The Audacity of Doing Nothing

Friday, February 13th, 2009

Philip Greenspun has been speaking to money managers, and they want the federal government to demonstrate the audacity to do nothing:

The “real money” investors didn’t want to invest alongside the government. Their concern is that if things go south, the government will take 100% of the value left in the bank or whatever and leave private investors, including recent ones, with nothing. This is precisely what happened to recent investors in Fannie Mae.

The “real money” investors didn’t want to see judges modifying contracts, e.g., bankruptcy judges resetting mortgage payments at a lower level and reducing the principal owed. As far as they were concerned, a central tenet of the U.S. Constitution is that people are free to make contracts. Given how mortgages are split up among investors, a foreclosure is greatly preferable to these folks than a modification. In a foreclosure the most senior investors get what they expected, i.e., their money back. The holders of the most junior tranches, which carried a higher return and were known to be high risk, would get nothing. This is also what they would have expected. If mortgages are modified by government action, however, it is unclear how the obligations among the various private parties should be adjusted.

“What’s wrong with foreclosures?” some of these folks asked. “The historical rate of home ownership is about 60 percent and we’re probably going to revert to that sooner or later so why slow things down? How does it help the U.S. to have high housing prices? Isn’t it better for housing to be affordable? If we give a lot of money to people to prevent foreclosures in March, how is that fair people who were foreclosed on in January?”

Much of the justification for government intervention comes from the assertion that markets have failed. One money manager scoffed at this idea. “The markets are working fine, but they’re giving people answers that they don’t like, so people cry market failure.” Stocks and bonds low? That’s because investors are afraid of a prolonged depression and continued government interference. House in a jobless region of Michigan worth almost nothing? A place with 50% of its former jobs only needs 50% of its houses. There are plenty of former steel towns where the price of a comfortable house stabilized at $20,000 decades ago and has barely moved since.

What did these guys want the government to do? Nothing, basically. “Back in the 19th Century, there were a lot of steep crashes, guys got wiped out, and the economy came back quickly.” What’s different now? The government is a lot bigger and more powerful. Rich companies and people can put some of their wealth into lobbying and demand that the government prevent them from getting wiped out (or at least slow the process).

Body Language Reveals Wealth

Friday, February 13th, 2009

Body language reveals wealth — or, rather, status:

Psychologists Michael Kraus and Dacher Keltner of the University of California, Berkeley, videotaped pairs of undergraduate students who were strangers to one another, during one-on-one interviews. In total, 100 undergraduate students participated.

The researchers then looked for certain gestures that indicate level of interest in the other person during one-minute slices of each conversation.

They found that students whose parents were from higher socioeconomic status (SES) backgrounds engaged in more of what he called “impolite” behaviors, such as grooming, doodling and fidgeting. Lower SES students showed more “I’m interested” gestures, including laughter and raising of the eyebrows

The higher SES students fidgeted with nearby objects for an average of two seconds, while those from lower SES backgrounds almost never fidgeted during the 60-second clips. Upper SES students also groomed themselves for short stints while lower SES students didn’t. Rather, the lower SES students nodded their heads, laughed and raised their eyebrows an average of one to two seconds more than their upper SES counterparts.

“We’re talking seconds here, but that is a pretty big difference when you consider that we coded one minute of interaction time,” Kraus told LiveScience. “So how many times a day are you nodding if you’re lower socioeconomic status?”

It comes down to our animalistic tendencies, Kraus explained. Like a peacock’s tail, the seemingly snooty gestures of higher SES students indicates modern society’s version of “I’m fit,” and “I don’t need you.”

“In the animal world, conflict arises when you’re battling for status. So it’s adaptive for us to avoid those conflicts and tell us we know ‘I’m higher status than you, so don’t bother having a conflict with me,’” Kraus figures.

Lower SES individuals can’t afford to brush off others. “Lower SES people have fewer resources, and by definition should be more dependent on others,” Kraus said.

Why didn’t we see a similar bubble in commercial real-estate markets

Friday, February 13th, 2009

Shannon loves says those clamoring for further regulation of the housing market need to answer a question:

If greedy, irresponsible, unregulated etc. capitalism caused the housing bubble, why didn’t we see a similar bubble in commercial real-estate markets which operate under even less regulation than the residential markets? Why does the politically neglected and unregulated commercial real-estate market exhibit much milder swings?

Wall Street Can’t Count

Friday, February 13th, 2009

Cringely notes that Wall Street Can’t Count and shares this graphic as evidence:

My first thought, before studying it, was that market cap might not be the right metric for comparing enterprises that have just rejiggered their capital structures. Market cap takes into account equity, but an enterprise is also financed through debt — which can become substantial after, say, receiving a bailout.

