Archive for December 2008

There is no end in sight to the bailouts:

December 22, 2008

CQ Politics | Aviation Industry Joins Plea for Stimulus Funds

They should have let Bear Stearns go.  Take the short term pain for a longer term gain.  But no, take the easy way.  And now the same bailout types are still in charge, and still will be too.

This morning

December 16, 2008

L. told me ‘Today is going to be my second jolliest day.’ 

The day started with her eating breakfast fast enough so that she could put some more decorations on the tree.

Wow, just wow.

December 13, 2008

Coding Horror: Profitable Until Deemed Illegal

Never underestimate people’s ability to be manipulated.

How many repeat customers are there?

via: megan mcardle

Soup’s on!

December 12, 2008

Bloomberg.com: Bonds

U.S. Treasury Protection Costs Surpass Campbell Soup on Bailout
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By Shannon D. Harrington

Dec. 10 (Bloomberg) — The cost to hedge against losses on U.S. Treasuries surpassed the price of default protection on bonds from Campbell Soup Co. and drugmaker Baxter International Inc. as government spending on stimulus packages grows.

Credit-default swaps on U.S. government debt in euros for five years are trading at 67 basis points, according to CMA Datavision, meaning it costs 67,000 euros ($87,24 0) to protect 10 million euros of debt. Contracts on Campbell of Camden, New Jersey, were quoted at a mid-price of 50.4 basis points today, and Deerfield, Illinois-based Baxter contracts were at 54.2 basis points, CMA data show.

The Federal Reserve’s assets have more than doubled from a year ago to $2.14 trillion as the central bank seeks to revive credit markets. The Fed’s balance sheet may reach $4 trillion, according to strategists including Ira Jersey at Credit Suisse Group AG in New York. Economists including Harvard University professor Kenneth Rogoff and Nobel Prize winner Joseph Stiglitz say President-elect Barack Obama should push for a stimulus package of at least $1 trillion to lift the economy out of a yearlong recession.

“It’s a certain absurdity, but it’s also a question of supply and demand,” said Scott MacDonald, head of research at Aladdin Capital Management LLC in Stamford, Connecticut, who expects between $1.5 trillion and $2 trillion of Treasuries may be issued over the next 18 months. “We have another massive stimulus package coming. Does Campbell’s Soup have a stimulus package coming? No.”

U.K., Netherlands, Italy

Contracts protecting U.K. government debt for five years were quoted at 115 basis points today, according to CMA. Swaps on Italy are at about 189, and the Netherlands at 93.5. France was quoted at 57.5 and Germany at 49, CMA data show.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent if a borrower fails to meet its debt obligations. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

A benchmark credit-default swap index tied to the bonds of 125 companies in the U.S. and Canada fell today. Contracts on the Markit CDX North America Investment-Grade index of 125 companies in the U.S. and Canada fell 7.5 basis points to 260.5 basis points as of 4:45 p.m. in New York, according to Barclays Capital. An increase suggests deterioration in investor confidence; a decline indicates the opposite.

Contracts on the Markit iTraxx Europe index of 125 investment-grade companies rose 5.5 basis points to 197.5 basis points, according to JPMorgan Chase & Co.

An excellent discussion

December 12, 2008

Paul Wilmott’s Blog: Magicians And Mathematicians

Models are metaphors. 

 Taleb’s and Romer’s comments are right on.

Edge: CAN SCIENCE HELP SOLVE THE ECONOMIC CRISIS?

Models in economics are to force you to be clear about the logic of the discussion to make sure that your story is consistent, and also to suggest the broad quantitative forces.  We can also use empirical work with the models to reject possible explanations.

 

Apparantly I am one of the dumb:

December 8, 2008

Who is the Real ‘Dumbest Generation’? – washingtonpost.com

My wife’s first question

December 7, 2008

upon hearing that part of the new stimulus packing is changing the light bulbs was ‘What are they going to do with all the mercury from the old bulbs?”

The law of unintended consequences is coming to us, yet again.

(This is not a stimulus plan, but a plan they wanted anyway for other reasons. They are just using stimulus for cover. Just like the Republicans did for lowering taxes.)