The blame-it-on-Lehman story leads to a dangerous complacency. If we can persuade ourselves that the fault was just one policy mistake, forced on the feds by silly legal restrictions and not enough bailout power, everything can go back to the cozy way it was before.Cochrane and Zingales on the lessons of Lehman.
This is a convenient story for large banks that dominate the lobbying and communication effort. And it absolves the Fed and Treasury of facing up to their long string of policy mistakes.
We don't pretend that we could have done any better. That's the point: A system with so much power vested in so few people, with so few rules, in which crises are managed with 2 a.m. conference calls, cannot possibly do better no matter how good the people at the top. Repeating the Lehman story lets us all ignore the fact that this system cannot go on.
A few months ago I recorded a discussion with a Palestinian friend who had recently returned from a trip in the West Bank, where he visited an Israeli settlement. Before reading this post, make sure you read part 1, and the disclaimer.
About the wall. What they did, they said because we want to protect ourselves from suicide bombers, we are going to build a wall around Palestinian territories. And they told the world that it's around the West Bank only, you know, just to protect Israel from suicide bombers.
Apparently, the wall is not only around the West Bank - it's like, they don't like this village, there is a wall circling it all over. It's more like small prisons rather than a single wall identifying one country from another. It's going all the way according to their, you know - it's disconnected. It's not like one single wall.
I was telling you at the beginning about the settlement. So I told him [Asad's cousin], I want to go see a settlement. And he said, yea, I know a settlement next to Ramallah, they sometimes allow Palestinians to go. I said, how come they allow Palestinians to go into this settlement - he said yea, it's good business for them - not any Palestinian, they know that you are going to buy food or clothes or something. Right now it's calm, there isn't much tension, so they might just turn a blind eye and let you in. So I said OK, let's go and check it out.
And he goes, for him, you know -- 'it's the best supermarket you'll ever see in your life, it's out of this world, the supermarket is huge, you can find anything you want'. I mean, it was definitely like a 7-Eleven, or a Tescos or Sainsbury's - but my cousin, you know, compared to the standards they have in the West Bank - for them, it's something out of this world. [Asad's cousin lives in Nablus]
So, anyway, we were stopped outside the settlement - all the other cars are passing, but the soldier at the checkpoint in front of the settlement says 'you come this way'.
My cousin is very cynical, you know; when he speaks, he says everything as a kind of joke or something. So he tells the soldier - 'Why, everybody is passing through here, and you are telling us to stop'. And the guy with the rifle [the IDF soldier] says 'You are Palestinian'. And my cousin says 'But we are the best people!' [Asad laughs at this point] And he asks the soldier 'Why, where are you from?'; by the way, the guy with the rifle was speaking in Arabic. And he says 'I'm Israeli' - so my cousin tells him 'Ah, you are also the best people!' [Asad laughs again].
So the guy smiles, you know, and he told us 'OK, guys, since you are Palestinians, do you have any guns hidden, or rifles, or bombs' - so my cousin looks at him and he tells him 'But you are carrying the gun! It's not me carrying the gun'.
[Asad and the other friends in the room are all laughing] And the whole scenario is just so funny, because of the stereotype you get that we are meant to be trying to attack them, and here's the guy holding a gun and asking us if we have weapons.
So he [the soldier] said 'OK, open the boot of the car'. So we opened the boot, we had a few bottles of arak that I got from the duty free when I arrived in Nablus, and he looks and he goes 'Tsk, Haraam, Haraam - Muhammed, this is Haraam!' [Asad laughs again]. And we told him, 'ah, we are just having fun, and we are going out, for a night out in Ramallah, so we stocked for that'. So he goes, 'OK, good luck, go in'.
So we went into the settlement, and we were trying to park. The settlers, of course, they are all carrying weapons - it's a very nice family, you know, you get to see little girls, kids; each settler has - these guys they make babies much better than the Palestinians, I have to admit that. [Asad laughs]. You see them walking with five-six kids and the dad carrying a big M-16, a nice family.
Of course they can tell from the plate that we are Palestinian, trying to park - nobody's letting you to park. He's coming with the trolley, you know, and his family; he sees that this car, Palestinian car, wants to park, it's like against his religion you know [laughter]. He looks at you and goes 'no, no, you can't - I'm not leaving'. So we stayed there for thirty minutes maybe, and we are trying to find a parking spot.
