US Auto Manufacturers

Liberals and Taxes

Liberals do not consider cheating on taxes to be as morally problematic as conservatives do. This presents an obvious moral quandry [sic] of its own, as, putatively less surprisingly, liberals are more likely than conservatives are to favor greater amounts of taxation and wealth redistribution.

Complete analysis here.

Game Theory in Geithner's Plan

Let's say that I am a bank ("financial institution") with $100 billion in "toxic assets". I have them on my balance sheet at 80 cents on the dollar. The market has them marked at 30 cents. We do not know what the held-to-maturity performance will be, since that requires knowing the future, although for the moment let's assume that they are cash-flowing at the present time.

What I (the bank) do know, however, is that if I sell them at 30 cents I take a monstrous loss - perhaps enough to force me under Tier Capital limits and thus render me subject to an FDIC enforcement action. I therefore will not sell for 30 cents so long as I have any belief whatsoever that the cash flow - or any government subsidy - will exceed that value.

If I, as a "financial institution" can participate as a bidder in these auctions I can foist off my loss onto the taxpayer. Here is how I can rig the game so as to avoid an otherwise-inevitable loss:

• I become a "bidder" and "bid" on my own assets at 75 cents.
• I am providing 5 or 10% of the money. The rest is covered by Treasury, The Fed and the FDIC via guaranteed bond issuance.
• The loan, ex my contribution, is non-recourse. That is, I can lose 5 or 10% of the total portfolio purchased, but nothing more.

Now the "assets" (a passel of CDOs?) turn out to be worthless. I lose 5% of $75 billion, or $3.75 billion that I put up, plus the other nickel on the original mark, but that's all.

The taxpayer gets hosed for the remaining $71.25 billion dollars.

This can and will be done if the "sellers" of these assets are allowed to bid either directly or indirectly as it provides a means for banks to intentionally dump bad assets at a certain loss that is much smaller than their expected realized loss over time, shifting the rest of the loss to the taxpayer.

This program has the potential to shift literally $500 billion or more in losses onto the taxpayer, not through the operation of "bad luck" but rather through what amounts to a bid rigging operation.

Do Men and Women Read Books Differently?

One study says the answer is yes.

A study of reading habits showed almost half of women are 'page turners' who finish a book soon after starting it compared to only 26 per cent of men.

The survey 2,000 adults also found those who take a long time to read books and only managed one or two a year were twice as likely to be male than female.

Men are also more likely to have shelves full of books that have never been opened.

The only similarities between the sexes came among those who have two books on the bedside table at once and who start one book on the middle of reading another, switching easily. Twelve per cent of women were in this category – exactly the same number as men.

How Walkable is Your Address

The White House is 99.
Former Pres. Bush's ranch is a 0.

Find out here.

Outsourced Cheating

The orders keep piling up. A philosophy student needs a paper on Martin Heidegger. A nursing student needs a paper on dying with dignity. An engineering student needs a paper on electric cars.

More here.

Trvial Pursuit

The AIG bonuses now being debated in Congress and everywhere else represent about .001 percent of annual GDP. If a typical Congressman spent that fraction of a 2000 hour work year on the topic, it would consume only about 1 minute of his or her time.

More here.

Grade Inflation

Q: What does a major state university do when test scores on a precalculus math exam for incoming freshmen continue to decline year after year, while at the same time high schoo GPAs of incoming freshmen are going up?

A: If your answer is "make the test easier," go to the head of the class!

Watch a disturbing video on the decline in math skills for college students (click twice on the arrow above), with an explanation for why it has been happening ("reform math"), and some ways to solve the problem (abandon "reform math").

Wall-E

American 15-year-olds rank 24th out of 29 countries in math literacy, and their parents are as likely to believe in flying saucers as in evolution; roughly 30 to 40 percent believe in each. Their president believes “the jury is still out” on evolution.

More here.

Sarcastic Twist to Default Swaps

This week brought fresh revelations that the Boston Symphony, among many leading organizations, is heavily leveraged in atonal credit swaps, more than the most pessimistic theorists had previously forecast.

Continued here.

Everyone Hates a Public/Private Partnership

The state has decided that all new subdivisions must have through streets linking them with neighboring subdivisions, schools and shopping areas.

Read here.

KYS

Iowa Sen. Charles Grassley suggests AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

Read Here.

Mainstream Media

Today, everyone -- including media stars everywhere -- is going to take Stewart's side and all join in the easy mockery of Cramer and CNBC, as though what Stewart is saying is so self-evidently true and what Cramer/CNBC did is so self-evidently wrong. But there's absolutely nothing about Cramer that is unique when it comes to our press corps. The behavior that Jon Stewart so expertly dissected last night is exactly what our press corps in general does -- and, when compelled to do so, they say so and are proud of it.

Kenny Powers

Why Are Diamonds So Expensive

The diamond invention—the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem—is a relatively recent development in the history of the diamond trade.

Circa 1982

Business School

The master’s of business administration, a gateway credential throughout corporate America, is especially coveted on Wall Street; in recent years, top business schools have routinely sent more than 40 percent of their graduates into the world of finance.

But with the economy in disarray and so many financial firms in free fall, analysts, and even educators themselves, are wondering if the way business students are taught may have contributed to the most serious economic crisis in decades.

Everyone Hates Ethanol

Corn ethanol producers -- led by Wesley Clark, the retired general turned chairman of a new biofuels lobbying outfit called Growth Energy -- want the Obama Administration to make their guaranteed market even larger. Recall that the 2007 energy bill requires refiners to mix 36 billion gallons into the gasoline supply by 2022. The quotas, which ratchet up each year, are arbitrary, but evidently no one in Congress wondered what might happen if the economy didn't cooperate...

