subject:"Re\: Meltdown"


On 24/09/2008, at 8:36 AM, John Williams wrote:

 Charlie Bell [EMAIL PROTECTED]


 Instead of mocking, why don't you try EXPLAINING.

 Instead of telling other people what you think they should do,
 why don't YOU explain whatever you believe needs explaining?

Because I'm not the one mocking, and I know what I think. But you  
think different, and it would be nice to know why you think it, rather  
than you calling people idiots for not thinking as you do.

But you don't seem to actually be interested in how this mailing list  
and discussion forum works, or how much some of the other people here  
actually do know about a fairly eclectic and esoteric range of  
knowledge. No, they disagree, so they're imposing their views on  
others.

*shrug* It's your loss. The sad thing is, you'll never know what  
you're actually missing.

Charlie.
Very Close To Increasing My Killfile By One Maru
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown


On 24/09/2008, at 1:16 PM, John Williams wrote:
Sorry, I have much less confidence in
 politicians and people like you than I do in the collective self- 
 interest and creativity
 of a large group of talented people to solve problems competitively.

Tragedy of the Commons. Murray/Darling River system. Easter Island.

There is such a thing (provably) as an Evolutionarily Stable Strategy  
that can lead to extinction, and I reckon the completely unregulated  
market is one of them.

Charlie.
Counterexample Maru.
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown


On 24/09/2008, at 2:34 PM, Gautam Mukunda wrote:

 Me:
 Ah yes, because I'm definitely running for office right now.  Come  
 on, this is just tiresome.  At least try to have a simple discussion  
 without accusing everyone of bad faith.

Yeah. Discussions can get heated, and occasionally blow up, with  
people you've been talking to for a long time, but to be consistently  
rude to people you don't know at all is a different thing entirely.

Hello Gautam. Long Time No See. I seem to recall we were having a bit  
of an argument last time we spoke. Ah well, that was 5 years ago. Peace.

Charlie.
Older, More Travelled And More Tolerant Maru
___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown

2008-09-24 Thread Ronn! Blankenship

At 06:09 AM Wednesday 9/24/2008, Alberto Monteiro wrote:

Dan M wrote:
 
  Oh, the irrationality.  Why would people be reluctant to by one
  day notes from GE.  Does any sane person think GE will go belly up
  _tomorrow?_  That's what the interest rate measures...the
  willingness of folks to buy GE notes. All of a sudden, buyers dried
  up.  That's a measure of the panic. A rational market wouldn't
  change GE's interest rate that quickly because companies with idiots
  as managers (e.g. AIG) went belly up and had to sell most of their
  equity to the government at a discount or go bankrupt.
 
Are you sure _they_ (the managers) are the idiots? They probably
were richly paid, lived lavishly and became the alphas of their
peer group, while it lasted. Who cares about the future?
Stockholders want profit _now_.

Maybe we are the idiots.

Alberto Monteiro


Maybe even EE-VIL religion got it right when they named greed 
one of the seven deadly sins . . .


. . . ronn!  :)

This planet has - or rather had - a problem, which was this: most of 
the people living on it were unhappy for pretty much of the time. 
Many solutions were suggested for this problem, but most of these 
were largely concerned with the movements of small green pieces of 
paper, which is odd because on the whole it wasn't the small green 
pieces of paper that were unhappy.

-Douglas Adams



___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Charlie Bell [EMAIL PROTECTED]

 No, they disagree, so they're imposing their views on  
 others.
 
 *shrug* It's your loss. The sad thing is, you'll never know what  
 you're actually missing.

If what I'm missing is being told what to do, I hope I miss it. Unfortunately,
there is a good chance this $700B government bailout is going
to pass and I'll be forced to pay thousands of dollars. That is
a clear consequence of those who disagree and believe they or
some experts can fix the problem with other people's money.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Charlie Bell [EMAIL PROTECTED]

 There is such a thing (provably) as an Evolutionarily Stable Strategy  
 that can lead to extinction, and I reckon the completely unregulated  
 market is one of them.

1) Why are you talking about a completely unregulated market? Is it because
it is easier to imagine some impossibly idealized system and then claim it
can never work rather than making a case that whatever specific rule you want to
impose on others today is definitely going to make them better off?

2) Would you care to explain why ESS's that lead to extinction did not lead
to extinction of the human race, but apparently will lead to extinction in
a market without an intelligent designer to keep things going? Talking about
Easter island is odd, since that is not the entire human race. Rather, in
your analogy that might represent a large company which goes bankrupt.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown


On 24/09/2008, at 11:20 PM, John Williams wrote:

 Charlie Bell [EMAIL PROTECTED]

 No, they disagree, so they're imposing their views on
 others.

 *shrug* It's your loss. The sad thing is, you'll never know what
 you're actually missing.

 If what I'm missing is being told what to do, I hope I miss it.

No, you're simply being informed that this group has lasted as long as  
it has (at least 13 years, I think?)  because the vast majority of  
members agree to be polite when discussing. You can choose not to be,  
but if your goal in life is to simply be contrary and any guidelines  
at all suggested by others are bad simply because they are suggested  
by others, then many members of this group will just ignore you. If  
that's imposing their will, then so be it.

But I'm done trying to persuade you. I thought you might have  
something interesting to say, but you're too busy telling everyone  
they're ignorant, wrong, in love with the government, or just stupid  
to bother telling anyone why your point of view has any merit, brief  
glimpses to the contrary aside.

As I said in an earlier post, I'm not telling you what to do. I'm just  
saying that your actions have consequences, and so far the consequence  
is to make me think that you're arrogant and uncouth. Like I said,  
your loss if you don't want to talk on a level.

*plonk*

Charlie
Killfile Plus One Maru.
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

On Wed, Sep 24, 2008 at 6:20 AM, John Williams
[EMAIL PROTECTED]wrote:



 If what I'm missing is being told what to do, I hope I miss it.
 Unfortunately,
 there is a good chance this $700B government bailout is going
 to pass and I'll be forced to pay thousands of dollars. That is
 a clear consequence of those who disagree and believe they or
 some experts can fix the problem with other people's money


Why aren't you living on some island somewhere, where nobody will impose
their ideals on you?  It seems like such a move would be a net gain for
everybody.

Nick
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Charlie Bell [EMAIL PROTECTED]


 Yeah. Discussions can get heated, and occasionally blow up, with  
 people you've been talking to for a long time, but to be consistently  
 rude to people you don't know at all is a different thing entirely.

You appear to place a lot of emphasis on superficial language. 
I think it is more important not to force one's ideal on others than
to insert a few polite words into a sentence when communicating.

If you want to get terribly upset because I write sarcastically, that
is your prerogative. If I do not want to do something that someone 
forces me to do, that is by definition NOT my prerogative. In other
words, supporting certain positions or rules has consequences on
others that those who support the rules should acknowledge, but 
my writing sarcastic remarks does not impose any consequences
on you except for those you choose.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Charlie Bell [EMAIL PROTECTED]


 But I'm done trying to persuade you. 

Thank you! That certainly deserves a polite response!


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Wahh! (was Re: Meltdown)

On Wed, Sep 24, 2008 at 6:45 AM, John Williams
[EMAIL PROTECTED]wrote:


 If I do not want to do something that someone
 forces me to do, that is by definition NOT my prerogative.


Show of hands -- who else found themselves instantly thinking teenager
when they read this sentence?

The phrase, You can't make me! came to mind instantly.  Because I don't
WANT to wasn't far behind.

Ah, when the Wonder Years give way to the Sociopath Years.

Nick
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Nick Arnett [EMAIL PROTECTED]


 Why aren't you living on some island somewhere, where nobody will impose
 their ideals on you? It seems like such a move would be a net gain for
 everybody.

That would be forcing me to go somewhere I don't want to go, and which doesn't
actually exist, anyway. You seem to be confused again? 


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)

Nick Arnett [EMAIL PROTECTED]


 Ah, when the Wonder Years give way to the Sociopath Years.

And then to the senile years, apparently. No doubt you will want
the young ones to spend lots of money to take care of you, too.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

On Wed, Sep 24, 2008 at 6:56 AM, John Williams
[EMAIL PROTECTED]wrote:

 Nick Arnett [EMAIL PROTECTED]


  Why aren't you living on some island somewhere, where nobody will impose
  their ideals on you? It seems like such a move would be a net gain for
  everybody.

 That would be forcing me to go somewhere I don't want to go, and which
 doesn't
 actually exist, anyway. You seem to be confused again?


Wow... just asking the question forces you to go?

This is perversely entertaining.

Nick
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)


On 24/09/2008, at 11:55 PM, Nick Arnett wrote:

 On Wed, Sep 24, 2008 at 6:45 AM, John Williams
 [EMAIL PROTECTED]wrote:


 If I do not want to do something that someone
 forces me to do, that is by definition NOT my prerogative.


 Show of hands -- who else found themselves instantly thinking  
 teenager
 when they read this sentence?

I've been wavering between teen and retiree, depending. Both groups  
contain intransigents who know-it-all. But being an arse is age- 
independent really, so who knows.



 The phrase, You can't make me! came to mind instantly.  Because I  
 don't
 WANT to wasn't far behind.

Yah. Anyway. I can't be bothered with trolls, so I've solved the  
problem.

Charlie.
Self-Help Maru
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Nick Arnett [EMAIL PROTECTED]


 Wow... just asking the question forces you to go?

Ummm, no? Try again.

 This is perversely entertaining.

So I guess I have something to look forward to when I get old
and senile?


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)

From: Charlie Bell [EMAIL PROTECTED]

 Yah. Anyway. I can't be bothered with trolls, so I've solved the  

 problem.

Which, of course, was his prerogative. If only I could so easily avoid
having my money taken by people who think they can spend it better.
Alas, there is no killfile for wasteful government spending.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

On Sep 24, 2008, at 6:41 AM, Charlie Bell wrote:

 Killfile Plus One Maru.