At that moment, to be honest, I was scared. Because they can easily lock you up, or hit you, and what's gonna happen? At the end of the day, you are nobody. They will fuck you up and say, well, he's in a place that he shouldn't be. So I told him [Asad's cousin], 'man, it's OK, I don't want to see it, let's leave'. And he said ' no, no, don't worry, you'll get used to it'.
So in the end we managed to park and we walked to the supermarket. Because we were late for half an hour the guys [the IDF soldiers at the checkpoint] had already spoken on the walkie talkie to the guys inside the settlement asking if we had showed up, so they were looking around for us; when we showed up they came to us and said hello. Because, anyway, they can't tell by looking at someone's face that they are Palestinian - in the settlement you get people that are Moroccan-looking, Iraqi-looking, British-looking, French-looking, all sorts. So they can't tell that someone is Palestinian just by looking at them.
I'll be posting the final part soon.
A few months ago I recorded a discussion with a Palestinian friend of mine who had recently returned from a trip in the West Bank. Asad is from a well off family, he is UK-born and holds a British passport. He grew up in Nablus in the West Bank, and he has spent more than 10 years in the UK where he went to boarding school (from the age of 15) and university. He currently lives and works in Jordan.
Before continuing, a disclaimer: I am not a journalist, and the text below is not meant to be a fair and balanced depiction of reality, or even a statement of my own views. If you have any objections to anything you read, especially concerning facts, comments to this post are open and (respectful) contributions welcome.
What follows is a verbatim transcription of the discussion. Whenever anyone other than Asad speaks the text is in italics (I remained silent throughout, but other friends - all Europeans - were also taking part). Here goes:
The West Bank, politically, is Palestinian land - under UN law it is for the Palestinians. Now you get a Jewish guy coming from Russia, and they all have a station car or a four-wheel drive. And he's allowed to go anywhere - you know, it's his country - so he goes at the top of a mountain for example. He camps there, first with a tent. Then a few friends come along. It's just a tent - by law that's all right.
By the way, by the law they are not allowed to build anything; if the soldiers know they are meant to stop them. In the beginning, there will just be tents; then after a while you see a single house has appeared. If you complain about it, nobody shows up to check the house. After a few months, after the house has been there for a while, practically it's his - even though it's your land. The guy has a weapon, you cannot go in, and that's how it starts.
So we went to this settlement that's next to this Palestinian village. My cousin is a distributor for [a big Israeli company], so they've given him identification so he can move around the West Bank, including the settlements.
- So, normally Palestinians are not allowed to visit the settlements?
No, and not just settlements, there's no way you can move around in the West Bank; you come from this village, you stay in this village; you come from this town, you stay in this town. You get people who haven't left their village or town for ten years now.
-So from Nablus you can't go to, say, Bethlehem.
Man, you get people in Nablus who haven't been outside Nablus in ten years now. Never seen anything outside Nablus for ten years.
- So is the wall covering the whole of Nablus?
Actually, there is no wall next to Nablus, but on the main streets there are three checkpoints. The checkpoints, I'll tell you about them.
We went out of Nablus, and he [an IDF soldier] said please walk, get out of the car. I told him we have the license and stuff, he said no - walk. They are like an international airport these checkpoints, it's not a checkpoint per se; you have a rotating door, and this is for the car, and several guns pointing at you from several directions; I got scared at that point. Why is he asking me to walk when I have the permit to leave?
So I walked out of the car and the guy said, well, he started speaking to me in Hebrew. I tell him no; only speak Arabic or English. One of them then goes, 'hold on, you speak English you said'? And I said yes, I do speak English. And he said - in Arabic - 'how is it to curse?'
And I thought, shit, this is gonna - because you hear stories, of them making fun, taking the piss. The guy is bored at the checkpoint and he wants to insult you basically so he tries to insult you in any way he finds. So I think, fuck, I'm not going down this route, you know.
And he said 'you know, bitch, fuck, how do you curse?' And I said 'I don't know these words man; I just learned English in school, they don't teach us these words'. And then he goes - in Arabic - 'no, you know, sharmuta, manyak - speak some Arabic swear words. I want you to curse'. And I spoke a few swear words in Arabic. And he said 'OK, come with me'.
