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Agreed, this is silly. There are much more substantive reasons to be concerned about Elizabeth Warren and her agenda. (BTW, I may not be that versed in the Gingrich canon, but I don't think that he proposed an alternative history in which the south won the Civil War. At least, not the book that you scornfully cite.)
My take on the first part of Surowiecki's argument is that there's a point at which homeowners should walk away. Being underwater is neither necessary nor sufficient to lead to that decision, but it is one, among many, options, and one, among many, factors, that homeowners should keep in mind. When you weigh the costs vs. the various benefits, then you reach whatever decision works for you. I don't think that Surowiecki was advocating that everyone who is underwater should walk away, or that people should default more generally. Nor should this blog tell people to keep paying their mortgage or that they should count of relief that may not come. I view Surowiecki's second point as being that corporations tend to be very cold-hearted and calculated about this. Homeowners do face costs, like the hit to their credit scores and so on. But all of the soft stuff that you mention may matter from a pyschic perspective, but just like cleaning out your attic, you should ask whether it really does. Because otherwise, you're holding yourself hostage to things that matter only to you and not others. He may have made this argument backwards - starting with the corporations then drawing the analogy to homeowners - but I think that his basic point is correct: You should evaluate where you stand in determining how to approach your mortgage and should act accordingly. And you should be careful to overweight soft considerations, noting that corporations certainly don't feel that type of remorse.
What's ironic about this whole issue is that Durbin et al's calls for consumers to find a bank that doesn't charge such fees basically involves shifting accounts to banks that are exempt from his amendment. Credit unions, your local community bank, etc. If the objective was to decrease merchant fees, then that suggestion seems to be a self-defeating proposition, as those banks can continue to get whatever (generally higher) interchange fees the market will bear. If the objective was to stick it to the big banks, well, then we see at least one true objective of this whole debacle.
Toggle Commented Oct 29, 2011 on Bully for BofA: New Debit Card Fees! at Credit Slips
Just as a factual matter, and I might be wrong about this (although a quick google search indicates that I'm not), I believe that networks charge fees to both banks when processing a transaction. I can't see how this would be an interchange fee in that it's paid by both banks to the network for each transaction. And, in fact, it serves as a cost of each transaction to the cardholder's bank. So I don't see how including that fee/cost would be double counting. If a cardholder's bank pays a fee to a network for each transaction, why would that not be a relevant cost for the cardholder's bank under the Durbin Amndt, regardless of whether the merchant's bank pays an analogous fee? You may object to including it as a matter of fairness, but as your response astutely notes, the Durbin Amndt doesn't say anything about fairness. If that's the type of example that will be worked over, then I'm not sure that the Durbin Amndt really did give instructions to the Fed that would satisfy you in terms of generating the outcome that you obviously want.
I dunno, Adam. I watched the Fed briefing the other day, and the aftermath seems to be pretty muted. Perhaps one could attribute this to EVERYONE being cowed by the banks, but I think that the alternative reading is that the line that the Durbin Amndmt wanted the Fed to draw just isn't clear. Now, there are certainly some parties who think that the line is clear, like Wal-Mart or other retailers. Or people like you who rage against the clear injustice that occurs when the Fed caves to the bankers, regardless of the circumstances surrounding that capitulation. But even Durbin's response was pretty muted, which suggests that he wasn't too sure if he wanted this to head where it could have headed. Ultimately, the Fed basically split the baby in half. Very Solomonic. Again, certain interested parties would see that outcome as an affront (as befits the response to a Solomonic outcome) while others, like you, would view the process as an affront. We could argue about whether that particular split is justified by the Durbin Amendment. For example, should the new costs that the Fed has added qualify under the statute? The one that I'm aware of that would clearly seem to qualify would be network processing fees, as leaving those out might placate one's sense of fairness, but would seem to be something that banks pay to perform transactions. Not sure what the others are, but it's likely that they fall in a similar gray area related to performing transactions. More generally, is a Solomonic response a reasonable outcome to a messy situation? Is it justified by the statute? I dunno. This was a death match between two well-funded, well-organized interest groups, and if the Fed managed to find a reasonable middle ground, that might not be a terrible outcome.