Not here, for two reasons:

1) It doesn't work -- I can block one person, but I can't block all  
the swirling eddies of replies and counter-replies that the obstacle  
generates.

2) This, too, shall pass -- Either the tantrum will play itself out or  
others will learn not to try to engage someone whose only interest  
seems to be contradiction and sniping.

Been There, Done That Maru

Dave

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Richard Baker

Dave said:

 2) This, too, shall pass -- Either the tantrum will play itself out or
 others will learn not to try to engage someone whose only interest
 seems to be contradiction and sniping.

I don't suppose he cares one way or the other what I think as long as  
I don't force him to agree with me, but I think that John is not just  
contradicting people but arguing from a coherent position: many  
problems are too complex for even intelligent planners to solve  
centrally, their attempts to do so are often counterproductive,  
assembling a large number of levers of coercive power in the hands of  
governments amplifies the degree to which those planners can make far- 
reaching mistakes compared to the possibilities for planners in  
corporations, and governments tend to make those large and expensive  
mistakes with other people's resources at little cost to themselves

Rich
GCU Putting Words in His Mouth
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Julia Thompson



On Wed, 24 Sep 2008, Dave Land wrote:

 On Sep 24, 2008, at 6:41 AM, Charlie Bell wrote:

 Killfile Plus One Maru.

 Not here, for two reasons:

 1) It doesn't work -- I can block one person, but I can't block all
 the swirling eddies of replies and counter-replies that the obstacle
 generates.

 2) This, too, shall pass -- Either the tantrum will play itself out or
 others will learn not to try to engage someone whose only interest
 seems to be contradiction and sniping.

Gee, and here I was thinking it was just that as an admin, it was in 
everyone's best interests for you to actually read everything.

Julia

who doesn't use killfiles at all, but may skip the Nth post in a day by 
certain people on *other* lists
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Gautam Mukunda

- Original Message 
From: Charlie Bell [EMAIL PROTECTED]
To: Killer Bs (David Brin et al)  Discussion brin-l@mccmedia.com
Sent: Wednesday, September 24, 2008 8:19:12 AM
Subject: Re: Meltdown

On 24/09/2008, at 2:34 PM, Gautam Mukunda wrote:

 Me:
 Ah yes, because I'm definitely running for office right now.  Come  
 on, this is just tiresome.  At least try to have a simple discussion  
 without accusing everyone of bad faith.

Yeah. Discussions can get heated, and occasionally blow up, with  
people you've been talking to for a long time, but to be consistently  
rude to people you don't know at all is a different thing entirely.

Hello Gautam. Long Time No See. I seem to recall we were having a bit  
of an argument last time we spoke. Ah well, that was 5 years ago. Peace.

Charlie.
Older, More Travelled And More Tolerant Maru

Hi Charlie.  Yeah, I'm sorry about that.  I've thought about it occasionally in 
the intervening period.  I guess I'm older too.

I'm willing to bet I'm no longer the youngest list member though :-)

GM

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Richard Baker [EMAIL PROTECTED]

 I don't suppose he cares one way or the other what I think as long as  
 I don't force him to agree with me, 

On the contrary, I am interested in what you think (and others here
as well). But being interested does not mean that I will refrain from
sarcastic remarks, which I apparently engage in when I feel that others
are imposing on me. No doubt it is a character flaw, but fortunately,
a relatively harmless one.

 many  
 problems are too complex for even intelligent planners to solve  
 centrally, their attempts to do so are often counterproductive,  
 assembling a large number of levers of coercive power in the hands of  
 governments amplifies the degree to which those planners can make far- 
 reaching mistakes compared to the possibilities for planners in  
 corporations, and governments tend to make those large and expensive  
 mistakes with other people's resources at little cost to themselves

Feel free to put words in my mouth anytime! That is more clear and concise
an explanation than I could have written, and the lever imagery is a nice
touch!


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown

2008-09-24 Thread Dan M

 -Original Message-
 From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
 Behalf Of John Williams
 Sent: Tuesday, September 23, 2008 5:53 PM
 To: Killer Bs (David Brin et al) Discussion
 Subject: Re: Meltdown

 Dan M [EMAIL PROTECTED]

  That's
  what the interest rate measures...the willingness of folks to buy GE
 notes.

 Gee, really? It couldn't possibly be just a little more complicated than
 that?

   A rational
  market wouldn't change GE's interest rate that quickly

 Again, really? Either you are stating a tautology, or you have no way of
 knowing whether the change was reasonable.

OK, let me get this straight.  GE is not a financial company, it doesn't
hold toxic debt.  It is a company that has a lot of physical assets, has
held the highest bond rating, has been very profitable, etc. And it is
selling _one day_ loans.

Now, if you look at 

http://www.federalreserve.gov/pubs/supplement/2008/08/table1_35.htm

you will note that for years the best commercial 1 month paper and the
federal funds have been very close.  Now, all of a sudden, the fed short
term funds dip significantly, and commercial one day paper for companies
that do not have any evidence of being tied up with the sub-prime mortgage
problem are finding that they have to pay a lot more for overnight money.
The article I quoted showed that it wasn't just GE.  I picked them because
they are among the least likely to be caught up with bad debts.

Your answer, as I take it, is the meltdown of big financial corporations and
the flight from corporate bonds and the fact that commercial paper from
corporations far removed from this meltdown became much harder to sell a
week ago, is probably a coincidencethe world is complex you know.  

Well, chemistry is complex QED.  We can barely calculate the simplest
bonding with our fastest computers.  Does this mean we must ignore data?

The question at hand is not whether Paulson's plan is the one we should
execute.  I think that the government needs to get an equity stake in
exchange for its.  The question we were debating was whether we saw a panic
starting.  

We've seen panics and know some of their warning signs.  My argument is that
a gigantic jump in the spread between Fed. Funds and the best commercial
paper of companies that are, to the best of anyone's knowledge, totally
divorced from the source of the problem is one of these signs.  My
understanding of your argument is the world is complex and this could be a
coincidence.

Well, it could.  But, you know, the sun rising in the East all these days
could also just be a coincidence. :-)

Dan M. 

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]


 OK, let me get this straight.  GE is not a financial company,

Actually, GE is a financial company.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)

On Sep 24, 2008, at 7:09 AM, John Williams wrote:

 From: Charlie Bell [EMAIL PROTECTED]

 Yah. Anyway. I can't be bothered with trolls, so I've solved the  
 problem.

Actually, Charlie, you haven't, entirely. The _list_, and not just  
your inbox is infected with this particularly pernicious virus.

 Which, of course, was his prerogative. If only I could so easily avoid
 having my money taken by people who think they can spend it better.
 Alas, there is no killfile for wasteful government spending.

Sure there is!

Since you're such a tough guy, show the government who's boss. You  
want to make a statement? Make a statement: stop paying your taxes.  
When they come for you, tell them how much you hate having your money  
taken by people who think they can spend it better.

Or, if you're so smart, run for office. Change the country.

You're certainly not going to accomplish anything of value by coming  
in here and kicking everybody in the teeth.

Dave

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]


 Your answer, as I take it, is the meltdown of big financial corporations and
 the flight from corporate bonds and the fact that commercial paper from
 corporations far removed from this meltdown became much harder to sell a
 week ago, is probably a coincidencethe world is complex you know.  

No.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)



Dave Land [EMAIL PROTECTED]

 You're certainly not going to accomplish anything of value by coming  
 in here and kicking everybody in the teeth.

No, not everyone.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

On Sep 24, 2008, at 7:05 AM, John Williams wrote:

 Nick Arnett [EMAIL PROTECTED]


 Wow... just asking the question forces you to go?

 Ummm, no? Try again.

 This is perversely entertaining.

 So I guess I have something to look forward to when I get old
 and senile?

We don't condone ad hominem attacks on this list. This is the second  
time you've resorted to it.

Stop it. Now.

Yes: I told you what to do, and we ALL know how much you hate that.

There is, of course, a remedy: find another list to dog.

Dave

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

On Sep 24, 2008, at 7:50 AM, Julia Thompson wrote:

 On Wed, 24 Sep 2008, Dave Land wrote:

 On Sep 24, 2008, at 6:41 AM, Charlie Bell wrote:

 Killfile Plus One Maru.

 Not here, for two reasons:

 1) It doesn't work -- I can block one person, but I can't block all
 the swirling eddies of replies and counter-replies that the obstacle
 generates.

 2) This, too, shall pass -- Either the tantrum will play itself out  
 or
 others will learn not to try to engage someone whose only interest
 seems to be contradiction and sniping.

 Gee, and here I was thinking it was just that as an admin, it was in
 everyone's best interests for you to actually read everything.

Ahem. Fine, then. I do not have, nor would I ever use a killfile.

I do read _nearly_ every message on this list.

Since you remind me that I am an admin, allow me to state that I am  
coming very near to asking the other admins to place a certain member  
on moderation.

Dave

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dave Land [EMAIL PROTECTED]


 Stop it. Now.

No.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)

On Sep 24, 2008, at 10:16 AM, John Williams wrote:

 Dave Land [EMAIL PROTECTED]

 You're certainly not going to accomplish anything of value by coming
 in here and kicking everybody in the teeth.

 No, not everyone.

Agreed: There are yet people who have not disagreed with you, at least  
not on-list.

Dave


___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Wahh! (was Re: Meltdown)

Dave Land [EMAIL PROTECTED]


 Agreed: There are yet people who have not disagreed with you, at least  
 not on-list.

You are welcome to disagree with me. I have zero problem with that.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Appropriate metaphors (was Re: Meltdown)

On Wed, Sep 24, 2008 at 10:16 AM, Dave Land [EMAIL PROTECTED] wrote:


 There is, of course, a remedy: find another list to dog.