So I went into that room, and they had a guy, they took out his shirt, put it on top of his head and two guys are kicking him. Apparently, on the check point, after he left, he cursed at them. And they did the whole thing, they made everyone wait for an hour, with so many cars behind you know, and they are beating this guy and waiting for someone to come and tell him that they are beating him because he is cursing on them. And most of the time of course they can speak full arabic. But it's just - you know, setting an example. So, in this case, the whole thing was for me to see what's happening so they can set an example - the guy [the IDF soldier] spoke perfect Arabic, they didn't need me to tell the guy anything. [pause]
At checkpoints, you cannot move unless he [the IDF soldier] tells you to move. And with these guys, you know, it's random; he can tell you 'wait for an hour and after one hour I'll let you guys move'. They don't need a good reason to do that.
- Where was that?
In Nablus, going out of Nablus.
- How could you go out of Nablus? Because you have a UK passport?
No, because there is the permit which allows you to go. Personally, I had my British passport on me so, I wanted to use it, in case - but also, man, for them it depends on your face and whether they buy your story, it's all judgmental...
- So, the people who haven't been able to go out of Nablus for 10 years, they can't get the permit?
Yeah, some of them can't get the permit. And some of them when they go to the checkpoint - they ask you questions you know, 'where are you going?' - and if he doesn't buy your story, well, OK - go back. So you have to have a good reason [to move]- you go to the checkpoint, he'll ask you for your permit.
- So why can't they apply for the permit?
Well, most of them [Palestinians in the West Bank], they'll either not get it or not try to apply.
- So how come you got one? Was it because of your passport?
No, no, I applied normally - most people can exit and leave. But man, you end up paying £200 for the journey, you know over there some people just can't afford it. And most importantly, there are no guarantees that the town won't be blocked and then you can't come back; you know there's all these logistics. If you are going on holiday and you are not well off, and you know there is this a slight chance that Nablus will get locked for three weeks, I mean, this is not something you risk.
I will be posting parts two and three once I get a chance to transcribe them, hopefully later this week.
And glad to see Krugman went one better than Mankiw (they don't hand out them nobel prizes for nuffin) by following my advice:
The econonerd also missed the killer point here: why not compare US Federal debt with Italian public debt? (do I have to do your work for you?)Btw – Krugman is right; the notion that US public debt (current and projected) is 'unsustainable' in any way is frankly ludicrous. It is criminal that US monetary policy is so tight and fiscal policy so restrained, and I find it difficult to understand how people can argue otherwise. Get some inflation and serious spending going, people.
But no time for a serious exposition today, so I'll say more on this soon.
"People are wondering why Goldman is making such bumper profits... What they don't realize is how little competition there is left in certain areas...
Lots of banks just want to get rid of 'funny' assets at whatever price to please their freaked-out shareholders. Goldman operates under no such constraint, and there's no end to golden opportunities to make money."
Dr. Gregory House: I choose to believe that the white light people sometimes see, visions this patient saw, they're all just chemical reactions that take place when the brain shuts down
Dr. Eric Foreman: You choose to believe that?
Dr. Gregory House: There's no conclusive science. My choice has no practical relevance to my life, I choose the outcome I find more comforting
Dr. Cameron: You find it more comforting to believe that this is it?
Dr. Gregory House: I find it more comforting to believe that all this isn't simply a test.
From "House M.D.: Three Stories (#1.21)" (2005)
What should you do if you are entering the job market for the first time in this unemployment climate?
If you don't desperately need the money, wait a bit longer. The real cost of doing a PhD or taking a year off to travel the world is not just what you have to pay for it, but also the income you forego by not working. With so few jobs to go round, investing in your future or pursuing that crazy dream of yours has never been cheaper - so go for it!
If you don't have a college degree at all, this is an absolute no-brainer. College graduates earn so much more over the course of their careers that getting a degree is wise even in a booming economy. In times when finding a job is so hard, it's an offer you can't refuse.
Now, if delaying getting a job is not an option, there's a few tricks that can help you get there:
1. Overall unemployment figures mask a lot of regional variation. Don't be afraid to move city, state or even country to where there is the highest demand for your skills. Apart from increasing your chances of landing a job, getting to live in a new place is fun, you'll learn things you never would have back home, and you'll earn lots of brownie points for your future resume.
2. Get some work experience, even if you have to put up with lousy pay or if it's not exactly the kind of job you eventually hope to get. Internships are great (and often culminate to a full job), but there are other options too - volunteering is an obvious one, and so is helping out at your uncle's small business. Whichever route you follow, make sure you take on as much responsibility as possible: dealing with the public or customers, helping with the accounts, coming up with ideas to do things in a better way, contributing to management decisions. You should be able to do all of these in a small charity or business, and they will offer you invaluable skills and experience that you can showcase when you are applying for a ‘proper’ job.