Goodness, Adam, I really don’t understand what you’re talking about in this post. You start by essentially arguing that because government does something (like support rail travel), it must do that activity. Lovely logic, my friend. As evidence of this involvement, you make repeated references to “bailouts.” But again, the existence of bailouts doesn’t imply that such involvement is an inherent function of government. Instead, it’s a government role that happens to have been invoked in the last few years. And one could argue about the wisdom of that particular form of involvement, given the cost, inevitable moral hazard, etc. You then argue that there’s something special about housing that necessitates government involvement. This logic is embodied in your statement that: “Housing is just different from other assets--it's socially central, it's critical consumption, and it's a huge consumer investment class. That combination makes it a market that no government in the world can allow to go in the crapper.” Ummm, ok. To begin with, I suspect that people could make arguments of the same sort about lots of industries that are important to them. Autos? (Heck, we bailed them out!) Oil? Fill in the blank with your favorite big industry? Ultimately, your arguments for government involvement don’t reflect anything that would usually be thought to require government intervention. The typical reasons would be, in no particular order, externalities, public goods, market power/natural monopoly, and asymmetric information. These are the standard market failures that would necessitate government intervention. But I’m not sure how being a “big” sector causes one to conclude that a market failure exists. You conclude with the “elephant in the room”: “Currently there's $5 trillion in investment in the US housing market. That's primarily interest-rate risk investment, not credit-risk investment. Investors in Ginnie Mae, Fannie Mae, and Freddie Mac MBS and bonds do not see themselves as taking on credit risk, just interest rate risk.” I’m not sure what this statement even means. I do agree that there’s interest rate risk associated with anyone who buys securities based on the US housing market, but what are you talking about with respect to credit risk? The fact that things are rated AAA? Suddenly, we’re putting a lot of stock in the credit rating agencies (which, I can assure you, the investors are not doing)? As I said at the outset, I just don’t understand what you’re talking about in this post.
First, kudos to Adam for continuing to engage Hangtime79. That's the kind of moxie that makes this site so interesting. Second, I don't want to dive into the all of the disputes between Adam and Hangtime79, but I did find it interesting that Adam said that he'd favor the 5% cash back from his card over the usual discount that a merchant could provide at the point of sale. Geez, 5% cash back? That's a pretty good deal! Speaks pretty highly of the pass-through of your issuer if you're getting more back than what I understand interchange rates to be. You're clearly a good shopper when it comes to banking services! (What card do you have? B/c I gotta get me one of 'em.) I suspect that you'd come back to the old "I'm rich and a good credit risk, which is why I get this card" argument. But I think that the problem there is not that you get this deal, but that others don't. In other words, why don't we focus on getting cards, especially cards with good deals, to low income households rather than screwing around with interchange fees? Perhaps we don't want to give them credit cards, if we're feeling paternalistic, but at least let's get them deposit accounts and debit cards with good rewards and other attractive terms. Heck, a debit card with a 1% reward would probably be better for most low income households than any relief in prices from the Durbin Amendment. And I certainly don't see how the Durbin Amendment will improve their access to debit cards. (Access to credit cards? Well, that's a different story. Talk about one of the unintended consequences of the Durbin Amendment - people may start shifting back to credit cards if debit cards become less attractive.) More generally, if the problem is insufficient competition among banks, who appear unwilling to give sufficiently good cards to low income households, why not concentrate the policy attention on that problem? Give Wal-Mart a bank - that would be a pretty good way to get cards and accounts downmarket, and I suspect that Wal-Mart would give smashing rewards on its Visa debit cards, especially for use at its own stores. Why fiddle with interchange fees, with all of the associated dislocation in the market, rather than attacking the core competitive problem that causes difficulties for low income folks? Even more generally, if the difficulty is being poor so that poor folks cannot get cards/bank accounts and end up getting screwed at the cash register, why don't we attack the core problem of poverty instead? Going after interchange fees as a way to correct regressive features of our economy seems to be a very indirect way to do so. Why not focus on redistribution through the general tax system, which would seem a more direct, and arguably less distortionary, way to achieve the ultimate result? That having been said, I do have to agree with Adam about the restrictions on merchant pricing. I believe that Hangtime79 is correct that many of the purported restrictions, such as separate display pricing, are no long in effect, if they ever were, particularly after the recent DOJ settlement, which I believe removed any restrictions on discounts across payment