Friday, October 31, 2014

1952 recalled

A Facebook friend of mine has recently quoted Senator Bernie Sanders thus:

Bernie Sanders's photo.

She (my friend) then added her own comment:

There were a lot of things wrong with the 50's, but one parent working with another one staying home (which they owned) was doable when the onus of taxes wasn't on citizens.

There are so many different lines of thought that arise out of such claims., I almost replied thus:

One line of thought this suggests, (your comment, not Bernie's) is the size of the labor pool then and now. Were women staying home (after the riveting services of Rosie were no longer required for reasons of war) because their men could make enough money to support them comfortably? That's what you seem to be suggesting, though you prefer to state the fact in a gender-free manner that would have seemed off in 1952. Anyway: consider the other direction of causality. Perhaps the fact that women were expected to stay home helped keep the supply of labor for certain sorts of jobs low, and that allowed the salary-earning to do what you say was then but is now no longer "doable." At any rate, I don't see how that has a lot to do with what Bernie wants here, And I'm not suggesting a return-to-1952, any more than are you, but I am suggesting that the "things wrong" you mention may have been related to the things you see as having been right, and related in uncomfortably intertwined fashion.

But that would have been misunderstood as something other than analytical exuberance, so I've simply left it here instead.

I'll follow another line of thought tomorrow.

Thursday, October 30, 2014

The Last of HedgeWorld

Thomson Reuters is putting an end to what until days ago remained of HedgeWorld. Excuse me while I shed an inward tear.

HedgeWorld, founded in 1999, was the first news operation to focus squarely, full time, upon the hedge fund industry. The founders lit this candle soon after the self-destruction of Long-Term Capital Management created a broad public desirous of information on this subject. Better to light that one candle, after all, than to curse the darkness.

I was the first hire of those founders -- they brought me on board in the spring of 2000.

HedgeWorld had a complicated corporate history, but in time it was captured by Reuters, and it was run as a semi-autonomous operation beneath that broad Reuteronian sky.

Then, alas, Reuters merged with Thomson, and the Bigs of the two operations put their pointy heads together and decided where they could make cuts. They closed down HW as a news gathering operation in the fall of 2008. That was the end of my involvement.

TR kept on Chris Clair, though. One of our number, indeed the final managing editor of HW, Clair kept the site going. Why did they want the brand name and a web portal bearing that name, but no news gathering? Well, I suppose it helped direct traffic to other TR territories, and it gave its brand to conferences and events.

But now TR has finally given up the ghost.

The "HedgeWorld" conferences have now been rebranded as "PartnerConnect" conferences.

And Clair has this to say:

 Dear friends of HedgeWorld:

Fifteen years ago, HedgeWorld launched with a mission to provide news, research, data, opinion and analysis for a hedge fund industry that was on the verge of explosive growth. At the time, few other similar ventures existed. With a skeleton staff but a ton of moxie, HedgeWorld set out to cover the world of hedge funds. News reports chronicled the industry's rise from misunderstood niche investment clique to misunderstood $2 trillion market moving force. The business was acquired, expanded, acquired again and downsized.

Today I write to tell you the ride is over. Thomson Reuters has decided to discontinue HedgeWorld as a business unit. The web site will no longer be updated. Yet to be determined is what will become of the Lipper hedge fund database, which traces its roots to the old TASS database. Also unknown as of right now is what happens to the thousands of archived news stories and the subscriber database. The conference business will likely continue - albeit under a different brand - with UCG, the firm that recently purchased HedgeWorld's sister publications: Buyouts, VCJ and peHUB. Keep an eye out for that.

As the last man standing editorially for HedgeWorld, I thank you for reading, e-mailing, contributing, speaking, networking, following, friending and retweeting. It's been a hell of a ride, but eventually all waves must break. Those of you who have known HedgeWorld the longest should remember it in its heyday, as an upstart start-up living billing cycle to billing cycle but shining an unapologetic light into a strange corner of the investment world. It was a business that perfectly embodied the entrepreneurial spirit of the industry it sought to cover.

Too many people to list here made HedgeWorld work. They know who they are, and many of you do, too. How Thomson Reuters ultimately winds up the brand is yet to be seen. In truth I have been told before that HedgeWorld was to close, only to see it continued on a weird life support. This time, though, it really seems to be the end. It is for me, at any rate.


I can't beat that as a curtain line. 

Sunday, October 26, 2014

Global Warming and Theology

I'm a member of a facebook group devoted to the discussion of global warming. It was probably a mistake to join, since the discussion is quite jejune.

Here is an example. A poster writes:  "Prove that God is not responsible for global warming."


Assume theism [of some fairly traditional peoples-of-the-book sort] for the sake of discussion here.

Now abstract a bit and consider ANY statement of the form "why is X happening?" where X  is some observable event in time and space. Either you believe that "God so decreed" is an adequate answer or you don't.

If you do believe that to be an adequate answer, then you have rejected empirical science altogether, because science is all about assigning observable causes to observable effects.

On the other hand, if you do not believe that to be an adequate answer, and you press on for a better one, then you have accepted the scientific enterprise, and the challenge of the form "Prove that God is not responsible for X" is simply meaningless.

