Elizabeth Scripturient (the delinquent, ecumenical (hermionesviolin) wrote,
Elizabeth Scripturient (the delinquent, ecumenical
hermionesviolin

[Wednesday] SquawkBox, bailouts, etc.

[gym] 45min treadmill, 4.0mph, 1.0 incline

(Sidebar: How am I always so hard on my footwear?)

***

CNN AM, a female anchor (Carol?) on Hillary Clinton: "She would be the 3rd female Secretary of State.  Is there something about that job that attracts empowered women?"  I wanted to *headdesk*  There have been so few women at high levels of government in the USA that if you're going to ask an inane question, wouldn't it make more sense to ask one like, "Is there something about that position that makes men feel safe appointing women to it?"

***

I understand less of SquawkBox than I do of CNN, but I prefer watching SquawkBox. 

[I looked for the clip of the portion I saw, and I thought "Economic Data: A look at durable goods, jobless claims, personal income and spending, with Rick Szpila, JP Morgan Futures; Diane Swonk, Mesirow Financial; Doug Cliggott, Dover Management; CNBC's Rick Santelli & Steve Liesman" sounded right, but it wasn't the part I wanted.]

Steve Liesman said the government has bet a huge amount, so if it all turns out okay, we the American people make a lot of money.  Someone else pointed out that we've had to borrow this money.  Someone said something about reserve currency? so that for better or for worse we have more latitude than we deserve?

Steve said no one told Paulson he was no longer on Wall St. and was in government instead and so he built an equity fund because he was bored.

I did find the video of a later bit -- A look at the rough year hedge funds have had, with Renee Haugerud, Galtere Ltd. principal/founder [8:16am].
"I say that equities are like the grain of the 80s: at a price that can be had, and the elevators are full."
"I think maybe a long short commodity equity strategy would be good, but..."  Why do I enjoy sentences like that when I don't even understand what they mean?

***

No one wants us to bail out financial institutions, but we want to bail out the auto industry?  I'm honestly curious what the thought process is behind that. 

Matthew Yglesias posted:
Too Big To Be Allowed to Exist?

My generic view of regulations, is that we ought to try to have fewer, but clearer and perhaps harsher. You want regulations that can't be gamed by the regulated and don't depend on hubristic assumptions about what the regulators are actually going to do in practice.

To that end, what's the deal with banks that are too big to fail?

If we can identify such banks, why not try to make a rule preventing banks from becoming that big? As a tradeoff, banks that rested in the small-enough-to-fail category could be allowed to operate with much, much laxer oversight and regulation since everyone would understand that if they fail they're going to sink. Presumably, there are some efficiency gains associated with the economies of scale involved in big financial institutions. But there would also be efficiency gains associated with relaxing the regulations on financial institutions. And the only reasonable way to seriously relax those regulations would be to commit to a no-bailouts scenario. But to do that, we need to make sure the banks aren't too big to fail. So why not focus the regulatory effort on that — on making sure that institutions don't get so big that they need bailing out?
Megan McArdle wrote:
It is trivial to observe that humans are imperfect; that is why institutions exist.  One of the most interesting things about the emerging fields of experiemental and behavioral economics is how they contradict, and complement each other.  Behavioral economics looks for all the ways that human beings do not act like the textbook rational value maximizers--and then experimental economics goes ahead and shows that when you stick them in a market, they go ahead and rationally value maximize.

These two things seem to contradict each other until you understand that a well designed institution creates things that are greater than the sums of their parts.  Of course, when a badly designed institution fails, it can create a bigger mess than the sum of the individual failures.  I think it was Daniel Davies, perhaps channeling George Orwell, who pointed out that unless you think that someone thrown out of work in a recession somehow deserves to be unemployed now, but did not deserve to be unemployed four months ago, you have to be at least somewhat skeptical of the rugged individualist school of economic advancement.

I'm actually not sure that what we had was bad institutional design; I'm not sure it's possible to design an institution that doesn't fail occasionally.  What we certainly have, however, is institutions that have performed badly in the current environment.
Tags: gym: tv, gymming it up, issues, issues: obama administration, issues: the financial crisis (2008)
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