The tragedy of mathematical education

Posted June 20, 2009 by gh1f
Categories: Uncategorized

Here

You see the fruits of the problem when you teach students material that uses math to solve problems and express ideas. They freeze up and want recipes rather than seeing beneath the surface to the ideas.

But to be fair, some people only get the ideas by working through the recipes. I never understand anything until I work through all the steps myself, writing the recipe in my own words.

Sigh.

This seems like another alternative to a credit card option to me

Posted June 18, 2009 by gh1f
Categories: Uncategorized

Is This The Beginning of the End of Free Checking? – Real Time Economics – WSJ

You pay $20 per month to the bank for the checking account, but the account does not charge any overdraft fees for overdrafts up to $500.  And you get a debit card.

You therefore pay $20 per month for the ability to have a short term ‘interest-free’ loan of $500. 

That works out to an interest rate of 4% per month, or 1.04^12-1=60% yearly interest, in the best case.  And that is if you borrow the $500 each month.  Surely you can find a lower cost credit card? That is, get a no-fee credit card for those $500 short term loans.

‘Crowding out’

Posted June 3, 2009 by gh1f
Categories: Uncategorized

is the idea that people offset increased government spending by increasing private savings.  It is happening, at least partially:

Americans are saving more money – Top Stocks Blog – MSN Money

Much of the time when I read something

Posted May 1, 2009 by gh1f
Categories: Uncategorized

in the newspaper related to what I work on, I realize that when reporters try to explain the facts, they get it wrong, or at least explain it wrong, since they stop a few steps before the correct explanation-probably looking for the ‘bad guy versus good guy’ explanation, rather than a consistent and coherent explanation.

The Baseline Scenario is probably the worst online site. When did the IMF ever successfully deal with oligarachs? As far as I know, that organization spent much of its time giving money to the oligarchs, or funnelling money to communists. I don’t like bailouts, either.

I loved the kindle,

Posted March 21, 2009 by gh1f
Categories: Uncategorized

and now it is dead. :(

And no way to repair it–either buy a new one, or pay $180.00 for a refurb.  I am sad and annoyed.

In the summer, I went to a talk by regulators,

Posted March 20, 2009 by gh1f
Categories: Uncategorized

who argued that a big problem they had was that financial institutions did not want to borrow money because of ’stigma,’ which ended up making the liquidity problems worse.  So the regulators wanted to take away that stigma.

Fast forward to fall 2008, in which the government has ’solved’ the stigma problem by making the deals better and apparently forcing some of the institutions to borrow money.

Now we know that some of then financial institutions had ‘rational expectations’ about the problems with taking money from the government. :)

The more I think of it,

Posted March 18, 2009 by gh1f
Categories: Uncategorized

the more that I think that this financial bailout is a giant scam.  Follow Bagehot’s rule: Lend freely at a penalty rate if you think that the assets are good.

But that’s what they tried with AIG. Didn’t work, because good assets can become bad assets before the crisis ends.  After all, the Fed was telling us that AIG’s assets were good, they just had a liquidity problem, not a solvency problem.

That could be true, since much of the money is going to collateral, not to pay off claims.  But some are real losses.

Even the ones for the bankers forced by Paulson to take the TARP money?

Posted March 17, 2009 by gh1f
Categories: Uncategorized

What Congress Can Do To Stop The AIG Bonuses – The Atlantic Politics Channel

That’s one way to get the banks to pay back.  It’s also another way to move people from banks to hedge funds. 

Oh boy the hedge fund guys must be happy.  The survivors are going to be really rich, because they are going to run the next I-banking business.

And all this bonus pay is ‘tax driven’ anyway:

It is worth recalling however, as a reader wrote me today, that we have been here before. The Clinton Administration in its 1993 tax law change wanted to cap the amount of executive pay that could be deducted against income taxes. My correspondent writes:

There was also a loophole, a provision that said that Bonus Compensation was taxed differently than standard compensation. Bonus compensation under those provisions is fully deductible. That was the year when people like Michael Eisner of Disney got large bonuses for performance. Over time, Executive Compensation was shifted from Salary to Bonuses, and such provisions were written into Executive Contracts and those of other high performing employees. Presumably “Bonus Compensation” was to be tied to performance or certainly used as an incentive to get a star performer to move into a failing area of the business to help “right the ship”. Another point that is sometimes missed is that compensating someone with a bonus is being more responsible to the shareholders because this allows the company to structure its tote sheet in a way to reduce the overall corporate tax burden.

Now fast forward to the “Banking Crisis” and “Bailout Packages” and we have a sudden attack on “Bonus Payouts”. People who apparently don’t understand how business works or how to get top level performers to stick their careers out on the line are attacking people who get such rewards.

quoted from:SCSUScholars: What happened last time

I am not a supporter of the bonuses to AIG, but all the current political posturing is a bit rich. 

Awesome

Posted March 11, 2009 by gh1f
Categories: Uncategorized

Falkenblog: Economists Aren’t More Stupid than Other Scientists

Alas, I don’t know enough physics to judge this.  Perhaps all those ex-physicists and mathematician types who actually run the complicated derivatives models will comment.

The economists’ asteroids are realizations of mean zero random variables…fashionably now with power-law tails.

Economist as charlatan

Posted March 10, 2009 by gh1f
Categories: Uncategorized

Listening to Paul Krugman on tv telling us that ‘for sure Japan’s government spending during the lost decade saved them from a great depression.’

There is no way he knows that.  No one knows that.