My dogs are offended by this.

Let's stick to offending trolls.

Nick
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread David Hobby

Dave Land wrote:
 On Sep 24, 2008, at 7:05 AM, John Williams wrote:
...
 We don't condone ad hominem attacks on this list. This is the second  
 time you've resorted to it.
 
 Stop it. Now.
 
 Yes: I told you what to do, and we ALL know how much you hate that.
 
 There is, of course, a remedy: find another list to dog.
...

John--

Hi.  I agree with many others here.
Please stop the insults and personal attacks.
You seem to have interesting things to say,
and to be capable of minding your manners.
So I conclude you're doing it on purpose.

This isn't a threat, but a warning--you'll
wind up being ignored.  I'm already at the
stage where I delete many of your posts
unread.

---David

So what is the proper function of government?
For example, if my neighbor to the south wants to build
a wall that blocks my sunshine, should zoning laws be able
to stop her?
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

David Hobby [EMAIL PROTECTED]

  I'm already at the
 stage where I delete many of your posts
 unread.

I hope you continue to do so, if that is what you think
is best. I will continue to write as I think best.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

David Hobby [EMAIL PROTECTED]

  I'm already at the
 stage where I delete many of your posts
 unread.

I hope you continue to do so, if that is what you think
is best. I will continue to write as I think best.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Rceeberger


On 9/24/2008 12:17:53 PM, Dave Land ([EMAIL PROTECTED]) wrote:
 On Sep 24, 2008, at 7:50 AM, Julia Thompson wrote:
 
  On Wed, 24 Sep 2008, Dave Land wrote:
 
  On Sep 24, 2008, at 6:41 AM, Charlie Bell wrote:
 
  Killfile Plus One Maru.
 
  Not here, for two reasons:
 
  1) It doesn't work -- I can block one person, but I can't block all
  the swirling eddies of replies and counter-replies that the obstacle
  generates.
 
  2) This, too, shall pass -- Either the tantrum will play itself out
  or
  others will learn not to try to engage someone whose only interest
  seems to be contradiction and sniping.
 
  Gee, and here I was thinking it was just that as an admin, it was in
  everyone's best interests for you to actually read everything.
 
 Ahem. Fine, then. I do not have, nor would I ever use a killfile.
 
 I do read _nearly_ every message on this list.
 
 Since you remind me that I am an admin, allow me to state that I am
 coming very near to asking the other admins to place a certain member
 on moderation.
 

But but but...I've hardly said anything in the last few months.


xponent
Just For Grins Maru
rob
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Rceeberger


On 9/24/2008 1:36:39 PM, John Williams ([EMAIL PROTECTED]) wrote:
 David Hobby [EMAIL PROTECTED]
 
   I'm already at the
  stage where I delete many of your posts
  unread.
 
 I hope you continue to do so, if that is what you think
 is best. I will continue to write as I think best.
 

You are Eric Reuter and I demand my 10 bucks.


xponent
Students Of History Maru
rob
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread David Hobby

Rceeberger wrote:
 On 9/24/2008 1:36:39 PM, John Williams ([EMAIL PROTECTED]) wrote:
 David Hobby [EMAIL PROTECTED]

  I'm already at the
 stage where I delete many of your posts
 unread.
 I hope you continue to do so, if that is what you think
 is best. I will continue to write as I think best.
...
 You are Eric Reuter and I demand my 10 bucks.
 
 xponent

Rob--

Uh, he doesn't sound like Eric?  There must be
a reference here that I'm not getting...

---David

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Rceeberger [EMAIL PROTECTED]


 You are Eric Reuter and I demand my 10 bucks.

Huh?


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread xponentrob

- Original Message - 
From: David Hobby [EMAIL PROTECTED]
To: Killer Bs (David Brin et al) Discussion brin-l@mccmedia.com
Sent: Wednesday, September 24, 2008 7:15 PM
Subject: Re: Meltdown

 Rceeberger wrote:
 On 9/24/2008 1:36:39 PM, John Williams ([EMAIL PROTECTED]) 
 wrote:
 David Hobby [EMAIL PROTECTED]

  I'm already at the
 stage where I delete many of your posts
 unread.
 I hope you continue to do so, if that is what you think
 is best. I will continue to write as I think best.
 ...
 You are Eric Reuter and I demand my 10 bucks.

 xponent

 Rob--

 Uh, he doesn't sound like Eric?  There must be
 a reference here that I'm not getting...

Of course not, he just behaves much like Eric did in the period just before 
he intersected with the big boot.
I thought it an entertaining jape.

xponent
And The Dutch Incident Maru
rob 

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread xponentrob

- Original Message - 
From: John Williams [EMAIL PROTECTED]
To: Killer Bs (David Brin et al) Discussion brin-l@mccmedia.com
Sent: Wednesday, September 24, 2008 6:53 PM
Subject: Re: Meltdown

 Rceeberger [EMAIL PROTECTED]

 You are Eric Reuter and I demand my 10 bucks.

 Huh?

There's lots about this list and the people on it you know nothing about.
A lot of history here in over a decade.

xponent
Acausal Reference Maru
rob
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

xponentrob [EMAIL PROTECTED]


 There's lots about this list and the people on it you know nothing about.
 A lot of history here in over a decade.

So I don't owe you 10 bucks?


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Doug Pensinger

Just my opinion, but while I find J.W.s sarcasm a bit sophomoric, nothing
that he's said or done comes close to what I would consider cause for
moderation.  I wish he'd tone it down a bit and address the argument rather
than the individual making it; I think he's got an interesting and informed
point of view and wouldn't mind hearing more from him.

All the talk about kill files, ad homonyms and moderation does nothing but
fan the flames.  Instead of talking about ignoring posts you find offensive,
just do it.

Doug
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-24 Thread Doug Pensinger

rob wrote:



 You are Eric Reuter and I demand my 10 bucks.


I wondered when that comparison was going to surface...

I actually miss Eric, and JDG and other contrarians.

Doug
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Appropriate metaphors (was Re: Meltdown)

On Sep 24, 2008, at 11:03 AM, Nick Arnett wrote:

 On Wed, Sep 24, 2008 at 10:16 AM, Dave Land [EMAIL PROTECTED] wrote:


 There is, of course, a remedy: find another list to dog.

 My dogs are offended by this.

 Let's stick to offending trolls.

My trolls are offended by this.

Are you trying to tell me what to do? Because if you are trying
to tell me what to do, I won't do it, and you can't make me.

Neener, Neener Maru

Dave


___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Charlie Bell


On 23/09/2008, at 1:27 PM, Julia Thompson wrote:
 The general SEC requirement had been to limit it to 12X.  An  
 exception was
 made in 2004 for 5 companies - Goldman, Merrill, Lehman, Bear  
 Stearns, and
 Morgan Stanley.

None of which exist today in the form they did five years ago. D'oh.

Charlie.
___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown





  If I read
  correctly, and I multi-sourced this, there was a short period that
 companies
  couldn't sell short term paper; in other words companies with big assets
  couldn't get loans for a day or two that were a fraction of their
 assets.
 
 Not all companies...mainly the companies that had questionable balance
 sheets.

I don't have direct access to the WSJ on-line because I'm cheap.  But,
here's a site that quotes themnote the companies involved:

http://weblog.blogads.com/1565/credit-crunch-from-wall-street-to-main-street

quote
In the giant market for commercial paper, a reliable source of low-cost,
short-term funds in normal times, the cost of borrowing shot up Wednesday.
Traders said most lenders were unwilling to extend credit beyond a single
day.Sears Holdings said it paid 3.6% Wednesday, about three-tenths of a
point more than a day before, to sell $3 million in 30-day commercial paper.
Ford Motor Credit Co., the finance arm of Ford Motor Co., paid 7.5% for
overnight borrowings, according to one trader, who said the rate would
typically be several percentage points lower. General Electric Co., rated
one of the safest borrowers, paid 3.5% for overnight borrowing, about 1.5
percentage points more than would have been normal, this trader said.
end quote


Given this, a panic started Thursdaythat's when the Fed's announced the
bailout. 

Now, you can argue that Sears and Ford are questionable, but GE?  The point
is that the liquidity of the market was drying up.  And, at

http://meganmcardle.theatlantic.com/

we see some of the consequences of a loss of liquidity,


a short quote on this:

quote
Or take capital requirements.  I'm in favor of higher ones.  But a high
capital requirement, perversely, hurts companies in a downturn.  This sounds
bizarre.  But say you have a broker-dealer that is only allowed to leverage
itself 5 to 1--a very, very safe capital ratio.  (12-to-1 is, IIRC, about
standard).  

Now say that the bank suffers a major setback, like a bunch of totally
illiquid mortgage backed security whose nominal value has dropped to near
zero.  Having a lot of capital protects the creditors in bankruptcy, who now
get 20 cents on the dollar instead of six.  But the firm still goes into
bankruptcy, because they can't dip into their other capital to make good the
debts.  Indeed, the higher their capital requirements, the more they have to
deleverage in a crisis, because they need to unwind more positions to shore
up the bad ones they can't sell.  That deleveraging dries up capital in
other markets, decreases the value of whatever securities they're dumping,
and thus threatens other institutions.
end quote



Or, just take how I'm affected.  If Fanny and Freddie went under, the place
where roughly half of the mortgages end up is gone.  So, it's much harder to
find a mortgage, which drives prices down, which means more houses are under
water and now bad debt, etc.

The natural tendency of business (which we saw as the short term liquidity
started to dry up on Wednesday) is to hunker down during bad times.  That's
why even GE had trouble selling short term debt on Wednesday. 

Finally, one part of the first quote struck me as critical:

 Traders said most lenders were unwilling to extend credit beyond a single
day.  

That looks like the start of a panic to me.  I'm not sure what you'd call
it.


Dan M.