3. Work your contacts. Your biggest problem when trying to get a job for the first time is that, at least on paper, you look exactly the same as thousands of other job-seekers. People you know can help you get past this problem by informing you of hardly-advertised job opportunities in their industry, vouching for your skills and trustworthiness to other employers (especially if they happen to be their customers or partners), and even by offering you a job themselves – but you have to ask! It sounds obvious, but it’s not: after months of unsuccessful applications, a friend recently landed a job via a contact who noticed his –just updated- ‘looking for a job’ facebook status. Another friend simply asked her dad for some help – and it turns out he knew somebody, who knew somebody, who happened to want to fill a vacancy quickly with someone he could trust.
Thanks to Sharon Gitelle and Carl Lavin of Forbes.com for suggesting the topic.
What percentage of draft eligible men did not, or would not, join the US military despite being drafted? How many men's enlistment in the military ultimately depended on the outcome of the lottery? I will let you ponder these questions for a moment, and put the answer under the fold...
In a double-blind trial, patients exhibit the placebo (and nocebo) effects because of the expectation they might be on a real drug.
If expectations are so important, could it be that patients being administered the real drug don't react to it fully due to the expectation they might be on the placebo?
Addendum: Steve Waldman (of Interfluidity and Naked Capitalism) posts in the comments:
Jeffrey Wooldridge (a hero of mine) and Guido Imbens delivered this excellent 3-day cemmap masterclass a few months ago, with yours truly in attendance.
The lecture notes and presentation slides are now available online. If you were looking for a book offering an overview of developments in econometrics in the past decade or two, you've just found it - and it's absolutely free, so get downloading.
You can also find more cemmap goodies here (make sure you go through the different years, and navigate a bit around the site). Their seminars and masterclasses are consistently excellent, so if you are interested in econometrics this is a little treasure chest waiting to be discovered.
Most corrupt acts don't take the form of clearly immoral choices. People fight those. Corruption thrives where there is a tension between institutional and interpersonal ethics. There is "the right thing" in abstract, but there are also very human impulses towards empathy, kindness, and reciprocity that result from relationships with flesh and blood people.
I've been an occasional visitor to Interfluidity, but after reading these four sentences I'll never miss another post.
A talented, creative writer invents a story about an object. Invested with new significance by this fiction, the object should -- according to our hypothesis -- acquire not merely subjective but objective value. How to test our theory? Via eBay!
This is the idea behind the Significant Objects project, and I really like it. At last count, the cost of objects stood at $112.02, with sales 'post-Significance' at $2,857.22.
Tip o' the hat Justin Wehr.
The answer is no. There has been a boom all right, but it has been a land price boom. This is not semantics - the fact there was no housing boom has a stark implication: society does not need to move resources away from construction in the long-run as has been suggested or assumed time and again (see for example this related discussion). We - meaning most of the western world - have not been building too much.
Development is generally severely constrained by the planning system, so the returns to developing land to the landlord are way above normal. Unless the price of housing falls below construction costs (impossible in Europe, extremely unlikely in most of the metropolitan US), landowners that offer their land for development will keep enjoying a pure windfall gain, albeit one that is smaller the lower
house prices go. The point is that whether the windfall gain is small or large is irrelevant; in both cases there's profit to be made (and societal gains to be reaped) by developing the land. Keep in mind that agricultural land (the alternative use) is next to worthless - in the UK it's £7k/hectare on average, and this is probably amongst the most expensive in the world - while land carrying planning permission is worth more than 15 times that.
The reason you don't see development now is that landowners are holding back for higher prices in the future - it is fundamentally a short-term thing. If expectations about future prices adjust, there will be a renewed supply of land offered up for development. Unless land prices reach zero, no resources should move away from construction in the long-run.
Henry George's thinking on optimal taxation is also related to this observation.
From Google's director of research:
One of the interesting things we've found, when trying to predict how well somebody we've hired is going to perform when we evaluate them a year or two later, is one of the best indicators of success within the company was getting the worst possible score on one of your interviews. We rank people from one to four, and if you got a one on one of your interviews, that was a really good indicator of success.
Ryan Tate uses this as evidence that Google's interview process is broken.
Craig Newmark sets the record straight.
On related news, I was surprised by suggestions that Larry Page still reviews CVs personally, and half-surprised to find out that lots of Google employees struggle with bureaucracy within the company.
But are the Brits really so productive? If so, why can't they get both hot and cold water coming out of the same tap?More.