methods, networks, or types of cards, at least for credit cards. Even still, I agree with Adam that when networks prohibit surcharges or other forms of differential pricing, even if they generally allow discounting, that seems to be difficult to justify. It's a bit silly because at some point, outside of framing issues, discounts and surcharges become the same thing, but I personally think that a merchant should be able to deal with its various costs however it sees fit. But this gets back to my earlier point: Whenever I see a gas station with a cash and credit price, I do a quick calculation in my head and immediately decide to pay with my card. "Thank goodness," I quietly say to myself, "For my bank and its awesome 5% cash back on gas." And as for the unfortunate schlub trekking into the station to pay with cash, which requires the attendant to activate and set the appropriate amount for his pump, well, I pity both him and the gas station operator as I zoom through my unattended pump and am on my way. Now if we could only do something about that $4.00 per gallon price of gas... dangit, where's Durbin when you need him? (Completely off point, but I read an article recently, can't recall where, about how Chuck Schumer has been calling for release of petroleum from the strategic reserves for years. He did so back in 1999 when oil rocketed to $25 per barrel and has done so repeatedly over the years whenever prices jump up, notwithstanding the fact that this strategy would likely have involved selling low from the reserves and buying high to replenish them. And his ilk are calling for such actions again now. Talk about a schlub. But I guess that I can make a relevant point here, which is that it's not very wise to get the government involved in the price-setting business.)
Toggle Commented May 7, 2011 on The Politics of Swipe Fees at Credit Slips
You're talking about a fee change that's quite direct and transparent on one end versus changes that are, on average, much smaller and more amorphous. Suppose that you end up facing a fee for each debit card transaction, or face a higher account fee? You'll certainly be irritated to say the least (and if you're low income, you may just be shut out of the system altogether). What benefit will you actually see from merchants? Certainly nothing that you can discern, as it generally doesn't matter whether you use debit cards, credit cards, or cash when you pay for something. Perhaps you'll pay a few cents less per purchase, but if you don't have any way to evaluate those savings relative to the counterfactual, you'll just be peeved that your bank is (apparently) screwing you. Perhaps that's ok, but I'm not sure that it's a good thing if people stop using their debit cards (particularly, perhaps, in favor of credit cards). Ultimately, this is a mess and, as you note in your post, the issue is pretty complicated. Not sure that knee-jerk regulations in response to a hail mary pass - which happened to land!!! - is a good way to make public policy.
I don't get it. As your definitional quip suggests, no banking relationship is "free" if you don't follow certain parameters set up for your account. Bounce a check - you're going to pay a fee. Make a foreign ATM withdrawal - you're likely to pay a fee, regardless of how "free" your account is otherwise. I would take the bankers' point on this to be the following - as you squeeze the balloon in certain places, be it interchange fees, overdraft fees, or whatever, things will give in other places. "Free checking" may truly be a fiction, but it's nonetheless possible that account terms will get worse as the balloon gets squeezed. The direction of the movement, rather than the starting point, is the key (although the fiction of "free checking" does give the bankers at least a good starting point for their scary tales). And some people, who otherwise could largely avoid fees if they behaved in certain ways, may find it difficult, if not impossible, to do so when their account terms change for the worse. This post and discussion seems to be about three points: First, account holders may face fees for certain actions. You don't say! What's more interesting is whether one can actually hold an account, but also avoid any fees through certain types of behavior. And then how difficult it is to behave in the necessary way. Second, account fees are complex, and may become more so. Again, however, the important point is the direction of these movements being spurred by the regulatory changes rather than the initial conditions. Account fees may be complex, but if policy changes are causing them to become more complex, at least in certain dimensions, how should we evaluate those policy changes? Finally, unsophisticated and less affluent individuals tend to face worse terms for their accounts. Legitimate economic reasons may drive such discrepancies, but even if it's just third-degree price discrimination, I'm not sure that it's a surprise or a scandal. And again, it doesn't alter the fact that the rule changes may cause even greater discrepancies. While poor, ignorant overdrafters may have subsidized affluent, sophisticated folks in the past, the new rules might cause the banks to simply cut off those violators altogether. Ultimately, I think that the "free checking" straw man is just that, a straw man. What's important is the direction in which things are moving, not where they started. And it would seem that many of the new rules are moving things in a way that disadvantages many bank account holders - perhaps, in the case of interchange fees, in favor of merchants or the extreme unbanked - regardless of where they started out.