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]

 
 Now, you can argue that Sears and Ford are questionable, but GE?  The point
 is that the liquidity of the market was drying up.  And, at

No, the liquidity of the market was not drying up. Interest rates went up. As
they should. As they should have long ago if there weren't so much
government interference in the market.

 Or, just take how I'm affected.  If Fanny and Freddie went under, the place
 where roughly half of the mortgages end up is gone.  So, it's much harder to
 find a mortgage, which drives prices down, which means more houses are under
 water and now bad debt, etc.

Home prices should be driven down. FNM and FRE, with their wrong-headed 
government charters and guarantees, inflated housing prices for years. They 
still
have a ways to go down before they reach something closer to long-term
equilibrium.

 The natural tendency of business (which we saw as the short term liquidity
 started to dry up on Wednesday) is to hunker down during bad times.  That's
 why even GE had trouble selling short term debt on Wednesday. 

Yes, when insolvent companies are kept in limbo by silly government 
interference,
the market does not behave efficiently. Big surprise, that.

  Traders said most lenders were unwilling to extend credit beyond a single
 day.  
 
 That looks like the start of a panic to me.  I'm not sure what you'd call
 it.

A useless generalization. Naturally, anyone who cannot borrow because 
their balance sheet is full of an unknown amount of toxic waste is going to
complain and make things sound dire if it will help them to feed at the
taxpayer trough.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown

 -Original Message-
 From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
 Behalf Of John Williams
 Sent: Tuesday, September 23, 2008 2:58 PM
 To: Killer Bs (David Brin et al) Discussion
 Subject: Re: Meltdown

 Dan M [EMAIL PROTECTED]

  The natural tendency of business (which we saw as the short term
 liquidity
  started to dry up on Wednesday) is to hunker down during bad times.
 That's
  why even GE had trouble selling short term debt on Wednesday.

 Yes, when insolvent companies are kept in limbo by silly government
 interference, the market does not behave efficiently. Big surprise, that.

The problem was that no-one (including the board of directors of AIG knew
that AIG was insolvent until the day the government intervened.  Bubbles and
panics are part of the nature of the market.  You can repeat your mantra of
free markets are perfect until you are blue in the face, but AIG was the
biggest insurance company in the world and no one had any idea of their
problems.

At that point, _everything_ becomes questionable. GE having to pay nearly
double for a 1 day note is an example of this.  The viewpoint you are
expressing here makes Milton Friedman look like Karl Marx.

The government did not intervene in the market after the panic of 1929.  It
did after the panic of 1987.  The latter turned out fine, the former was the
start of the Great Depression.

I'm sure you'd call it coincidence...or other factors in play, but panics
and bubbles are inherent part of any market.  Its irrational to think all
market players act rationally.

It may be true, like the early economist said the market will work in the
long run.  But as Keynes said in the long run, we're all dead.

Dan M. 

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]


 The problem was that no-one (including the board of directors of AIG knew
 that AIG was insolvent until the day the government intervened. 

LOL! Do you believe in the tooth fairy, too?

 At that point, _everything_ becomes questionable. GE having to pay nearly
 double for a 1 day note is an example of this.

Oh, the horrors!

 The viewpoint you are
 expressing here makes Milton Friedman look like Karl Marx.

Hmmm, if you actually knew what you were talking about, I might take that
as a compliment.

 The government did not intervene in the market after the panic of 1929.  It
 did after the panic of 1987.  The latter turned out fine, the former was the
 start of the Great Depression.

The Fed caused much of the Great Depression by not increasing the money
supply during a banking panic. The stock market crash of 1987 was not
a banking panic, it was volatility due to wrong-headed program trading and
portfolio insurance, the propagators of which lost their shirts and the silly
techniques largely disappeared from the market.

 I'm sure you'd call it coincidence...or other factors in play, but panics
 and bubbles are inherent part of any market.  Its irrational to think all
 market players act rationally.

It is funny that you would think I would disagree with this. It is also 
irrational
to think that a bunch of politicians and people like you know how to fix the
system by taking taxpayer money and using it to enrich a bunch of bozos
who made foolish loans at ridiculously low interest rates because the government
encouraged the process.

 It may be true, like the early economist said the market will work in the
 long run.  But as Keynes said in the long run, we're all dead.

Just a thought, but you might inspire a bit more confidence in your marks
if you spent a little time learning about how markets and regulation actually
work and a little less repeating cliched-jokes that were corny when my
grandfather was young.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Charlie Bell


On 24/09/2008, at 6:40 AM, John Williams wrote:

 Dan M [EMAIL PROTECTED]


 The problem was that no-one (including the board of directors of  
 AIG knew
 that AIG was insolvent until the day the government intervened.

 LOL! Do you believe in the tooth fairy, too?

Instead of mocking, why don't you try EXPLAINING. 'cause all I see you  
do is say Ha ha, how could you be so stupid or words to that effect,  
without explaining why. Again, this is a DISCUSSION LIST, where we  
discuss many things. There are many points of view and opinions, and  
if yours are different, try arguing the point.

Right now, all you're doing is being rude.

Charlie.


___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Charlie Bell


On 24/09/2008, at 6:21 AM, Dan M wrote:

 The problem was that no-one (including the board of directors of AIG  
 knew
 that AIG was insolvent until the day the government intervened.

That sounds implausible. Someone knew. It's what level they were at  
and what they choose to do with the knowledge that's important.

Charlie.
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Charlie Bell [EMAIL PROTECTED]


 Instead of mocking, why don't you try EXPLAINING. 

Instead of telling other people what you think they should do,
why don't YOU explain whatever you believe needs explaining?


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown

 -Original Message-
 From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
 Behalf Of John Williams
 Sent: Tuesday, September 23, 2008 3:40 PM
 To: Killer Bs (David Brin et al) Discussion
 Subject: Re: Meltdown

 Dan M [EMAIL PROTECTED]

  The problem was that no-one (including the board of directors of AIG
 knew
  that AIG was insolvent until the day the government intervened.

 LOL! Do you believe in the tooth fairy, too?

  At that point, _everything_ becomes questionable. GE having to pay
 nearly
  double for a 1 day note is an example of this.

 Oh, the horrors!

No, rather

Oh, the irrationality.  Why would people be reluctant to by one day notes
from GE.  Does any sane person think GE will go belly up _tomorrow?_  That's
what the interest rate measures...the willingness of folks to buy GE notes.
All of a sudden, buyers dried up.  That's a measure of the panic. A rational
market wouldn't change GE's interest rate that quickly because companies
with idiots as managers (e.g. AIG) went belly up and had to sell most of
their equity to the government at a discount or go bankrupt.

BTW, in saying this, I'm arguing that there is a problem that is not
inherently related to the government, but originated with market players who
build bubbles and panic, even though folks like Greenspan said and says both
are foolishwhich they are. 

In a sense, the problem is not that there is a housing bubble in some areas
of the country.  It's the timing of the market response, and the irrational
extension of it.  Let me give an example.  I live in a neighborhood near a
city that has been growing like gangbusters: Houston.  Our housing prices
have always been low compared to the US.  In one of the prime suburbs, a
fancy house goes for $100 sq/foot.  My house, including upgrades to its
basic value (e.g. wood floors and granite counter tops) will probably sell
for about 60% more than I bought it for 16 years ago.  That's 3% per year,
and I've upgraded the value of the house.  That's not a bubble, that's
barely keeping up with inflation.  And we're in one of the top 10 growing
counties in the nation. And our prices are very low, even compared with
cities like Milwaukee.

Nonetheless, our market is affected, even though our potential buyers are
not the sub-prime folks.  Banks are nervous about loans to well qualified
buyers.  

This is a personal example of the irrationality of the market that I'm
talking about.  

Out of curiosity, have you any experience or any friends who are connected
to investment banking, have contact with CEOs of large corporations, etc.?
You know my background, what's yours?

Dan M. 

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]


 That's
 what the interest rate measures...the willingness of folks to buy GE notes.

Gee, really? It couldn't possibly be just a little more complicated than that?

  A rational
 market wouldn't change GE's interest rate that quickly

Again, really? Either you are stating a tautology, or you have no way of 
knowing whether the change was reasonable.

 BTW, in saying this, I'm arguing that there is a problem that is not
 inherently related to the government, but originated with market players who
 build bubbles and panic,

How profound. Maybe you should write it up as a paper and submit it to
an economics journal. Surely you are the first to realize this!

 In a sense, the problem is not that there is a housing bubble in some areas
 of the country.  It's the timing of the market response, and the irrational
 extension of it.

Sure, the government was largely responsible for creating a huge home price
bubble and encouraging a bunch of bad loans to con-artists and people who
had no business getting the loans, but that is not the problem. The problem
is that the market finally began adjusting the price towards fundamental 
values. Right. Good point.

 This is a personal example of the irrationality of the market that I'm
 talking about.  

Right, blame the market for adjusting values to where they should be, not
the government for being largely responsible for putting values out of whack.
That's the ticket.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Euan Ritchie


 The problem was that no-one (including the board of directors of AIG knew
 that AIG was insolvent until the day the government intervened.  Bubbles and
 panics are part of the nature of the market.  You can repeat your mantra of
 free markets are perfect until you are blue in the face, but AIG was the
 biggest insurance company in the world and no one had any idea of their
 problems.

It amazes me (was this AIG or Fanny and Freddie, I forget) that they
went to ask for some 30 Billion but on a couple of days investigation it
turned out to be more like 70 Billion was needed to meet their obligations.

The management of the relevant company literally did not know the state
of their cash flow.

And they have the temerity to continue to claim they know something
about economics.

Not knowing your businesses demands on cash flow and impending ability
to provide for its demands is impressive incompetence, except when its
more accurately attributed to the carelessness of over-reaching greed.
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

 Euan Ritchie [EMAIL PROTECTED]

 
 It amazes me (was this AIG or Fanny and Freddie, I forget) that they
 went to ask for some 30 Billion but on a couple of days investigation it
 turned out to be more like 70 Billion was needed to meet their obligations.
 