But I was thinking far too deeply.

The real problem is that the graphic, produced by J. P. Morgan and distributed by Bloomberg, represents market caps as circles with diameters proportional to the dollar value, when your eye naturally assumes that the two-dimensional circle’s area should be proportional to the dollar value.

So they’ve squared all the values, vastly magnifying the already levered-up changes in market cap. Smooth.

Let’s Get It On — for Free

Friday, February 13th, 2009

In an effort to promote its MP3 store this Valentine’s Day, Amazon is giving away free copies of Marvin Gaye’s Let’s Get It On. Cute.

Oarfish

Friday, February 13th, 2009

Oarfish are “large, greatly elongated, pelagic Lampriform fish comprising the small family Regalecidae.”

In fact, one such “large, greatly elongated” species of oarfish, the Regalecus glesne or King of Herrings, is the longest bony fish on record, growing up to 11 meters long.

(The whale shark, Rhincodon typus, is longer but cartilaginous.)

The family name Regalecidae is derived from the Latin regalis, meaning royal:

The tapering, ribbony silver bodies of oarfish — together with an impressive, pinkish to cardinal red dorsal fin — help explain the perception of majesty taken from rare encounters.

Oarfish are rarely encountered and even more rarely encountered alive. They tend to linger at the surface or to beach themselves only when sick or dying, but these rare encounters may have led to stories of sea serpents.

Recently though an oarfish beached itself on the California coast:

A Great, Horn-Crowned Hog

Thursday, February 12th, 2009

Mencius Moldbug has some fun with the works of a bitter, old artist and the government’s response to our current economic crisis:

Goya left no captions for his Black Paintings, so we have no way of knowing whether or not he meant to call this one Democracy. Events of the last week, however, have shown that Goya got one thing wrong. The black-robed figure is no goat at all — but a great, horn-crowned hog.

No, Not Calpis

Thursday, February 12th, 2009

Most Americans know very little about Hinduism, seeing it as a live-and-let-live religion, like Buddhism, but with a peculiar interest in cows. Most Americans are unaware of what hardcore Hindu nationalists are up to, like launching their new cow urine soft drink:

The bovine brew is in the final stages of development by the Cow Protection Department of the Rashtriya Swayamsevak Sangh (RSS), India’s biggest and oldest Hindu nationalist group, according to the man who makes it.

Om Prakash, the head of the department, said the drink – called “gau jal”, or “cow water” – in Sanskrit was undergoing laboratory tests and would be launched “very soon, maybe by the end of this year”.

“Don’t worry, it won’t smell like urine and will be tasty too,” he told The Times from his headquarters in Hardwar, one of four holy cities on the River Ganges. “Its USP will be that it’s going to be very healthy. It won’t be like carbonated drinks and would be devoid of any toxins.”

The drink is the latest attempt by the RSS – which was founded in 1925 and now claims eight million members – to cleanse India of foreign influence and promote its ideology of Hindutva, or Hindu-ness.

Hindus revere cows and slaughtering them is illegal in most of India. Cow dung is traditionally used as a fuel and disinfectant in villages, while cow urine and dung are often consumed in rituals to “purify” those on the bottom rungs of the Hindu caste system.

In 2001, the RSS and its offshoots – which include the opposition Bharatiya Janata Party – began promoting cow urine as a cure for ailments ranging from liver disease to obesity and even cancer.

The movement has often been accused of using more violent methods, such as killing 67 Christians in the eastern state of Orissa last year, and assaulting women in a pub in Mangalore last month. It also has a history of targeting foreign business in India, as in 1994, when it organised a nationwide boycott of multinational consumer goods, including Pepsi and Coca Cola.

The cola brands are popular in India, now one of their biggest markets, but have struggled in recent years to shake off allegations, which they deny, that they contain dangerous levels of pesticide.

Mr Prakash said his drink, by contrast, was made mainly of cow urine, mixed with a few medicinal and ayurvedic herbs. He said it would be “cheap”, but declined to give further details about its price or ingredients until it was officially launched.

When I first heard this story, I immediately thought of Calpis, the Japanese soft drink:

Calpis (???? Karupisu) is a Japanese uncarbonated soft drink, manufactured by Calpis Co., Ltd. (???????? Karupisu Kabushiki-gaisha), headquartered in Shibuya, Tokyo. The beverage has a light, somewhat milky, and slightly acidic flavor, similar to plain or vanilla-flavored yogurt, or Yakult. Its ingredients include water, nonfat dry milk, and lactic acid, and it is produced by lactic acid fermentation.
[...]
The name Calpis was actually constructed as a portmanteau, by combining cal from calcium and pis from Sanskrit sarpis (supreme taste). Sarpis is used to described the essense of Buddhist teaching.