Toggle Commented Apr 15, 2011 on "Free" Checking at Credit Slips
What I've never understood is why merchants don't install PIN pads despite a sizeable difference in the interchange fees, at least until the last few years. While lots of big merchants, like grocery stores, have PIN-enabled pads, a significant number of merchants don't, especially smaller merchants. Perhaps it's because the cost of the PIN pad itself is too high to rationalize saving a few bucks a month. Perhaps merchants' rates that they pay are blended in a way that wouldn't lead to much visible savings anyway (which is really a problem with their banks, not the system as a whole). Or perhaps merchants are sheltered from the fraud enough, through liability rules, that they don't see any benefit to installing PIN pads from decreased fraud, especially in light of the other cost considerations noted above. However, what's somewhat perverse about the Federal Reserve's rules as I understand them (and is potentially perverse about the Durbin Amendment altogether) is that they wipe out any differential in the interchange fees across signature and PIN transactions. While this may give banks more of an incentive to push PIN (if it's less costly and fraud prone), it also removes the most significant incentive for merchants to install PIN pads - assuming the liability rules don't change, why would merchants install PIN pads if they haven't already given the previous potential cost savings? Perhaps one could just outlaw signature altogether, although that seems a bit extreme (and would currently make online debit purchases difficult). Alternatively, one almost needs to subsidize (or mandate) PIN pads for merchants while at the same time giving a higher PIN interchange fee to banks. Good luck figuring out how to do that. To close out, did you see the Onion's note about new bank fees? http://www.theonion.com/articles/hidden-bank-fees,19438/ Good stuff. Also, did you hear that the PIN network in Australia recently shifted from an issuer-pays system to an acquirer-pays one? http://www.abc.net.au/news/stories/2011/03/08/3157891.htm Interesting.
Good grief, Adam, who cares about this notary stuff. There are crazy (debit) interchange movements afoot that could change the payments landscape forever. The Durbin Amendment. The DOJ settlement. The TCF lawsuit. Can you please write something about this stuff? What's going on and what does it all mean?
Gah! I am there! Albeit perhaps with a photo of David Evans for Adam to deface, err, sign.
I'm confused. First, let me start by saying that I generally agree with Adam that declines in interchange fees will be passed through to final prices (assuming that merchants continue to price the same across payment methods - if they don't, it's not clear why you need the interchange intervention anyway). While hangtime79's suggestion that the pre-legislation prices will serve as a collusive focal point for firms has some support in the empirical literature (think of gasoline prices rising like a rocket and falling like a feather in response to fluctuations in crude oil prices), I think that we generally believe that prices of individual firms will adjust in response to an overall cost decline. Of course, that's a bit vacuous as some price decline is, indeed, axiomatic, but I'd go further to argue that most of the firms who are pushing for this - WalMart, Target, Home Depot, etc. - will lower their prices in response to lower payment costs in a way that largely reflects those cost declines. Moreover, it seems a bit perverse to suggest that interchange fees serve a role of reigning in merchant market power or preventing collusive behavior by merchants. Last I heard, that's the role of the DOJ and FTC - for better or worse - not the responsibility of Visa and MasterCard. But this is the first point where I'm confused. Their costs are lower. But their prices are also lower. So to a first-order approximation, their profits are unchanged. What gives? Why are these guys wailing to high heaven about their payment costs when it's not immediately clear how those payment costs influence the profitability of their operations? I can think of three reasons. (A fourth, more nefarious, reason has to do with hangtime79's posts.) First, they really care about "cash users." After all, by raising their prices due to high card fees, they're really funneling those fees through to people who pay with other payment methods. I find this a bit hard to swallow. While they use "cash payers subsidizing card user rewards" as a standard complaint, I'm not sure why WalMart suddenly cares about cash payers over other customers. Second, they stare at the "card fees" line on their income statement and just cannot stand how that line grows. Partly due to higher card fees, but also due to higher rates of card use. They don't recognize that a cut in card fees, unless it's differential in a way that advantages them over their competitors, won't really change the competitive landscape