 The management of the relevant company literally did not know the state
 of their cash flow.

I think it more likely that they did not know at first how much money they
would be able to get away with.

But either way, AIG did not deserve to continue in business. The government's
behavior is shameful. The moral hazard being created is huge. Of course, 
politicians only care about looking good for a few years, and if they can do
that by pushing the problems out into the future (even if it makes the problems
greater), then they will do that every time.

With a free market made up of a number of diverse players, when people make
the inevitable stupid or greedy mistakes, they suffer the consequences, 
disappear,
and the resulting system is slightly better than it was before. Businesses fail,
some assets lose value, but things go on.

But when the government gets involved, the incentives become perverse and the
mistakes tend to be coordinated. Also, the government has proven that it will
bail out many of the players who took excessive risks. So the instabilities grow
and grow until they become so large and widespread that the politicians cry that
the market is in crisis and must be rescued! Which will in turn allow the 
instabilities
to build to even higher levels

It boggles my mind that some people think politicians are capable of making 
decisions
about billions or trillions of dollars of other people's money that will turn 
out well, 
when businesspeople who make decisions about much less money (and at higher 
potential cost to themselves) frequently make  the wrong decisions. The bigger 
the 
dollar value of the decision, the bigger the cost of the inevitable mistakes.
Better to keep the decisions smaller and in the hands of those who stand to 
gain or
lose personally from their decisions.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

RE: Meltdown

 -Original Message-
 From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On
 Behalf Of Charlie Bell
 Sent: Tuesday, September 23, 2008 5:28 PM
 To: Killer Bs (David Brin et al) Discussion
 Subject: Re: Meltdown

 On 24/09/2008, at 6:21 AM, Dan M wrote:

  The problem was that no-one (including the board of directors of AIG
  knew
  that AIG was insolvent until the day the government intervened.

 That sounds implausible. Someone knew. It's what level they were at
 and what they choose to do with the knowledge that's important.

Well, I tried for half an hour to get a link to the article that detailed
the AIG Board meeting that got the take it or leave it proposal from the
US government to swap 80% of its equity for about 80 billion. I'm sorry
about that.  But, my understanding is that the bundling has become so
layered and convoluted that folks really didn't understand what was
happening in real time.  With the amount of leverage that exists, a
perfectly reasonable looking position can fall apart quickly.  

Most financial houses rely on analytical models that ignore the possibility
of Black Swans.  My article stated that at 5 PM the board had a plan that
would work, at 6 PM a division called saying they had done their latest
analysis and they needed 20 billion more, and everything fell apart.  I've
worked for companies that have been messed up enough so that no one knew
what the real balance sheet was for a while.  I think AIG was that badly
managed.

With margin requirements and what not, and AIG's foolish exposure to
sub-prime mortgages, a lot can happen in a day.  That's scary, at least to
me.  

When I get back, I'll try to find the article and let you decide if you
think it is possible.  But, I've been chatting with folks who have
connections to investment banking, and they've told me that this is the most
likely scenario.

Dan M. 

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Dan M [EMAIL PROTECTED]

 But, my understanding is that the bundling has become so
 layered and convoluted that folks really didn't understand what was
 happening in real time.  With the amount of leverage that exists, a
 perfectly reasonable looking position can fall apart quickly.  

Yes, and if that is the case -- if the leverage is so high that a one-hour
or one-day fluctuation can bankrupt you -- then you are insolvent by any
practical measure. Whether some line in a model wanders up and down
through the zero line over a period of hours or days does not make a
practical difference. (Look, we're solvent! Wait, now we're insolvent
no, look, it's coming up, just a little more...)

It is nearly certain that many people at AIG knew that they had no margin
of safety from insolvency, and that random fluctuations over the next hours
or days would bankrupt them if they did not get acquired or bailed out.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown



 Gautam Mukunda
[EMAIL PROTECTED]
Freedom is not free
http://www.mukunda.blogspot.com



- Original Message 
From: John Williams [EMAIL PROTECTED]
To: Killer Bs (David Brin et al)  Discussion brin-l@mccmedia.com
Sent: Tuesday, September 23, 2008 6:52:33 PM
Subject: Re: Meltdown

Dan M [EMAIL PROTECTED]


 That's
 what the interest rate measures...the willingness of folks to buy GE notes.

Gee, really? It couldn't possibly be just a little more complicated than that?

Me:
Well then, what do you think it measures?  For a first approximation analysis, 
that's a pretty good assessment of what it measures.  There are more factors, 
but in the short-term money market, not that many, really.  These are usually 
very short-term unsecured notes (1 day, I believe, in this case).  The only way 
to lose money is if the company defaults _tomorrow_.  Most companies, btw, rely 
on this sort of very short-term financing, and every company relies on it 
indirectly, because even if you don't (and the odds are really, really high 
that your company does) your customers surely do.

  A rational
 market wouldn't change GE's interest rate that quickly

Again, really? Either you are stating a tautology, or you have no way of 
knowing whether the change was reasonable.

Me:
Well, he can't state it to a certainty, but I think you need to provide an 
alternative explanation here.  We had enormous market events followed 
immediately by a pretty-much unprecedented increase in money market interest 
rates, paired (presumably not coincidentally) by a massive flight of investors 
from the money markets - massive defined as hundreds of billions of dollars.  
This flight was particularly odd given that _no person_ lost money in such 
investments.  Fidelity, which would up its fund, covered its responsibilities 
and made up the money the fund had lost out of internal funds (and good for 
them too!).  While such a massive movement of capital might be rational, it's 
stretching the Efficient Markets hypothesis _way_ past its breaking point to 
argue that this is so, and in particular ignores everything we know about 
behavioral finance.  It also ignores everything any practitioner could tell you.

 BTW, in saying this, I'm arguing that there is a problem that is not
 inherently related to the government, but originated with market players who
 build bubbles and panic,

How profound. Maybe you should write it up as a paper and submit it to
an economics journal. Surely you are the first to realize this!

Me:
OK, this is just rude.  Are you a professional economist?

 In a sense, the problem is not that there is a housing bubble in some areas
 of the country.  It's the timing of the market response, and the irrational
 extension of it.

Sure, the government was largely responsible for creating a huge home price
bubble and encouraging a bunch of bad loans to con-artists and people who
had no business getting the loans, but that is not the problem. The problem
is that the market finally began adjusting the price towards fundamental 
values. Right. Good point.

Me:
I would say this is an opinion without a lot of evidentiary support.  The 
government was not largely responsible for the run-up in home prices.  It 
certainly didn't help - it was at least partly responsible.  But there are many 
other actors involved.  A conservative should understand the limits of the 
power of the government!  Even if this were the case, the actions of the 
government were known and transparent.  They do not - and cannot - explain the 
decision by AIG to take on $42BB in unhedged risk on credit-default swaps 
structured based on subprime mortgages.  That's a purely private failure.  The 
government made many mistakes in this case, but it's simply impossible to argue 
that it is solely, or even primarily, responsible for the decision by major 
financial institutions to (functionally) go massively long on sub-prime 
mortgages.  The obvious support for that argument, btw, is that at least two 
major players in the financial markets -
 JPMorganChase (run by Jamie Dimon) and Goldman Sachs (run by Lloyd Blankfein) 
didn't.  If the government were responsible, you'd have to explain why they 
were immune to pressure.  Instead they - brilliantly - handled this potential 
crisis exactly right.  And thank goodness, too, if Dimon hadn't called this one 
I think we'd be completely screwed.  There's a difference between the position 
markets are usually the best way to allocate capital and markets are always 
right.  I can't think of any economist who would agree with the latter 
statement.

 This is a personal example of the irrationality of the market that I'm
 talking about.  

Right, blame the market for adjusting values to where they should be, not
the government for being largely responsible for putting values out of whack.
That's the ticket.

Me:
The government certainly did some things that were very foolish.  But I'm 
curious as to what, exactly, you think

Re: Meltdown

2008-09-23 Thread Ronn! Blankenship

At 03:40 PM Tuesday 9/23/2008, John Williams wrote:

Just a thought, but you might inspire a bit more confidence in your marks
if you spent a little time learning about how markets and regulation actually
work and a little less repeating cliched-jokes that were corny when my
grandfather was young.



Mainly because the latter is MY job.


. . . ronn!  :P


I Am A Trained Professional Smart-Aleck.  Do Not Attempt This On Your 
Own.  Neither The Author Of This Message Nor Any Organization He 
Represents Or Is A Member Of Assumes Any Liability Whatsoever For Any 
Consequences In The Event You Fail To Heed This Warning.





___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]

From: John Williams

Gee, really? It couldn't possibly be just a little more complicated than that?

Me:
There are more factors,

Yes, that is what I was referring to.

but in the short-term money market, not that many, really.

Surely the laws of supply and demand still hold? In other words, if
the supply of money to be lent (in aggregate) goes down, then the
price (interest rate) will have upward pressure.

We had enormous market events followed
immediately by a pretty-much unprecedented increase in money market interest
rates, paired (presumably not coincidentally) by a massive flight of
investors
from the money markets

Several large firms were in imminent danger of failing. I would pull my money
out,
too, if I thought I might lose it or it might get tied up in a bankruptcy.

This flight was particularly odd given that _no person_ lost money in such
investments.

Do you wait until you have been in an accident to put on your seat belt?

I would say this is an opinion without a lot of evidentiary support. The
government was not largely responsible for the run-up in home prices. It
certainly didn't help - it was at least partly responsible.

