stable disequilibrium

Jul
1st

Tue

The United States has really been living in a fool’s paradise, or a phony economy, probably for more than 20 years. But our economy has been growing and getting bigger and bigger.

We have been able to convince the world to lend us money and to provide us with goods that we don’t produce and that we can’t afford to pay for with exports. And it has gotten to the point now where the problem is so big, especially since the real-estate bubble.

We’ve now borrowed so much money from abroad. Our trade deficits are now very big, and our industrial base and our infrastructure have been allowed to decay for so long, that we are now at a point that we can only survive as an economy thanks to the charity of the rest of the world.

They have provided us with all the goods that we can no longer produce because we lack the industrial capacity. And they have to lend us the money because we don’t have any savings anymore.

— Peter Schiff, June 2008

Jun
28th

Sat

The housing bubble was an entirely preventable disaster. If the economists and other policy professionals who design economic and housing policy had not been asleep for the last decade, it could have been prevented.

Their incompetence will have serious impact on the living standards of a generation.

It would be the height of foolishness to create a house price support program to try to sustain the bubble.

The basic issue is that there is a huge excess supply at current prices. Unless we impose laws restricting construction to constrain supply, prices will continue to drop. At best, we may delay the decline and allow some current homeowners to sell at partially inflated prices so that the new buyers can enjoy the rest of the crash. That is not good policy.

— Dean Baker, CEPR, June 2008

Jun
24th

Tue

Like a boxer, the investor’s first step toward winning is knowing what to expect from his adversary…. He should know that the market goes to extremes in both directions, that it can be both the supportive, caring, seductive lover and the cruel, cold, insidious antagonist; that it can cause euphoria and exhilaration or anger, fear and despair. He should know that the market can change its mood on a dime; that it can be capricious, enigmatic, and ornery; and that mostly it can be dull, listless, and boring.

— Dick Davis

Jun
21st

Sat

Greg Ip discusses George Soros’ new book on his 25 year super bubble theory. In this video, Greg Ip discusses Soros’ underlying belief in reflexivity, which in a nut shell states that markets don’t achieve equilibrium, but rather trend to extremes due to momentum that ultimately changes peoples’ viewpoints on how fundamentals should be calculated.

Mr. Ip also refers to Soros’ previous predictions on super bubbles and financial catastrophe. Soros has written many books over the years on the popping of the super bubble. His predictions have not followed his prescribed timeline. Soros retorts that even when the boy cried wolf, he was right the third time. While the boy may have been right, he perished while telling the truth. One might wonder whether or not Mr. Soros’ credibility will suffer a similar fate should he prove wrong a third time. While the certainty of Soros’ predictions currently hangs in question, his accountability for predictions will remain in good standing. Soros has long been committed to the principle of fallibilism, or the theory that things he believe could well be wrong, and therefore require constant examination and improvement. Therefore, the thing we can bank on (assuming banks survive the super bubble) is that we can at the very least look forward to Soros’ prediction V4.0.

P.S. So long Greg Ip. While I look forward to your work at the Economist, I will greatly miss seeing your name attached to articles.

Jun
18th

Wed

One of my favorite artists, Chris Jordan is featured on TED. Chris Jordan is a Seattle based photographer who specializes in large format photography. His most recent project, Running the Numers, puts statistics into visually digestible morsels. Reading that 2.3 million people were incarcerated in 2005 is shocking. Seeing what 2.3 million prison uniforms look like stacked on top of each other is jaw dropping. In his TED talk, Chris walks through a few of his most popular images and talks about the statistics behind the images which can bring new meaning to the images if you’ve been following Chris’ artwork for a while.

Jun
17th

Tue

There may be a recession in stock prices, but not anything in the nature of a crash.

—

Irving Fisher, Economist

New York Times, 9/5/1929

Jun
16th

Mon

The Safest Seat on a Plane

Flowing Data has a great post on the safest seat of an airplane. In the 70’s, popular expert opinion was that every seat in the airplane was equally safe. Studies of the empirical data showed that the back of the airplanes were generally safer.

link

Jun
15th

Sun

There’s nothing different between this mania, the dot-com mania, the real estate mania, the Dow Jones mania of the 1920s, the South Sea bubble and the Dutch tulip-bulb mania. History repeats itself over and over and over again.

—

Stephen Schork, Oil Analyst

Commenting on oil’s 697% climb from 11/2001-6/2008.

via Bloomberg

Living Spaces by Zack Bent

Anya, Sophia and I went to the Henry Art Gallery today. One of my favorite exhibits was Living Spaces by Zack Bent. The series features archival inkjet prints of constructed scenes of him and his family. The images are striking and conjure familiar childhood memories; building a fort, hiding in the kitchen cupboards, wrestling with dad in the yard, etc.

Forces of Nature

Bloodline

The full living spaces gallery can be viewed here. This is currently on display in the North Gallery of Henry Art Gallery.

Jun
14th

Sat

Duck and Cover, 1951

via Prelinger Archives