Americans are unlikely to use enough gas next year to absorb the 13 billion gallons of ethanol that Congress mandated, because current regulations limit the ethanol content in each gallon of gas at 10%. The industry is asking that this cap be lifted to 15% or even 20%. That way, more ethanol can be mixed with less gas, and producers won't end up with a glut that the government does not require anyone to buy.

Daily Show vs. Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Intro - Brawl Street: Get Ready to Buy Low! And Sell Die

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

15 Strangest College Courses

College is viewed by many people these days as a diploma factory. You show up go to certain classes in a certain order, and eventually receive a diploma. There’s not a lot of love for learning for learning’s sake anymore. But that hasn’t stopped many colleges from offering plenty of quirky unique classes that go over non standard educational topics. A lot of the odd courses we found sound like lots of fun, but with tuition costs skyrocketing is it really worth it to spend thousands of dollars on fun diversions? Read on and decide.

Free Lunch

Reading the Morning News

In the 1930’s, Franklin Roosevelt started his day by reading half a dozen newspapers in bed. Today, you can read the printed front pages of more than a dozen major newspapers from around the world side by side right here on your browser, thanks to a feed from the Newseum.

The Happiest States in the Union

Read the New York Times article here.

What Does $1 Trillion Look Like

1 Million Dollars

1 Trillion Dollars (Notice the same man on the bottom left)

Lincoln vs. Obama

Obama Tax Plan

Mancession Continued

According to Friday's BLS report (Table A-1, Household Data), the U.S. economy has lost 4.464 million jobs since Dec. 2007. Further analysis shows that 72% of the job losses (3.483 million) were jobs held by males, and 22% of the jobs lost (981,000) were jobs held by females (see top chart above). Of the 351,000 decline in February employment (household data), 90% of the job losses were male jobs (315,000), compared to a 37,000 job loss for females (10% of total).

Further, the February unemployment rate for men was 8.8% vs. 7.3% for women, as the 1.5% male-female gap narrowed just slightly from the all-time historical record male-female jobless rate gap of 1.6% in January.

Jetpacks

I came across this lovely article this morning while driving to work (66 was gridlock, so I was not moving).

Nobel Prize Winner Has "Inflation" by the Balls

This is a bull named ‘Inflation’ — named “Inflation” because the beast never stopped growing. There on the left is Nobel Prize winner Friedrich Hayek, who’s got Inflation by the balls. The picture was taken by Australian driller Ron Kitching after Mrs. Kitching objected to the idea of a picture of Hayek on top of Inflation. The picture was taken in 1976.

Interesting Details to the Merck/Schering-Plough Deal.

To all the world, it appears that Merck is buying Schering-Plough. Unless you're a lawyer.

American Demographics

America’s demography tells not one story, but many. People concerned with looking at long-term trends need to familiarize themselves with these realities – and also consider whether these will continue in the coming decades.

Lots of Graphs.

So European

"A former Swiss investment banker admitted in court on Monday that he seduced and blackmailed Germany's wealthiest woman, heiress to the BMW car empire, with secret films of their hotel trysts.

Helg Sgarbi admitted seducing heiress Susanne Klatten and three other wealthy women and persuading them to pay him almost 10 million euros ($12.64 million) with various tales, including one that he had fallen foul of the Italian mafia."

Source: Reuters.

*Update* Pictures.

Big Law Firm's Leverage Problem

Over the last few decades - concurrent with the growth of leverage in the financial system - the business model of most large law firms has developed into one built on leverage as well. It is just a leverage which utilizes people rather than borrowed money. Specifically, since law firms generally bill by the hour (a system whose demise has been predicted for the near future and, in my opinion, always will be), firms increase their profitability by increasing the amount billed in respect of each equity partner. Since there is only so much time in the day, firms have tended to increase the ratio of attorneys per equity partner. Without irony, this ratio is known as..."leverage," and this tendency is how you can read now-horrifying articles like this one, which begins:

Now, in times where there is an easy supply of credit work, this system of leverage works very well for all involved. But when the flow dries up, the firms are left with high fixed costs to be serviced - and the more leveraged the firm is, the harder it is to service those costs with reduced revenue. Sound familiar? It should be no surprise that large law firms have been laying off attorneys in far greater numbers than in previous downturns, with some doomsayers (whom I hope are less accurate than their counterparts with respect to the economy generally) predicting additional firm collapses and permanent changes to the firms' business models. (The one saving grace to the law firm model of leverage is that they can "deleverage" far more easily than banks, as banks can't merely fire their "troubled assets.")

Entire post from The Atlantic can be found here.

Map of Drinking Ages

DC Metro Ad

Economic Value of Popularity

Read the report here.

They find that each extra close friend in high school is associated with earnings that are 2 percent higher later in life after controlling for other factors. While not a huge effect, it does suggest that either that a) the same factors that make you popular in high school help you in a job setting, or b) that high-school friends can do you favors later in life that will earn you higher wages.

Read his caveats as well. I would like to know more about the shape of the distribution. I would think that the most popular people achieve only mediocre results, whereas the very high earners are either loners (but not necessarily "unpopular" in the sense of being disliked) or had above-average popularity but not extreme popularity. Too much popularity too early produces the feeling that other things will come easily, too easily.

Map of Recession

Party

When keeping it real, goes wrong.

From The Internet

1. Why paying for grades is good.
2. Iceland's bankruptcy.
3. Why hasn't NBA free-throw shooting improved.
   

From the Internet

1. America's Worst Intersections
2. February Economic Summary in Graphs

Corporate Taxes