It seems silly to argue about what constitutes largely. But here are some
important factors:

- 1997 Taxpayer Relief Act created a $500 thousand home capital gain tax
exclusion
http://www.businessweek.com/bwdaily/dnflash/jul2005/nf20050726_4208_db013.htm

- 1999 ''Fannie Mae has expanded home ownership for millions of families in
the 1990's by reducing down payment requirements,'' said Franklin D.
Raines, Fannie Mae's chairman and chief executive officer. ''Yet there
remain too many borrowers whose credit is just a notch below what our
underwriting has required who have been relegated to paying
significantly higher mortgage rates in the so-called subprime market.''
Fannie Mae, the nation's biggest underwriter of home mortgages, does
not lend money directly to consumers. Instead, it purchases loans that
banks make on what is called the secondary market. By expanding the
type of loans that it will buy, Fannie Mae is hoping to spur banks to
make more loans to people with less-than-stellar credit ratings.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260sec=spon=pagewanted=1

- 2001 These privileges do more than just give the GSEs a funding cost
advantage, they also reinforce the perception of a federal guarantee on
GSE debt obligations. In order to avoid a federal bailout like the one
we saw with the savings and loan industry, policymakers may want to
consider a variety of alternatives, including privatization of one or
more of the GSEs.
http://www.mercatus.org/PublicationDetails.aspx?id=21118

- 2002 The new underwriting systems being used by Fannie Mae and Freddie Mac,
which are analogous to the credit-scoring systems used by banks, allow
for higher loan-to-income ratios than in the past to encourage home
buying. That's good for borrowers, but the relaxed ratios could pose
serious problems in the future.
http://www.businessweek.com/magazine/content/02_10/b3773052.htm

- 2008: In order to curry congressional support after their accounting scandals
in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased
financing of affordable housing. They became the largest buyers of
subprime and Alt-A mortgages between 2004 and 2007, with total GSE
exposure eventually exceeding $1 trillion. In doing so, they stimulated
the growth of the subpar mortgage market and substantially magnified
the costs of its collapse.
It is important to understand that, as GSEs, Fannie and Freddie were
viewed in the capital markets as government-backed buyers (a belief
that has now been reduced to fact). Thus they were able to borrow as
much as they wanted for the purpose of buying mortgages and
mortgage-backed securities. Their buying patterns and interests were
followed closely in the markets. If Fannie and Freddie wanted subprime
or Alt-A loans, the mortgage markets would produce them. By late 2004,
Fannie and Freddie very much wanted subprime and Alt-A loans. Their
accounting had just been revealed as fraudulent, and they were under
pressure from Congress to demonstrate that they deserved their
considerable privileges.
http://online.wsj.com/article/SB122212948811465427.html

JPMorganChase (run by Jamie Dimon) and Goldman Sachs (run by Lloyd Blankfein)
didn't. If the government were responsible, you'd have to explain why they
were
immune to pressure. Instead they - brilliantly - handled this potential
crisis
exactly right.

Which would be great if the government didn't interfere. The strong companies
that
made good decisions would survive, and the others would fail. But instead we
have
the government bailing out the bad companies.

For example, we had a series of events occurring. We saw the
mark-to-market value of financial instruments constructed based on subprime

Re: Meltdown

2008-09-23 Thread Kevin B. O'Brien

Dan M wrote:
 The problem was that no-one (including the board of directors of AIG knew
 that AIG was insolvent until the day the government intervened.  Bubbles and
 panics are part of the nature of the market.  You can repeat your mantra of
 free markets are perfect until you are blue in the face, but AIG was the
 biggest insurance company in the world and no one had any idea of their
 problems
There is a management consultant named Bob Lewis who puts out a weekly 
newsletter I get that illustrated the problem very neatly.

Set up a spreadsheet so that cell A1 has the formula =B1 +1. Then go 
to cell B1 and enter the formula =A1+1.

Now, most decent spreadsheet programs will not let you get away with 
this circular reference, but an unregulated market can. Essentially, it 
all came down to a shell game where everyone was insuring each others 
risks, and then convincing themselves that they had laid off the risk 
this way.

Regards,

-- 
Kevin B. O'Brien TANSTAAFL
[EMAIL PROTECTED]  Linux User #333216

Good teaching is one-fourth preparation and three-fourths theater. -- 
Gail Godwin
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Bruce Bostwick

On Sep 23, 2008, at 8:00 PM, Kevin B. O'Brien wrote:

 Dan M wrote:
 The problem was that no-one (including the board of directors of  
 AIG knew
 that AIG was insolvent until the day the government intervened.   
 Bubbles and
 panics are part of the nature of the market.  You can repeat your  
 mantra of
 free markets are perfect until you are blue in the face, but AIG  
 was the
 biggest insurance company in the world and no one had any idea of  
 their
 problems
 There is a management consultant named Bob Lewis who puts out a weekly
 newsletter I get that illustrated the problem very neatly.

 Set up a spreadsheet so that cell A1 has the formula =B1 +1. Then go
 to cell B1 and enter the formula =A1+1.

 Now, most decent spreadsheet programs will not let you get away with
 this circular reference, but an unregulated market can. Essentially,  
 it
 all came down to a shell game where everyone was insuring each others
 risks, and then convincing themselves that they had laid off the risk
 this way.

::facepalm::


___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Kevin B. O'Brien

Dan M wrote:
 Oh, the irrationality.  Why would people be reluctant to by one day notes
 from GE.  Does any sane person think GE will go belly up _tomorrow?_  That's
 what the interest rate measures...the willingness of folks to buy GE notes.
 All of a sudden, buyers dried up.  That's a measure of the panic. A rational
 market wouldn't change GE's interest rate that quickly because companies
 with idiots as managers (e.g. AIG) went belly up and had to sell most of
 their equity to the government at a discount or go bankrupt.
   
I'm going to have to disagree with you here, to some degree. Your 
premise is not as true as you might like. The interest rate may have a 
long-run *tendency* to approximate the credit-worthiness of a borrower, 
but in the short-run it is simply the price that clears the market for 
loanable funds. If there is a sudden sharp reduction in supply, as 
happened here, it will result in a sharp increase in the interest rate.

Now, you might say that the sharp reduction in supply is irrational, but 
I don't think that is the case. As you initially postulated, the 
interest rate for any particular loan is a function of the risk of that 
loan, and we have had a revelation in recent days that evaluation and 
pricing of risk was seriously wrong throughout much of Wall St.

Regards,

-- 
Kevin B. O'Brien TANSTAAFL
[EMAIL PROTECTED]  Linux User #333216

The theory of quantum electrodynamics describes nature as absurd from 
the point of view of common sense. And it agrees fully with experiment.  
So I hope you can accept nature as she is--absurd. --Richard Feynman
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Bruce Bostwick

On Sep 23, 2008, at 8:00 PM, Kevin B. O'Brien wrote:

 Now, most decent spreadsheet programs will not let you get away with
 this circular reference, but an unregulated market can. Essentially,  
 it
 all came down to a shell game where everyone was insuring each others
 risks, and then convincing themselves that they had laid off the risk
 this way.

  Another good analogy might be plugging a lamp into a power strip,  
then plugging the power strip into itself, then wondering why the  
light doesn't come on .. 
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Kevin B. O'Brien [EMAIL PROTECTED]


 Now, most decent spreadsheet programs will not let you get away with 
 this circular reference, but an unregulated market can. Essentially, it 
 all came down to a shell game where everyone was insuring each others 
 risks, and then convincing themselves that they had laid off the risk 
 this way.

I think it is more complicated than that. A derivative market (insuring each
others risks) can be relatively stable, given an adequate framework. Look
at the stock options market, which is organized by the Options Clearing
Corporation that guarantees the contracts and imposes margin requirements.
There are similar organizations in place for various Futures markets.

In contrast, the market for credit default swaps (CDS) has no centralized
clearing organization. No one can be sure that the CDS counter-party
will pay off if the credit event occurs. I think this played a significant part
in the instabilities last week.

Too bad the government isn't doing anything to encourage the creation
of a centralized clearing organization for CDS's.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

- Original Message 

From: John Williams [EMAIL PROTECTED]
To: Killer Bs (David Brin et al)  Discussion brin-l@mccmedia.com
Sent: Tuesday, September 23, 2008 8:48:12 PM
Subject: Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]

 From: John Williams 

 Gee, really? It couldn't possibly be just a little more complicated than that?

 Me:
  There are more factors, 

Yes, that is what I was referring to.

 but in the short-term money market, not that many, really.

Surely the laws of supply and demand still hold? In other words, if
the supply of money to be lent (in aggregate) goes down, then the
price (interest rate) will have upward pressure.

Me:
Yes, but again, it's a circular problem.  Why did the supply go down?  Because 
people were afraid of losing money in the money markets (even though _no one 
had_).  So there was a stampede for the exits.  Fine, but when there's a 
stampede lots of people get trampled.  Was the risk of defaults across the 
market so large that _GE_ was at a higher risk of default?  Obviously not.  But 
such a stampede could cause lots of otherwise fine companies to go under, which 
would cause still more companies to go under, and so on, until finally the only 
things left would be companies like, well, GE and Microsoft and Pfizer.  We 
know what financial collapses look like.  They look like 25% unemployment rates 
and a decade of disaster.  It's hard to imagine _anything_ worth the risk of 
going through that when interventions can prevent it.

  We had enormous market events followed 
 immediately by a pretty-much unprecedented increase in money market interest 
 rates, paired (presumably not coincidentally) by a massive flight of 
 investors 
 from the money markets

Several large firms were in imminent danger of failing. I would pull my money 
out,
too, if I thought I might lose it or it might get tied up in a bankruptcy.

Me:
Sure, that's fine.  The problem is that when everyone does it these actions can 
_cause_ a bankruptcy that will not otherwise occurred.  This is a standard 
collective action problem.  You have described exactly the mechanics behind a 
back run.  If there's a run on the bank, you want to be first in line.  But 
since everyone wants to be first in line, you can get runs on banks for no 
reason at all.  That's not a market functioning perfectly, and if you can 
prevent it, you should.  That's what the FDIC is for, and here we had a similar 
problem.

