot of company shares or are reliant on their paycheck and fear job loss). In that case, firm shareholders may benefit by encouraging a bit of risk-taking by the management team. I am sure that is not always the case, but to imagine that it could never be the case seems unrealistic. So whether Henderson made the argument or not, it is a reasonable one.
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Re: "Considering the point the report seems to emphasize over and over is that changes are likely to be overriden by Congress, perhaps we should focus on a way to make sure that such a move doesn't happen." My impression is that the forecasts based on the current law amount to forecasting that doctors will earn what plumbers earn by 2040 (that merits a hyperbole alert, but is directionally correct). The actuary is skeptical that such pay scales will come to pass; keeping an eagle eye on Congress and doctors to be sure that doctors accept their new and greatly reduced income status may not be a realistic strategy.
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This is from the actuaries opinion at the end of the Trustee's Report: "......the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable)." I would say they do not share the excitement (and perhaps the political views) of the Trustees, who are in Obama's Cabinet. In fact, the actuaries provided an alternative scenario they consider to be more realistic. Just for example, in 2050 they project realistic savings of 0.60 of GDP, rather than the 2.80% of GDP shown in the official report and the graph above. Not nothing, but not as big a deal as advertised. http://www.cms.gov/ActuarialStudies/Downloads/2010TRAlternativeScenario.pdf
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