I prefer Pocari Sweat.

(Hat tip to Yana.)

In House Software

Thursday, February 12th, 2009

Joel Spolsky briefly wrote in house software at Viacom in New York:

New York was the first place I got to see what most computer programmers do for a living. It’s this scary thing called “in house software.” It’s terrifying. You never want to do in house software. You’re a programmer for a big corporation that makes, oh, I don’t know, aluminum cans, and there’s nothing quite available off the shelf which does the exact kind of aluminum can processing that they need, so they have these in-house programmers, or they hire companies like Accenture and IBM to send them overpriced programmers, to write this software. And there are two reasons this is so frightening: one, because it’s not a very fulfilling career if you’re a programmer, for a list of reasons which I’ll enumerate in a moment, but two, it’s frightening because this is what probably 80% of programming jobs are like, and if you’re not very, very careful when you graduate, you might find yourself working on in-house software, by accident, and let me tell you, it can drain the life out of you.

OK, so, why does it suck to be an in house programmer.

Number one. You never get to do things the right way. You always have to do things the expedient way. It costs so much money to hire these programmers — typically a company like Accenture or IBM would charge $300 an hour for the services of some recent Yale PoliSci grad who took a 6 week course in dot net programming, and who is earning $47,000 a year and hoping that it’ll provide enough experience to get into business school — anyway, it costs so much to hire these programmers that you’re not going to allowed to build things with Ruby on Rails no matter how cool Ruby is and no matter how spiffy the Ajax is going to be. You’re going into Visual Studio, you’re going to click on the wizard, you’re going to drag the little Grid control onto the page, you’re going to hook it up to the database, and presto, you’re done. It’s good enough. Get out of there and onto the next thing.

That’s the second reason these jobs suck: as soon as your program gets good enough, you have to stop working on it. Once the core functionality is there, the main problem is solved, there is absolutely no return-on-investment, no business reason to make the software any better. So all of these in house programs look like a dog’s breakfast: because it’s just not worth a penny to make them look nice. Forget any pride in workmanship or craftsmanship you learned in CS323. You’re going to churn out embarrassing junk, and then, you’re going to rush off to patch up last year’s embarrassing junk which is starting to break down because it wasn’t done right in the first place, twenty-seven years of that and you get a gold watch. Oh, and they don’t give gold watches any more. 27 years and you get carpal tunnel syndrome.

Now, at a product company, for example, if you’re a software developer working on a software product or even an online product like Google or Facebook, the better you make the product, the better it sells. The key point about in-house development is that once it’s “good enough,” you stop. When you’re working on products, you can keep refining and polishing and refactoring and improving, and if you work for Facebook, you can spend a whole month optimizing the Ajax name-choosing gizmo so that it’s really fast and really cool, and all that effort is worthwhile because it makes your product better than the competition. So, the number two reason product work is better than in-house work is that you get to make beautiful things.

Number three: when you’re a programmer at a software company, the work you’re doing is directly related to the way the company makes money. That means, for one thing, that management cares about you. It means you get the best benefits and the nicest offices and the best chances for promotion. A programmer is never going to rise to become CEO of Viacom, but you might well rise to become CEO of a tech company.

Anyway. After Microsoft I took a job at Viacom, because I wanted to learn something about the internet and Microsoft was willfully ignoring it in those days. But at Viacom, I was just an in-house programmer, several layers removed from anybody who did anything that made Viacom money in any way.

And I could tell that no matter how critical it was for Viacom to get this internet thing right, when it came time to assign people to desks, the in-house programmers were stuck with 3 people per cubicle in a dark part of the office with no line-of-sight to a window, and the “producers,” I don’t know what they did exactly but they were sort of the equivalent of Turtle on Entourage, the producers had their own big windowed offices overlooking the Hudson River. Once at a Viacom Christmas party I was introduced to the executive in charge of interactive strategy or something. A very lofty position. He said something vague and inept about how interactivity was very important. It was the future. It convinced me that he had no flipping idea whatsoever what it was that was happening and what the internet meant or what I did as a programmer, and he was a little bit scared of it all, but who cares, because he’s making 2 million dollars a year and I’m just a typist or “HTML operator” or whatever it is that I did, how hard can it be, his teenage daughter can do that.

