"The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessors to draw correct conclusions." - John Maynard Keynes
Thursday, March 27, 2008
This is Who I Am. This is What I Do.
I was just looking through some old notes and I stumbled upon a quote that I have always liked. I don't necessarily agree with all of Keynesian theory, but this summarizes economics pretty nicely.
Thursday, March 20, 2008
BOOM BOOM BOOM DaDaDa DaDa Da
Monday, March 3, 2008
Hmmm....
Check out the way independent males surveyed... especially when Hillary makes a Saturday Night Live reference about Obama.
Thursday, February 28, 2008
Ohh You Got Me There!
Wednesday, February 27, 2008
Check Out This Weeks Free Will
On this week's Free Will on Bloggingheads, Will Wilkinson discusses behavioral economics with Dan Ariely, author of Predictably Irrational. It is an interesting discussion, and it addresses some topics that I think are somewhat confusing for those who aren't economic-minded.
One topic (among many others) they mentioned are the limitations to the economic axioms. One being full information.
Dan Says:
He goes on to illustrate by asking Will to compute the optimal mortgage payment he should take on. Will responds with the quick and dirty computation of a mortgage should be no more than 1/3 of your annual income. Which Dan says is exactly the problem. People simply can't make the actual computation that would include the time value of money, opportunity costs and so on, and they are forced to use a rule of thumb.
One topic (among many others) they mentioned are the limitations to the economic axioms. One being full information.
Dan Says:
"When we design things like healthcare policies and insurance policies and so on, we almost seem to assume that people can do all these computations instantly and basically be infalable."
He goes on to illustrate by asking Will to compute the optimal mortgage payment he should take on. Will responds with the quick and dirty computation of a mortgage should be no more than 1/3 of your annual income. Which Dan says is exactly the problem. People simply can't make the actual computation that would include the time value of money, opportunity costs and so on, and they are forced to use a rule of thumb.
Okay, Lets Get Serious
I've been neglecting my blogging duties a bit lately, but I think this is worth mention. NPR briefly discusses the Bankruptcy Bill and how Lenders say it will hurt homeowners. [listen here]
This is tricky. The bill would give Judges the ability to rewrite the mortgages of those who are about to go into bankruptcy. My outlook may be a little pessimistic, but the only outcome I can see coming from this is disaster. It's one of those sitcom-like situations where something goes awry and every goofy elaborate plan to make things better snowballs into a bigger mess, and when the credits roll we've all learned a valuable lesson about dealing with the consequences of our actions from the get go.
Maybe it is time to say enough is enough, but I don't think Judges are the right people to make these decisions. Our court systems have more pertinent problems. The thing is, foreclosure (especially now) will hurt everyone. Lenders are going to lose money on foreclosed upon property, and it's obviously a negative outcome for the homeowners. I think flexibility is going to be a major factor in how the housing market will bounce back. HUD has given incentives for lenders to mitigate losses on foreclosures. Most lenders are willing to be flexible, but home owners need to approach them for help. One of the problems is most home owners don't do this. I'm sure all the stat-spewing and scaremongering doesn't give someone in financial trouble a lot of hope, but even aside from the HUD's role, Lenders have reasons to not want to foreclose.
One reason would be that most often, when a mortgage is signed, it is immediately sold and repackaged as an equity. The mortgage payments goes toward a pool that is payed out in dividends and a piece of the cash flows go to the holding firm as compensation. When a home is foreclosed on, this stream of cash flows is gone. Another reason is the fact that, even if a Lender doesn't resell the mortgage note, they will face a loss on the value of the home. It is not a sellers market right now, so when a bank forecloses they often end up reselling the property at a loss, not to mention the fact that they have to endure expenses such as maintaining insuring the property until it is sold.
If I could give the Dems that are pushing this bill a word of advice it would be patients. There is no quick fix and it needs to be understood that this problem will be burdening the economy for some time. There isn't much sense in further complicating the issue and trying to manipulate markets with no idea of the unintended impact it may have. Some measures may help in lessing the severity of the problem, but it isn't going to just disappear. If anything, it would be helpful to keep home owners from walking away from their mortgages and realizing that Lending Institutions are most likely willing to work with you. And for those watching from the outside while biting your nails, just remember this too will pass.
Update: Megan McArdle mentions Fannie Mae's 3.6 trillion fourth-quarter losses and the Office of Federal Housing Enterprise Oversight's announcement to lift the caps on its portfolio. Check it out.
