Archive for August 2007

Something puzzling

August 31, 2007

about the real estate bubble narrative:

I also am unsure how Shiller’s concept of real estate price bubbles in “superstar” cities is to be reconciled with the fact that the problems with mortgage defaults initially proved to be most serious in rustbelt areas where there had been very little real estate price inflation.

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via: Econbrowser: Report from Jackson Hole

The WSJ today reports that a good chunk of the defaults were not for owner occupied houses–real estate speculators–in the “superstar” markets, as far as I can tell.

There is something about lax credit standards, as much as  bubbles going on here. It is to empirically measure a ‘bubble,’ though.

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You can add LOL Cats to your RSS feeds!

August 30, 2007

I haven’t tried it you, but I will. 

(scroll to the bottom to add a RSS feed)

LOL Feeds

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We are without water for a while,

August 30, 2007

so I am feeling a bit grumpy and sweaty. A nontrivial portion of our city is now without water pressure.

One of the weird things about science is how much it depends on being able to convince others you are correct. The scientific method is powerful because it is a good way to convince people of things. But nothing is ‘absolutely true.’ Not even in math: Gödel’s incompleteness theorems – Wikipedia, the free encyclopedia

For any consistent formal, computably enumerable theory that proves basic arithmetical truths, an arithmetical statement that is true, but not provable in the theory, can be constructed.1 That is, any effectively generated theory capable of expressing elementary arithmetic cannot be both consistent and complete.

In any formal system, there always are statements that cannot be decided to be true or false. If you cannot do it in formal math, how are you going to do it in more complex social environments.

I learned the political/social version of this when I first started teaching m first year-I was amazed when some students disagreed with things I thought to be self-evident. I quickly figured out that reasonable people can disagree, that you can disagree with people you admire intellectually without losing respect for them, and even that making your best argument and not convincing someone is OK. Argue honestly, respectfully, and transparently.

But that does not mean anything goes–it means that there will be some topics that you can disagree about (say the desirability of fly-fishing versus deep-sea fishing for pleasure, or punk versus rap, or three button versus two button suits, or whether or not cutting emissions is more worthwhile than long run growth, or even if there is such a tradeoff). But for some things, the experts might really know more than you do: what kinds of things are hurtful to large groups of people, say.

I learned this lesson once when I was in grad school. The city has a yearly arts festival, and one year they decided to honor the early industrial workers, so commissioned a statue of a worker. The statue was called ‘Derogatory Eastern European name’ worker. The artist claimed not to know that `Eastern European name’ is so painful. Many other people did, and I remember that name on the playground and when I was a kid. I think that the statue was renamed, with lots and lots of bad feelings on all sides.

Sometimes it is tricky to find the line, but often not. Now, back to feeling sticky.

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Good quote

August 21, 2007

“Its not even the number of deviations any more”, said one trader, “its that the deviations aren’t standard”

via: RGE – Reverse engineering financial engineering

Here’s the conundrum in economics: looking at historical data to ‘test’ models is tricky, because things are too complex.  And no model is perfect, anyway.  Instead a model is a metaphor, a way to understand the basic forces driving things.  But we need quantitative discipline in the models.  So the important thing is to take the basic message from the historical evidence in the models, but don’t ‘overfit.’  Impossible.  Hence, strong belief in theory, which has been subject to some empirical evidence, and is internally consistent.

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Lyrics that tickled my fancy

August 20, 2007

‘Love is like a bottle of gin, but a bottle of gin is not like love.’

from the song : Love is like a bottle of gin by Magnetic Fields (link to google music).

The more I listen to the CDs in that album, the more I like it. The delivery is great.

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I forgot

August 17, 2007

what a great blog Good Math, Bad Math really is.

Good Math, Bad Math : The Sierpinski Gasket by Affine

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The power of prices

August 17, 2007

Max Roach, a Founder of Modern Jazz, Dies at 83 – New York Times

I listened to an interview with Max Roach this afternoon on NPR. His hypothesis about how jazz musicians became such good players was based on taxes.  In the 40s, nightclubs paid extra taxes if people danced, or there we singers, or the band was big.  So, the club owners had an incentive to book smaller bands, which lead musicians to respond by becoming virtuoso players.  Thus bebop, eventually.

People reallt respond to incentives; if you can set incentives, you have a huge amount of power.

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