Random Links XXXXIX

How Central Banks (May Have) Helped Cause the Crisis:  Various theories on the topic. 

Servicer Safe Harbor

A promising development.  Given my druthers, I’d make this provision permanent, or at least longer-lasting than 2012.  I’d also extend it to all mortgages, not merely owner-occupied ones; preventable losses from FC’s on “investor/speculator/flipper” are no less preferable than losses from owner-occupied ones – both cost lenders & investors money. 

The key to implementation is the content of the guidelines by SecTreas.  E.g., discount rate & redefault rates used to calculate NPV. 

(Note:  Apparently the mention of “qualified loss mitigation guidelines issued by the Secretary of the Treasury under the Emergency Economic Stabilization Act of 2008” refers to guidelines authorized by Sec. 109 of EESA.) 

Chavez & Political Retaliation

Between 2002 and 2004 millions of Venezuelans signed petitions calling for a vote to remove Hugo Chavez from office. […] After the election, the list of signatories was distributed to government agencies in an easy-to-use database.  The database included the names and addresses of all registered voters and whether they had signed an anti-Chavez petition.  Technology thus provided Chavez supporters the information they needed to retaliate.

After the election, the employment and wages of signatories drop considerably, about a 10% drop in wages relative to non-signatories.  Survey evidence conducted by the authors is consistent with retaliation by Chavez supporters especially in the form of job losses in the public sector. 

Dangers of Politicized Lending: 

http://meganmcardle.theatlantic.com/archives/2009/05/the_price_of_the_kings_shillin.php

http://baselinescenario.com/2009/05/07/stress-tests-and-the-nationalization-we-got/

Chrysler BK as a Case Study:  http://www.ft.com/cms/s/0/1b5a9e16-3b38-11de-ba91-00144feabdc0.html

Killing Economic Recovery Via Commodities BoomThis assumes decoupling.  Not sure if that’ll in fact be the case or not. 

Underdogs: 

http://www.newyorker.com/reporting/2009/05/11/090511fa_fact_gladwell

Critique:  http://meganmcardle.theatlantic.com/archives/2009/05/innovation_pressure.php

Deleveraging => Indian DownturnThis is what happens when a country depends too much on imported foreign capital to fund its economic expansion.  Americans, with their (until recently) low savings rates, should take note. 

Whence “Too Big to Fail”How banks became TBTF…and the rest of us rationalized it. 

Wolf Controversy Out West

“For some of my conservation friends, it’s hard to appreciate how the other side is impacted by wolves,” Jimenez says. “The challenge is that there is a disproportionate cost-benefit aspect of having wolves back. One side, often a more urban population, disproportionately gets the benefits of wolves at the expense of people coexisting with them on a daily basis in rural areas.”

“It’s easy to want wolves when they don’t live in your backyard,” concludes Jimenez. “And it’s also easy for some in the livestock community to deny the biological significance of wolves and what their survival means to millions of Americans. This respect for both perspectives is what is missing from the current discussion.”

Dark Matter vs. Non-Newtonian Universe“We probably live in a non-Newton universe. If this is true, then our observations could be explained without dark matter”

Legionnaires’ SentimentsInteresting.  The Army as a bastion of moderation (in terms of both partisanship & ideology). 

Canadian Banking: 

http://blogsandwikis.bentley.edu/themoneyillusion/?p=1150

http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/04/canadian-vs-us-bank-regulation.html

Apparently, the relative soundness of Canadian banks nowadays isn’t due to better Canadian regulation, so much as a risk-averse Canadian banking culture.  The latter is much reinforced by “principles-based regulation”, whose inherent vagueness (relative to “rules-based regulation” in the US) tends to encourage bankers to remain conservative, lest they inadvertently break the rules.  Call it a “chilling effect”, as applied to banking. 

Synthesizing Artificial OrgansNifty…. 

Environmental NewspeakOf course debates become easier to win when one controls the language. 

Tenured Teachers“Firing tenured teachers can be a costly and tortuous task”.  In contrast with college professors – where tenure (can) help protect academic freedom – tenure for primary & secondary school teachers never made much sense to me. 

Vultere Funds & Secondary Markets: 

http://blogs.reuters.com/felix-salmon/2009/05/07/the-silly-war-on-vulture-funds/

http://meganmcardle.theatlantic.com/archives/2009/05/secondary_markets_are_real_mar.php

If we ever want to take care of the “toxic asset” problem, we’ll need vulture funds – people willing to assume high risk for (potentially) high gains.  Recall how risk & return correlate – decrease the latter by fiat (as Maxine Waters apparently wants to do), and you likewise lower the amount of risk people are willing to assume.  This would basically destroy the secondary market for risky debt.  Initial buyers of bonds would be less willing to make such purchases in the future, since, in the event that such bonds end up being riskier than they expect, they won’t be able to unload them (due to the absence of a secondary market).  Instead, they simply wouldn’t buy the debt at all, unless they were virtually certain regarding the credit risk of such debt. 

Female Humor as a Career-Booster

Philosophy of Mathematics

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