that they face so that other parts of their income statement will change in a way that offsets the decline in interchange fees. I can just see a senior exec at WalMart yelling at his payments folks, "Why is this card fee line so darn big??? Let's get this darn card fee down! So that we can lower our prices!" (N.B. This applies both to price declines and hiring more workers, I believe.) I think that there's something to this, but these guys aren't stupid (I think), so it's hard to believe that they don't recognize this fact. Third, if they can lower their card fees and lower their prices, they'll move down their demand curves and sell more. Most importantly, from an aggregate point of view, the overall amount sold will increase rather than simply shifting sales among retailers (or yielding no net change if everything cancels out). I suspect that this last effect is what the merchants really have in mind. They have some margin on each item sold, and if they can decrease their payment costs, they can decrease their overall price, keeping that margin more or less intact, can sell more, and can up their profits. Note, however, that this is more subtle than simply the "pass-through" issue that Adam discusses - it requires info that is much more complex than simply measuring the effect of interchange decreases on prices. The welfare effect here has to do with aggregate elasticities, not just redistributions associated with the same level of sales. The second thing that I'm confused about has to do with Adam's statement that "the only way that interchange regulation would not result in a net benefit to consumers is if the credit card market (with unregulated interchange) is more competitive than other industries." Competition in retail industries concerns how much it costs to buy something. Competition in a payments market concerns how much it costs to use a payment method to buy something. These are not the same things. In the former, the issue is how much distortion is created in the amount of final goods and services that individuals consume. In the latter, the issue is how much distortion is created in the way that people pay for things. The thing about interchange fees is that they primarily affect how people pay for things by altering the effective price of different payment methods relative to the costs and benefits of those payment methods. As other commenters have noted, interchange fees fund rewards, or at least better terms, for cardusers that encourage them to use cards. A cut in interchange fees will remove the source of those rewards or, more generally, will make card use relatively less attractive compared to cash, at least on the margin. (Note that the "on the margin" statement is notable because we don't care about the inframarginal people who will "still use their debit cards," rather we care about the person who is right on the edge of using or not using her debit card.) So people may shift away from cards, in this case debit cards, which every policymaker seems to love otherwise relative to credit, in favor of cash. Is this a good thing? The merchants have a beef and the banks have turf to defend, both of which suggest some rents to be gained that almost certainly don't reflect the interests of consumers. The battle between big banks and big retailers can leave one with a dirty taste in one's mouth - who of these two is really reflecting the interest of the "consumer." But the core policy issue comes down to how we want people to pay for things and how we encourage or discourage certain types of payment behavior. In the end, I'm fundamentally confused about the exact inefficiency that this amendment is supposed to address. Too much debit card use? Too little? And then how is the language in the amendment supposed to achieve that policy goal? Interchange fees that are "reasonable and proportional to actual cost"? I propose that any multiple of cost would satisfy the second requirement. That, I would argue, is axiomatic (what idiot wrote that language?). However, what does the first mean?
But Adam, you're missing the point. Why waste all of this time, and political effort and capital, on an issue that is only tangential to the entire crisis? After all, you started this post with the claim that "(a) popular explanation of the financial crisis lays the blame at the feet of the Federal Reserve for lax monetary policy." In a literal sense, that claim is correct as would be the claim that eradication of subprime mortgages would have "prevented" the financial crisis. But we have precipitating causes and underlying causes. My point is that the precipitating causes are much less important, in the big scheme of things, than the underlying causes. Much of the policy discussion is correspondingly misdirected - you can fiddle around the edges all you like, but if you miss the TNT, you miss the entire issue. We fix the Fed, or fix lending practices, and we then sit back and pat ourselves on the back for a job well done. I think not.