Mothers who are pregnant in the summer have taller and stronger-boned babies

Thursday, February 12th, 2009

Mothers who are pregnant in the summer have taller and stronger-boned babies:

Those born in the late summer and early autumn are around half a centimetre taller and have wider bones than their peers born in winter and spring, an 18 year project found.

Expectant mothers lucky enough to be blooming in the hot months should get enough sun to boost their vitamin D levels just by walking around outside or even sunbathing.

63% of Americans Reject Darwin’s Theory of Evolution

Thursday, February 12th, 2009

63% of Americans reject Darwin's theory of evolution — after careful consideration, I’m sure:

In the 150 years since he published his groundbreaking On the Origin of Species by Means of Natural Selection, and the 200 years since the date of his birth celebrated this week, Charles Darwin has failed to convince the majority of Americans of the validity of his theories; an August 2006 survey by the Pew Research Center’s Forum on Religion & Public Life and the Pew Research Center for the People & the Press, found that 63% of Americans say they believe that humans and other animals have either always existed in their present form or have evolved over time under the guidance of a supreme being while only 26% say that life evolved solely through processes such as natural selection. A similar Pew Research Center poll, released in August 2005, found that 64% of Americans support teaching creationism alongside evolution in the classroom.

The New Physiognomy

Thursday, February 12th, 2009

When phrenology fell into disrepute in the late 19th century, physiognomy was written off as pseudoscience, too. Now New Scientist looks at the new physiognomy, or how your looks betray your personality

Milton Friedman on Greed

Thursday, February 12th, 2009

I enjoyed this excerpt of Milton Friedman discussing greed with Phil Donahue:

(Hat tip to Dan from Madison of ChicagoBoyz, who felt it aptly summarized his feelings on the stimulus.)

America’s Diet: Too Sweet by the Spoonful

Wednesday, February 11th, 2009

America’s diet is too sweet by the spoonful, Jane Brody says, but we shouldn’t be especially worried about high-fructose corn syrup, because it isn’t too terribly different from table sugar:

High-fructose corn syrup is made by converting the starch in corn to a substance that is about 90 percent fructose, a sugar that is sweeter than the sugar that fuels the body cells, called glucose, and processed differently by the body. The fructose from corn is then mixed with corn syrup, essentially pure glucose, to produce one of two mixtures called high-fructose corn syrup: 55 percent fructose and 45 percent glucose, which is used to sweeten soft drinks, and 42 percent fructose and 58 percent glucose, which is used in products like breads, jams and yogurt.

Neither substance is radically different from ordinary sugar, which is 50 percent fructose and 50 percent glucose. The main difference is that in high-fructose corn syrup, the two sugar molecules are chemically separated, and in sucrose they are linked. Whether this difference is meaningful to health is still debated.

Personal Rapid Transit

Wednesday, February 11th, 2009

Two Personal Rapid Transit systems are being installed this year, one at Heathrow International Airport and one in the UAE’s experimental “green” development, Masdar City:

PRT systems are supposed to combine the convenience and privacy of automobiles with the environmental benefits of mass transit. Automated electric vehicles, or pods, each designed to carry from four to six people, wait at stations throughout a city or development, like taxis waiting at taxi stands. A person or group gets in a pod and selects a destination and the vehicle drives there directly.
[...]
Although PRT systems vary, the basic design involves a network of stations connected by a track that loops past all of the stations in a system. Large networks can include many interconnected loops. When a vehicle leaves a station, it travels along an on-ramp until it merges with the main loop. When it reaches the destination station, it exits this central loop via an off-ramp. The ramps allow individual pods to stop at a station while others pods continue to travel at top speed along the main track. As a result, it can be faster than buses, which have to stop frequently. Simulations suggest that the systems could run with as little as half a second between each vehicle, but the initial systems, such as the one in Masdar City, will keep the vehicles three to four seconds apart — enough to stop a pod should the one in front of it suddenly break down. A central computer controls the traffic.

At both Heathrow and Masdar City, the vehicles will be battery-powered, driverless cars. The system at Heathrow — built by Advanced Transport Systems, based in Bristol, UK — uses cars powered by lead-acid batteries along a concrete track and guided by laser range finders, says Steve Raney, a consultant for the company. For Masdar City, a Dutch company called 2getthere has developed cars powered by more-advanced batteries made of lithium iron phosphate. The pods travel on pavement equipped with embedded magnets placed every five meters, which the vehicle uses, along with information about wheel angles and speed, to determine its location, says Robert Lohmann, the marketing manager at 2getthere. When a person selects a destination, a central computer designates a path for the vehicle, and an on-board computer makes sure the car sticks to the path. (The system is being used now to control vehicles that transport cargo in warehouses.)