Saturday, October 25, 2014

The Judge

Vera Farmiga @ 2010 Academy Awards crop.jpg

I saw "The Judge" recently. A decent movie, though it didn't blow me away.

Robert Downey Jr plays Hank Palmer, the sort of city-slicker defense lawyer Hollywood loves, because he is both glamorous and sleazy, so there's plenty of room for tragedy and personal growth.

Robert Duvall plays his father, a small town judge who gets into trouble soon after his wife passes away, and who desperately requires the service of a good, even if sleazy, defense lawyer. That's the set up.

The leading lady is Vera Farmiga, whose character, Samantha Powell, was the high school girlfriend of Hank Palmer. Of course they went their separate ways. Hank went to law school and a big city practice. Samantha stayed in the rural town they grew up in.

One of the subplots of the story involves whether Samantha's daughter is Hank's child. I'm trying to be good and avoid spoilers here, so I'll say no more.

As you may already have gathered, the plot is a bit formulaic, the characters of stereotypes. Still, the acting talent is impressive and some of you may enjoy this.

The above photograph is of Farmiga at the Oscars in 2010. She was nominated that year for her performance opposite George Clooney in UP IN THE AIR.  She was lusty businesswoman Alex Goran.

I trust we'll all see more of her.

Friday, October 24, 2014

A Follow-Up on those Gilbert Lyrics

Lee Ellis - M Scott Peck MD

Almost 40 years ago now M. Scott Peck, in THE ROAD LESS TRAVELED, contended that discipline is the key not only to normal adult human functioning but to spiritual growth as well.

Discipline in the relevant sense is the habit of constructively responding to problems rather than avoiding them, and there are four basic techniques involved: "delaying gratification, assumption of responsibility, dedication to the truth or reality, and balancing."

That list seems to represent, in Peck's mind, roughly a chronological order in human growth. Even young children can figure out that it makes sense to delay gratification, that is to forgo one bit of candy now in order to get two bits later. At the other end of that list, though, balancing, one decides which of  "conflicting needs, goals, duties, responsibilities, directions" to give up, and making such decisions, making them well, is a lifelong challenge.

There is a connection between Peck's serious point here and Gilbert's humorously intended lyrics about a "policeman's lot," quoted yesterday. A policemen, at least one of the sort envisioned in Pirates of Penzance, would like to be a friendly chap, amiable to anyone who is willing to be amiable with him. That sort of live-and-let-live life is a "happy lot." But, alas, the dedicated constable must often give that up and arrest even amiable chaps in the pursuance of his duty.

Thursday, October 23, 2014

Some words from W.S. Gilbert

W S Gilbert

When a felon's not engaged in his employment
Or maturing his felonious little plans,
His capacity for innocent enjoyment
Is just as great as any honest man's.
Our feelings we with difficulty smother
When constabulary duty's to be done.
Ah, take one consideration with another,
The policeman's lot is not a happy one.

Sunday, October 19, 2014

Nobel Prize in Economics

Picture of Jean Tirole

The Nobel in Economics this year went to the dapper Frenchman pictured here, Jean Tirole, a member of the Toulouse School of Economics, and with the Institut d'Economie Industrielle (IDEI). In fact, he chairs the board of directors of IDEI.

Nonetheless, if you are an Anglophone, even if you are reasonably well informed about contemporary academic economics, the odds are good you've never heard of him.

Which is just as well. The selection of a more widely-known figure, Krugman, Kahneman, Mundell, to take recent examples, doesn't really teach us anything. The selection of Tirole naturally leads some of us to wonder why, and so to teach ourselves something. In that teaching-moment respect, the choice is akin to that of Elinor Ostrom a few years back.

Tyler Cowen got the goods, collecting a lot of material about Tirole quickly and effectively on his blog on the morning of the announcement.

About a third of third of the way down Cowen's blog piece, this caught my eye, "He has written some key papers on financial intermediation, collateral, and the agency problems associated with lending." As you might gather from that, he is an analytic numbers-crunching kind of economist, not one of the ideological warriors in the field.

Cowen also links us to a paper Tirole co-authored back in 1997 on financial intermediation. The short version: they worked out a model of intermediation that makes predictions about the consequences of collateral squeezes, a credit crunch, or a savings squeeze.

Through the website that the Royal Swedish Academy of Sciences devotes to these awards you can get a detailed 54-page discussion of the bases for honoring Tirole. You get to those financial intermediaries at the bottom of page 36. By page 39 the authors are describing the "Holmstrom-Tirole model" outlined in that '97 paper as "a workhorse for analyzing issues in financial intermediation as well as corporate finance."

Operating firms, the "real economy" widget manufacturers of the world, can ensure their liquidity in the event of a future crisis by hoarding lots of funds. But, as Holmstrom and Tirole understood, there are inefficiencies inherent in such hoarding. It is much more efficient to have a credit line with a bank. Thus, the buffering role of intermediation.  Yet there must be enough liquidity in the intermediates. Thus, H&T argue, there is a positive role for the public sector, for government Treasuries and central banks.

Tirole has also written about asset-price bubbles: about when they are impossible and under what circumstances they are not only possible but rational and socially useful.

Further (again quoting to document from the Swedish Academy, he has "combined his early work on bubbles with his more recent work on financial regulation...."