 This flight was particularly odd given that _no person_ lost money in such 
 investments.

Do you wait until you have been in an accident to put on your seat belt?

Me:
No, but _putting on my seat belt cannot cause an accident_.  This is the 
fundamental problem with your analogy.

 JPMorganChase (run by Jamie Dimon) and Goldman Sachs (run by Lloyd Blankfein) 
 didn't.  If the government were responsible, you'd have to explain why they 
 were 
 immune to pressure.  Instead they - brilliantly - handled this potential 
 crisis 
 exactly right. 

Which would be great if the government didn't interfere. The strong companies 
that
made good decisions would survive, and the others would fail. But instead we 
have
the government bailing out the bad companies.

Me:
Well, we don't yet know.  _But_.  If the run on the money markets had 
continued, we would have seen strong companies go under.  Like, for example, 
Goldman, which probably was in some danger for a while there.  That's what 
contagion means.  You have people who didn't do anything wrong going under.  
The only financial institution which I have really high confidence in right now 
is JPMorganChase, and even they're not invulnerable.

 For example, we had a series of events occurring.  We saw the 
 mark-to-market value of financial instruments constructed based on subprime 
 mortgages drop to near zero.  Functionally that explains the collapse of 
 Lehman 
 and AIG.  Although the value of these instruments is presumably substantially 
 lower than their purchasers thought they were, a true value of zero is 
 implausible at best (absent strange
 leverage constructions _unviersal across the instruments_ this would imply a 
 default rate on subprime mortgages of nearly 100%, which is clearly not going 
 to 
 happen).  This collapse forced Lehman to declare bankruptcy while it was 
 technically still solvent - an unprecedented event, so far as I know.

As I mentioned in another post, there is a practical definition of solvency and 
a
technical definition. The market seems to follow the practical one. Extreme 
leverage necessitates a probabilistic definition of solvency.

Me:
That's fine, but I don't think you've thought through the implications of such 
a definition in a period of extreme ambiguity.  You can have situations where 
_no one knows_ if you're solvent or not.  If that's true, and people have 
suddenly ramped up their risk aversion, then companies that are, in fact, 
solvent can be rendered insolvent simply by the existence of these concerns

Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]


 But 
 such a stampede could cause lots of otherwise fine companies to go under, 
 which 
 would cause still more companies to go under, and so on,

 It's hard to imagine _anything_ worth the risk of going 
 through that when interventions can prevent it.

So, you imagine a problem, make it plenty scary, then imagine a solution, 
and say that a few people can magically do it. It is a good thing you guys
are so much smarter than the rest of us dumb market peons, what would 
we do without you? 

You may not be a politician, but you have the mindset down perfectly.

Let me try one. My god, there are thousands of asteroids in the solar system and
one could slam into earth at any time. Billions would die! Mass hysteria! Dogs 
and
cats, living together! But I have a PLAN! I can save us all! Just give me $700B
and I will avert the disaster! Whadya say?

 Sure, that's fine.  The problem is that when everyone does it these actions 
 can 
 _cause_ a bankruptcy that will not otherwise occurred.

Would not have occurred if the firms were not excessively leveraged and invested
in toxic loans.

  No, but _putting on my seat belt cannot cause an accident_.  This is the 
 fundamental problem with your analogy.

That certainly is not a fundamental problem with my analogy. Difficulty with 
the 
money markets was only the latest problem for the big investment banks. The
main reason people feared for their solvency was because of high leverage and
bad assets.

  If the run on the money markets had continued, 
 we would have seen strong companies go under.  Like, for example, Goldman, 
 which 
 probably was in some danger for a while there.

And if so, was not as strong as you claim.

 That's fine, but I don't think you've thought through the implications of 
 such a 
 definition in a period of extreme ambiguity.  You can have situations where 
 _no 
 one knows_ if you're solvent or not.

No, you have not understood what it means to have no margin of safety from
insolvency. It means by any practical measure, you are insolvent. And plenty
of people know. Of course, if you have a vested interest and know, you do not
admit it.


 Well, it's not that uncharted.  Barclay's and Deutsche Bank are both over 
 50x, I 
 believe.

Those are not pure investment banks. They derive some funding from deposits.
That is why the investment banks have been merging with commercial banks or
becoming bank holding companies. Having deposits mitigates some of the risk
of money market problems.

  Now I absolutely think

You're fond of absolutes, aren't you?

 - and have thought for a very long time - that 
 we need regulatory limits on leverage, probably around the 12x range.  But I 
 doubt that's what you think we should have - I hope I'm not misinterpreting 
 you.

I don't know what we should have. Clearly the government does not, either,
since they increased the allowable limits on the big 5 and then they all got
into trouble. Certainly the insurer should have a lot of
say in the matter. If the government is going to keep bailing out investment
banks, then the government is the implicit insurer. But obviously I have little
faith that the government will lead us down the path to stronger firms if they
keep bailing out excessive risk takers.

 That's a problem, and the only 
 institution that can do something about it is the government.

Possibly true. I can imagine a few ways, involving consortia of private 
insurers,
that it could stabilize the system without government imposed leverage limits.
But I don't think it is likely that such a system will be started.

 But on what do you base 
 your belief that the track record is otherwise?  You haven't cited a single 
 case.  Not one.

Heh, yeah. Considering that the government just bailed out Bear, Fannie, 
Freddie,
and AIG, and still you feared armageddon last week, and Paulson says we need
another $700B, I'd say you are the one who needs to cite examples of $700B 
bailouts being successful. 

  But you know 
 that, in his shoes, you would have made the same decisions, because money 
 market 
 funds _never lose money_. 

Anyone who thinks that way should be kept far, far away from managing my money.

 I'm afraid I'm not clear on what basis - either theoretical or empirical - 
 you 
 disagree.

Quite simply, ego. You don't know nearly as much as you think you do about what
will happen and how you can control it. You run around wild-eyed telling us how
the world is ending but don't worry, you know how to save us. Then you do 
something, the world
does not end, and you claim you saved us. Sorry, I have much less confidence in
politicians and people like you than I do in the collective self-interest and 
creativity
of a large group of talented people to solve problems competitively.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Nick Arnett

On Tue, Sep 23, 2008 at 3:52 PM, John Williams
[EMAIL PROTECTED]wrote:



 Sure, the government was largely responsible for creating a huge home price
 bubble and encouraging a bunch of bad loans to con-artists and people who
 had no business getting the loans, but that is not the problem. The problem
 is that the market finally began adjusting the price towards fundamental
 values. Right. Good point.


The problem is government?  Not greed?

Or perhaps you'd be willing to acknowledge that it wasn't *just* government
that was the problem?

I put some of my faith in the greediness of people, including myself
sometimes.  I'm all for reducing the size and market interference... of
greed.  I'm not sure how to do that other than via some sort of political
process.

Nick
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

2008-09-23 Thread Nick Arnett

On Tue, Sep 23, 2008 at 4:54 PM, Gautam Mukunda [EMAIL PROTECTED]wrote:



 Now, you have these fund managers.  All of them are worried.  They've just
 seen several things happen that they've never seen before.  They know that
 there are still securities on a lot of balance sheets that have probably not
 yet been marked down fully.  But they don't know where they are.
  Furthermore, these financial instruments are so technically complex that
 _no one_, not the people who owned them, not the people who originated them,
 can properly value them under current market conditions.  Thus not only do
 they not know the financial status of companies in which they might invest,
 those companies themselves probably no longer know what their financial
 status is.


Gautam to the rescue!

There was a lot to like in your post, but may I say that this is my favorite
-- the insanity of billions of dollars in financial instruments that nobody
can really value them as a whole and as a practical matter, not even
individually in a comprehensive manner.  That's a failure of valuation,
which is rather deeply fundamental to an economy.  In short... yipes!

Valuation can be tricky (I've raised or helped raise tens of millions in
venture money, so boy do I know) but this is, as you said, scary.

Nick
(Sitting in my negative equity home)
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown



Nick Arnett [EMAIL PROTECTED]

I'm all for reducing the size and market interference... of
 greed. I'm not sure how to do that other than via some sort of political
 process.

You want to impose your ideals on the rest of us and destroy one of 
the main drivers of innovation and growth? You've outdone yourself
this time.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

- Original Message 

From: John Williams [EMAIL PROTECTED]
To: Killer Bs (David Brin et al)  Discussion brin-l@mccmedia.com
Sent: Tuesday, September 23, 2008 11:16:58 PM
Subject: Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]

 But 
 such a stampede could cause lots of otherwise fine companies to go under, 
 which 
 would cause still more companies to go under, and so on,

 It's hard to imagine _anything_ worth the risk of going 
 through that when interventions can prevent it.

So, you imagine a problem, make it plenty scary, then imagine a solution, 
and say that a few people can magically do it. It is a good thing you guys
are so much smarter than the rest of us dumb market peons, what would 
we do without you? 

You may not be a politician, but you have the mindset down perfectly.

Let me try one. My god, there are thousands of asteroids in the solar system and
one could slam into earth at any time. Billions would die! Mass hysteria! Dogs 
and
cats, living together! But I have a PLAN! I can save us all! Just give me $700B
and I will avert the disaster! Whadya say?

Me:
Well, I say I'd go to astronomers, and astrophysicists, and aerospace 
engineers.  And I'd find the best ones in the world.  I'd ask them - what's the 
risk of this happening?  What's the best way to prevent it?  How much would it 
cost?  Then I'd decide if that was worth the risk.  What would you do?  Judging 
by your feelings about finance, none of those people would be worth consulting. 
 Are you, by some chance, one of the best astronomers, astrophysicists, or 
aerospace engineers in the world?  Is there some reason I should believe that 
you know what you're talking about?

snipping stuff

Quite simply, ego. You don't know nearly as much as you think you do about what
will happen and how you can control it. You run around wild-eyed telling us how
the world is ending but don't worry, you know how to save us. Then you do 
something, the world
does not end, and you claim you saved us. Sorry, I have much less confidence in
politicians and people like you than I do in the collective self-interest and 
creativity
of a large group of talented people to solve problems competitively.