Listen folks, lots of things caused the housing bubble. You had a perfect storm of government, consumers, and firms misbehaving or, at the least, missing or misreading the signals. You end up with a housing bubble. However, the fact is that the housing bubble is only incidentally interesting in the bigger scheme of things - after all, the dotcom bubble (or biotech or name your favorite past bubble) was pretty darn big but didn't threaten the entire financial system. In my opinion, explanations for the housing crisis are pretty easy and, I suppose, moderately important, but don't get to the crux of the matter. Something else must have been going on to get us into the mess that we face. To get at the bigger picture, think of things in this way. Housing, and subprime in particular, was the hand grenade. That hand grenade was tossed into a room full of TNT. The TNT was way in which financial firms increasingly fund (or funded) their operations through short-term repos (in which a big institutional investor gives a bank short-term, often overnight, funds in exchange for collateral). The grenade - housing, subprime or whatever - goes off, raising questions about the solvency of the bank or the value of the collateral, and you have a classic run on the banks - the institutional investor either won't renew its repos at all or requires a large haircut (i.e. discount) on the collateral. As a result, the bank doesn't have enough money to fund itself and must sell its assets in a fire sale. However, this run occurs at the wholesale level, rather than in the standard depositors-in-line way (largely due to deposit insurance). Most people don't actually see the run, except in cryptic newspaper headlines. Even when actual depositor bank runs took place, as in the case of Northern Rock in the UK or IndyMac in the US, those runs occurred after the damage from runs in wholesale funding. Now, the maturity mismatch between assets and liabilities is a classic issue in banking. A bank has illiquid long-term assets (e.g. mortgage loans) that are funded by relatively short-term liabilities (e.g. deposits). (As an aside, securitization was largely an attempt to improve the liquidity of those long-term assets.) If everyone shows up at once to claim those liabilities due to some negative shock, the bank is in serious trouble - it doesn't have funds available to honor those redemption requests, rather they're tied up in long-term assets which would have to be sold, in a fire sale, to raise the required funds. This is nothing new - it's the way that banking, and banking panics, have always happened. (The Austrians would argue that this is an inherent feature of fractional-reserve banking. Of course, they're right. The problem is that their solution, while undoubtedly safer, would be horrifically inefficient during standard conditions, that is, when not facing a run. Alternatively, jack up capital requirements, but the Austrians have another point here - with fractional-reserve banking, you likely wouldn't have enough to withstand a run. Arguably, that's why we have a lender of last resort known as the Fed. But we also get moral hazard. Out the whazoo.) The key to the current crisis is that the magnitude of both the maturity mismatch and the amount of assets being financed that way grew enormously over the last decade. Bear Stearns was funding a large part of its balance sheet through overnight repos (incidentally using a lot of securitized mortgage stuff as collateral). Which explains why a firm of its size could not only blow up, but could blow up so incredibly fast. In aggregate, I don't think that anyone knows the exact numbers, but we're talking about something in the ballpark of $12 trillion being financed through this type of short-term wholesale funding. Which explains why the whole financial system was at risk when the run occurred. What's the point? The point is that all of this discussion - the Fed is to blame, Fannie and Freddie are to blame, a Consumer Financial Protection Agency is the solution - misses the point. All of that is targeted at the hand grenade. But the next hand grenade is just sitting out there waiting. And despite the best intentioned regulation that tries to target the hand grenade, you're not going to get it. There's simply too much money at stake. The Wall St firms will look to find the next hand grenade to mine it as far as they can. Alas, we've also shown them that we'll bail them out when the hand grenade hits the TNT. And, at the end of the day, that TNT is still sitting out there - perhaps pulled back a bit, but it's still out there - just waiting for the next hand unforeseen grenade to light things.
I suppose that there are two types of "empirical" issues that one could debate. The first would be inputs. In your (Adam's) response, these would seem to be the four numbered points that you make. Conceivably, I suppose that one could quibble about those. I don't have any problem with, much less any info about, the numbers that you cite. And a challenge of that type would seem to be counterproductive, if not downright silly. After all, the entire point of this site, I assume, is to debate ideas, rather than to bicker over a billion dollars here and there, or to argue over a few bps. The more substantive empirical issue would seem to be how one uses those inputs. How does one use the four facts and what does one conclude from them? As you surmise, that's the problem that I have with your "Home Depot" calculations. Based on my understanding of the discussion surrounding that post, my impression is that you used some empirical facts to generate a provocative conclusion. A conclusion that is completely supported by the "facts" but is so dependent on the underlying assumptions that it's largely indefensible. My objection is that there's a certain hypocrisy involved in calling out Evans and Wright about their provocative conclusions regarding the CFPA while being willing to post conjectures about Home Depot that are similarly provocative. Perhaps Evans and Wright make a mistake of the first sort so that they use bad inputs. But my impression is that you mostly dislike their outputs and the way that they reached them. I don't understand how complaints about their outputs and methodology are applicable to Evans and Wright, but not to you. What I also don't understand, and perhaps this is a reason not to have a discussion with me, is why a non-peer-reviewed paper posted on the web is that much different from a blog post on the web. Based on what I've seen on your site, my impression is that Evans and Wright are hired hacks. Ok, so what. They know how to produce a professional-looking pdf that they post on the web. In contrast, your Home Depot post is unprofessional? It involves no bias or point of view? Or are you just less rigorous in your blog posts, particularly relative to the work of the eminent Evans and Wright? Unless things are peer-reviewed, my understanding of the internet is that the line has been blurred between "real" and "fake" content. So I'm not sure that distinction matters. It probably doesn't for Evans and Wright. At the end of the day, hypocrisy bothers me. And my view is that the basic premise of your criticism of Evans and Wright is hypocritical. Perhaps I'm missing some distinction between the objectivity of the calculations. Or I don't understand the data. Or I don't understand the internet. But in light of your willingness to post your own provocative calculations, your criticism of Evans and Wright still bothers me. That's my main point.