This is tricky. The bill would give Judges the ability to rewrite the mortgages of those who are about to go into bankruptcy. My outlook may be a little pessimistic, but the only outcome I can see coming from this is disaster. It's one of those sitcom-like situations where something goes awry and every goofy elaborate plan to make things better snowballs into a bigger mess, and when the credits roll we've all learned a valuable lesson about dealing with the consequences of our actions from the get go.
Maybe it is time to say enough is enough, but I don't think Judges are the right people to make these decisions. Our court systems have more pertinent problems. The thing is, foreclosure (especially now) will hurt everyone. Lenders are going to lose money on foreclosed upon property, and it's obviously a negative outcome for the homeowners. I think flexibility is going to be a major factor in how the housing market will bounce back. HUD has given incentives for lenders to mitigate losses on foreclosures. Most lenders are willing to be flexible, but home owners need to approach them for help. One of the problems is most home owners don't do this. I'm sure all the stat-spewing and scaremongering doesn't give someone in financial trouble a lot of hope, but even aside from the HUD's role, Lenders have reasons to not want to foreclose.
One reason would be that most often, when a mortgage is signed, it is immediately sold and repackaged as an equity. The mortgage payments goes toward a pool that is payed out in dividends and a piece of the cash flows go to the holding firm as compensation. When a home is foreclosed on, this stream of cash flows is gone. Another reason is the fact that, even if a Lender doesn't resell the mortgage note, they will face a loss on the value of the home. It is not a sellers market right now, so when a bank forecloses they often end up reselling the property at a loss, not to mention the fact that they have to endure expenses such as maintaining insuring the property until it is sold.
If I could give the Dems that are pushing this bill a word of advice it would be patients. There is no quick fix and it needs to be understood that this problem will be burdening the economy for some time. There isn't much sense in further complicating the issue and trying to manipulate markets with no idea of the unintended impact it may have. Some measures may help in lessing the severity of the problem, but it isn't going to just disappear. If anything, it would be helpful to keep home owners from walking away from their mortgages and realizing that Lending Institutions are most likely willing to work with you. And for those watching from the outside while biting your nails, just remember this too will pass.
Update: Megan McArdle mentions Fannie Mae's 3.6 trillion fourth-quarter losses and the Office of Federal Housing Enterprise Oversight's announcement to lift the caps on its portfolio. Check it out.
Thursday, February 14, 2008
HAH! Hahaha!!
Ohh today has two themes. Hilarious and Valentines Day. They just go together so well.
Online Dating Helping Pathetic Women Get Their Hopes Crushed More Efficiently
Online Dating Helping Pathetic Women Get Their Hopes Crushed More Efficiently
Tuesday, January 29, 2008
Neato
I apologize for my lack of recent blogging, but I've got some things to catch up on. I'll get back at it soon. In the meantime, this was sort of nifty.
Friday, January 18, 2008
One Day I'll Be a Cosmolifestyleorangebeltwaytarian Too!
I think Douchebagatarian has a nice ring to it.
To Be Clear....
From the reactions I got it seems I may have been misunderstood. To be clear, the point of yesterday's post is not "people should diet" or "health conscious people are somehow morally better". The point was it's ridiculous to get self defensive and hostile in response to someone's eating habits. Especially when they are not trying to influence your own.
To be sure, if I really wanted to eat an entire pizza I would bet that I could. It doesn't necessarily mean I should or will. If you want to eat an entire pizza that's your prerogative, and I'd say bon appetit. Just like if you want to eat vegetables, that would also be your prerogative. You have a 'God given right' to eat however you want, and that goes for both sides.
What I don't understand is how it came to be that the subject of healthy lifestyles is now taboo, and people are faced with disincentives from those they associate with, and what I mean by this is the economic concept of reward and punishment. Anyway, I'm done on this topic. I hope that cleared some stuff up.
To be sure, if I really wanted to eat an entire pizza I would bet that I could. It doesn't necessarily mean I should or will. If you want to eat an entire pizza that's your prerogative, and I'd say bon appetit. Just like if you want to eat vegetables, that would also be your prerogative. You have a 'God given right' to eat however you want, and that goes for both sides.
What I don't understand is how it came to be that the subject of healthy lifestyles is now taboo, and people are faced with disincentives from those they associate with, and what I mean by this is the economic concept of reward and punishment. Anyway, I'm done on this topic. I hope that cleared some stuff up.
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