Me:
OK, your argument, just to be clear, is that you don't know anything about 
finance.  You have no experience with financial markets.  You don't know 
anything about me (so how do you know you shouldn't trust people like me?).  
You are aware of the overwhelming consensus of people who do have experience in 
finance, who have studied financial markets, and who (like me) have absolutely 
nothing to gain by exaggerating (or minimizing) the risks...but you think from 
a vague first principles belief in large groups of talented people (the same 
large group, it's worth noting, who caused this problem in the first place) 
that nothing should be done (even though the members of this large group are 
universal in their belief that something must be done) and you think it's _my_ 
ego that's the problem?  You're welcome to that belief, but, well, I'm a 
political scientist.  I believe in _data_.  I believe in theory too - my work 
is highly theoretical - but theories need
 to be grounded in clear causal mechanisms and tested against the empirical 
evidence.  You _still_ haven't come up with a historical example.  Not one.  
You're talking about isolated bailouts of firms (and it's worth pointing out 
that, so far, the AIG bailout has worked - the markets have not collapsed, even 
though they came pretty close, so this cuts _against_ your argument, not for 
it).  My point was that an organized and skillful bailout of an entire 
financial sector in panic can, and has, worked in the past.

Even more so, you don't seem to understand what I've been saying, so let me try 
again.  _My whole point_ is that we don't know what will happen.  We know 
there's a chance of the next Great Depression.  _We don't know_ what the odds 
of that happening are.  Had the money markets collapsed, the odds were very 
high (in my opinion) but they haven't yet, so we just don't know.  However, the 
best people in this field think that the odds remain uncertain but significant. 
 _Given that fact_ almost all of them feel that it's worth risking significant 
amounts of money to minimize the risk.  I'm the one saying We don't know 
what's going to happen, so we should play it safe.  You're the one who seems 
to be arguing that your understanding of markets is so total that you can 
predict that only the bad companies will fail.  Well that might be true.  
You're _so certain_ that's true you're willing to wager the an unknown 
possibility of a second Great Depression against
 it.  I'm _so uncertain_ that I'm willing to pay significant costs to insure 
against the possibility.

So I have two simple questions for you.  What do you think the odds of such a 
collapse occurring are?  1%  5%?  Whatever number you pick - what do you think 
should be done to lessen that risk?  Nothing?  If so

Re: Meltdown


So I have two simple questions for you.  What do you think the odds of such a 
collapse occurring are?  1%  5%?  Whatever number you pick - what do you think 
should be done to lessen that risk?  Nothing?  If so, do you not buy health 
insurance?

Best,
Gautam

I hate replying to m own post, but I had a good idea.  Do you know what 
iatrogenic errors are?  They're mistakes by doctors that cause harm to 
patients.  Iatrogenic errors are among the leading causes of death in the 
United States - I'm not sure, but I think they might actually be the leading 
cause of death.  Does that mean that you should never go to a doctor?  After 
all, sometimes people get better on their own.  Sometimes cancer goes into 
spontaneous remission.  And unlike most of the people involved in this debate, 
doctors have a financial incentive to treat you unnecessarily!  So does that 
mean you should never go to a doctor?  Of course not.  When you're sick you 
need to listen to your doctor.  You shouldn't listen blindly, but it's probably 
not a good idea to ignore them completely either.

Gautam



  
___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]


 Well, I say I'd go to astronomers, and astrophysicists, and aerospace 
 engineers.  And I'd find the best ones in the world. 

Why haven't you?

 OK, your argument, just to be clear, is that you don't know anything about 
 finance. 

It is?

 You have no experience with financial markets.  You don't know 
 anything about me (so how do you know you shouldn't trust people like me?)

How many words have you written to the list today? Is every one of those a 
misrepresentation of your views?

 You 
 are aware of the overwhelming consensus of people who do have experience in 
 finance, who have studied financial markets, and who (like me) have 
 absolutely 
 nothing to gain by exaggerating (or minimizing) the risks...

There are a large number of economists who think Paulson's $700B bailout
is a bad idea. That you have the cahones to claim that your viewpoint is an
overwhelming consensus of experts is a perfect example of the absurdity
of people like you actually being able to fix the problem.

(the same 
 large group, it's worth noting, who caused this problem in the first place) 

Politicians and people like you, yes.

  but, well, I'm a 
 political scientist. 

You don't say.

 I believe in _data_. 

Me too. 

 You _still_ haven't come up with a historical example.  Not one. 

Show me the data of the last three bail outs that I mentioned, and how
they averted disaster.

 You're talking about isolated bailouts of firms

Oh, so you mean that I haven't come up with one example that you like
and proves your point. So sorry.

 (and it's worth pointing out 
 that, so far, the AIG bailout has worked - the markets have not collapsed,

Heh. I just saved the world, too. It was about to blow up, but I stopped it in
the nick of time.

  Even more so, you don't seem to understand what I've been saying, so let me 
  try 
 again.

Yes, that must be it. It couldn't be that you might not have a monopoly on the 
truth.

  _My whole point_ is that we don't know what will happen.  We know 
 there's a chance of the next Great Depression.  _We don't know_ what the odds 
 of 
 that happening are.  Had the money markets collapsed, the odds were very high 
 (in my opinion) but they haven't yet, so we just don't know.  However, the 
 best 
 people in this field think that the odds remain uncertain but significant. 

You are really good at that. Did you learn that in political science class? I 
don't
know, but all the experts agree with me. So I must be right. It works even 
better
when all the experts actually do agree with you, though.
 
 So I have two simple questions for you.  What do you think the odds of such a 
 collapse occurring are?  1%  5%?  Whatever number you pick - what do you 
 think 
 should be done to lessen that risk?  Nothing?  If so, do you not buy health 
 insurance?

You sure are dramatic. Why not wait and see what happens? If things turn out as 
badly as you predict, surely your cadre of experts will be able to propose a 
simple
solution in a few weeks or whatever. Oh but wait, then we might see that you
were crying wolf. Hard to get re-elected then.


  

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown

- Original Message 

From: John Williams [EMAIL PROTECTED]
To: Killer Bs (David Brin et al)  Discussion brin-l@mccmedia.com
Sent: Wednesday, September 24, 2008 12:15:33 AM
Subject: Re: Meltdown

Gautam Mukunda [EMAIL PROTECTED]

 Well, I say I'd go to astronomers, and astrophysicists, and aerospace 
 engineers.  And I'd find the best ones in the world. 

Why haven't you?

Me:
Well, I have.  Or at least, I've read what they have to say.  I even know who 
they are.  Do you?

John:
There are a large number of economists who think Paulson's $700B bailout
is a bad idea. That you have the cahones to claim that your viewpoint is an
overwhelming consensus of experts is a perfect example of the absurdity
of people like you actually being able to fix the problem.

Me:
Brilliant.  You have paid such close attention to what I'm saying that you 
manage to...come to an opinion on something about which I have expressed no 
opinion.  Remarkable.  Actually, I don't think Paulson's bailout is a good 
idea.  Although the fact that you keep citing it as $700B suggests to me that 
you don't understand it.  I prefer Dodd's plan, which isn't perfect, but is 
much better.  

(the same 
 large group, it's worth noting, who caused this problem in the first place) 

Politicians and people like you, yes.

Me:
Again, you know nothing about me, except that I'm taking the time to debate 
with someone incapable of even ordinary civility.  Which, to be fair, doesn't 
speak well of constraints on my time.  But I'm trying to procrastinate right 
now.

 I believe in _data_. 

Me too. 

Me:
The data do not suggest that.

 You _still_ haven't come up with a historical example.  Not one. 

Show me the data of the last three bail outs that I mentioned, and how
they averted disaster.

Me:
It's not my job to educate you.  It may amuse me, but it doesn't really do that 
at the moment.  

  _My whole point_ is that we don't know what will happen.  We know 
 there's a chance of the next Great Depression.  _We don't know_ what the odds 
 of 
 that happening are.  Had the money markets collapsed, the odds were very high 
 (in my opinion) but they haven't yet, so we just don't know.  However, the 
 best 
 people in this field think that the odds remain uncertain but significant. 

You are really good at that. Did you learn that in political science class? I 
don't
know, but all the experts agree with me. So I must be right. It works even 
better
when all the experts actually do agree with you, though.

Me:
OK, so, I've talked about basic financial market mechanics and pointed to works 
by Kindelberger and Taleb.  You have...talked about mystical properties of 
markets.  Hmm.  

 So I have two simple questions for you.  What do you think the odds of such a 
 collapse occurring are?  1%  5%?  Whatever number you pick - what do you 
 think 
 should be done to lessen that risk?  Nothing?  If so, do you not buy health 
 insurance?

You sure are dramatic. Why not wait and see what happens? If things turn out as 
badly as you predict, surely your cadre of experts will be able to propose a 
simple
solution in a few weeks or whatever. Oh but wait, then we might see that you
were crying wolf. Hard to get re-elected then.

Me:
Ah yes, because I'm definitely running for office right now.  Come on, this is 
just tiresome.  At least try to have a simple discussion without accusing 
everyone of bad faith.  When you get cancer, you go to the oncologist.  She 
says, we need to do chemo now before it metastasizes.  Your answer is, of 
course...let's wait and see what happens.  After it metastasizes surely you 
will be able to propose a simple solution...  Try that approach.  Tell me how 
it goes.  

Gautam

___
http://www.mccmedia.com/mailman/listinfo/brin-l

Re: Meltdown