JD, Longtime fans of this site know what I'm talking about. Basically, it's a question of whether Prof. Levitin is being hypocritical by calling out others about the legitimacy of their numbers. Making up numbers isn't an offense that is unique to Dr. Evans. In fact, one could argue that Prof. Levitin has, on occasion, been guilty of it. That's all I was saying. (If you still more guidance, search this site for "Home Depot.")
Good grief, man, you're arguing about numbers. And you say, in no uncertain terms, that you are. Isn't this downright duplicitous? Or at least, incredibly ironic?
Given the brouhaha that your earlier post about Home Depot engendered, this line of argument seems more than a bit hypocritical...
Oh, I see. Through this quote, you were trying to point out that bankers were viewed as scum in the past, in contrast to their "esteemed" position today. I thought that you were noting how bankers were considered to be scum in the past, with the implicit similarity to their standing - which I would generally interpret to be scum - today. Anyway, I guess that's the point, although I may still be wrong. Sorry for being obtuse, but maybe you're being a bit too subtle. Also, sorry for the lawyer quotes. Only for its randomness, I'm particularly fond of the H.S. Thompson one. That's the only one I won't retract. "As your attorney, I advise you to..." - Thompson managed to pervert that statement better than almost anyone.
Hello pot, this is kettle... "In tribal times, there were the medicine men. In the Middle Ages, there were the priests. Today, there are the lawyers. For every age, a group of bright boys, learned in their trades and jealous of their learning, who blend technical competence with plain and fancy hocus-pocus to make themselves masters of their fellow men. For every age, a pseudo-intellectual autocracy, guarding the tricks of the trade from the uninitiated, and running, after its own pattern, the civilization of its day." - Fred Rodell or "While law is supposed to be a device to serve society, a civilized way of helping the wheels go round without too much friction, it is pretty hard to find a group less concerned with serving society and more concerned with serving themselves than the lawyers." - Fred Rodell Of course, Rodell isn't exactly an impartial witness, so let's consider... "Undistinguished and often shabby in appearance, Ulysses S. Grant did not recommend himself to strangers by looks. He once entered an inn at Galena, Illinois, on a stormy winter's night. A number of lawyers, in town for a court session, were clustered around the fire. One looked up as Grant appeared and said, 'Here's a stranger, gentlemen, and by the looks of him he's travelled through hell itself to get here.' 'That's right,' said Grant cheerfully. 'And how did you find things down there?' 'Just like here,' replied Grant, 'Lawyers all closest to the fire.' " I suppose that Grant wasn't particularly admirable either, so how about... "As your attorney, it is my duty to inform you that it is not important that you understand what I'm doing or why you're paying me so much money. What's important is that you continue to do so." - Hunter S. Thompson's Samoan Attorney Cazart! That's the best I can do? A quote from an unreformed degenerate? How about we bring out the big guns... "The first thing we do, let's kill all the lawyers." - William Shakespeare, Henry VI, Part 2 Of course, I'm taking that completely out of context. Still, it's a bit incongruous for a lawyer to be pulling out historical quotes that bash bankers. In both cases, it's like shooting fish in a barrel. One would wonder, however, why I couldn't dredge up some better quotes...