Finally Links

Busy busy. No comments on the last essay. Hmm. Perhaps it was illegible, I did write it on a plane and quickly edit prior to posting.

  1. Woo. Nukes.
  2. And guns. More guns?
  3. LOL.
  4. Debt.
  5. And speaking of debt … someone around here was arguing that incentives to save have been on the rise. Whoops.
  6. Art and emotion.
  7. I hadn’t realized my younger daughter was so exceptional.
  8. The Nile and denial.
  9. Cypriot economics.
  10. An amazing algorithm for the unbreakable password.
  11. There’s two ways of looking at this alas. Anyone who centers their religion of any sort on Jesus of Nazareth belongs anthropologically speaking to a Christ cult, which in some circles are called Christian(s). However, Nicene confessing Christians commonly use the term Christian to mean Nicene confessing Christians, which a person who denies the Resurrection is not … and myself being a Nicene Christian agree, that failing to confess belief in the Nicene creed means … you’re out of the club.
  12. Democrats like to point out they are better educated and pretend to smarter than the conservatives across the aisle. How they do that, is sometimes quite amazing. Wow, dumb like that has to be practiced for generations I imagine.
  13. A ghost slum?
  14. Just imagine how bad this would be in the absence of global warming, eh?
  15. News from Syria.
  16. Well, apparently nobody in the White House read Fault Lines.
  17. That STEM education. It always amuses me when politicians tout how we “need more STEM” students and squawk about needing to promote STEM. Uhm, so .. Mr Politician … tell me, why didn’t you get a degree in a STEM field, hmmmm?

10 Responses to Finally Links

  1. And speaking of debt … someone around here was arguing that incentives to save have been on the rise. Whoops.

    Kind of strange, the piece says this is the graph ‘for January’ of the savings rate for the past few decades. ‘For january’? Do they mean the rate only for the month of January each year (which could simply reflect how people have changed their finances right after Christmas each year) or that it cuts off on January 2013?

    It also illustrates my points about incentives to save being always two sided. In 1989 the rate was around 6%, now it hovers around 2-3%, although there was a rapid spike back up to 6% in 2007/8, supposedly when your ‘war on savers’ was in full swing with super low interest rates.

    Turn to the asset holding graph right beneath it. Retirement accounts when from an average of $10K to nearly $35K while liquid savings assets seemed to have remained roughly unchanged.

    So if we have gotten so bad at savings why do we have 3 times as much in our retirement accounts? Shouldn’t we instead be asking what was wrong with us back in 1989 when we had only 1/3 as much for retirement despite saving nearly twice as much?

    BTW, the chart’s ‘for January’ starts looking suspect when you look at this
    http://www.tradingeconomics.com/united-states/personal-savings

    The savings rate in the last two months of 2012 shot up to 6.4% which was much higher than it’s been for the first 10 months of 2012. The 2.4% in 2013 seems to simply be a correction to that extreme.

  2. Well, apparently nobody in the White House read Fault Lines.

    Maybe some of you even remember the efforts under the Community Reinvestment Act where the government pressured (with possible fines) banks and leaning agencies to lend to a broader set of people, including those with lower credit ratings.

    Never happened. Let me repeat, never happened.

    Study up on Countrywide Mortgage and Bank of America. Why did BoA need bailing out? Because it paid an insane amount of money to buy Countrywide, which wasn’t covered by the CRA. But Countrywide was so loaded with subprime loans and so liable for subprime loan packages it sold to other investors that BoA was brought to its knees asorbing their debts.

    Get it right, BoA never made a bunch of subprime mortgages due to the gov’t telling them they had too. They made a bunch of subprime mortgages because they wanted too and then went out and brought a subprime ‘superfactory’ because BoA was scared its competitors would get all the subprimes the market was minting so they decided they needed their own inhouse ‘subprime farmer’.

  3. Just imagine how bad this would be in the absence of global warming, eh?

    Let me guess, the globe isn’t warming because it snowed somewhere right?

  4. http://research.stlouisfed.org/fredgraph.png?g=hal played around with the graphing tool and did savings rate together with a measure of interest rates. Rate increases seem to be associated with fall, not rise, in savings rate and vice versa.

  5. Boonton,
    Hmm. You need to read Fault Lines too, apparently.

  6. Boonton,
    Except you don’t have any way of knowing which is cause and which is effect. Market thinking would suggest a rise in savings would result in a fall in interest rates and vice versa which is exactly what you saw.

  7. So now you’re going to propose saving causes interest rates rather than interest rates causing savings? That would seem to require you to ditch your assertion that low interest rates are some type of gov’t policy to discourage saving or harm savers then. You can argue for A, you can argue for not A, but you can’t quite argue for A and not A at the same time.

  8. Boonton,

    You can argue for A, you can argue for not A, but you can’t quite argue for A and not A at the same time.

    Apparently you failed economics (I of course, didn’t fail economics but instead never ever took any courses at all in it). If I lower prices demand can rise, my lowering prices drove the higher demand. Also, an increased demand can spur a seller to raise prices. See both sides can drive the steamboat. A and not A. Voila.

  9. You don’t say “demand can rise” if prices are lowered. You say ‘quantity demanded rises’. Important distinction.

    Imagine your simple demand curve, low price high quantity high price low quantity. If the price goes from one point to a lower point, you are moving along the curve to the new quantity. YOu say ‘demand rose’ if the entire curve shifts upwards.

    The supply and demand curve also are assuming everything is held constant. In reality there’s lots of things that make up the demand function. For example, the price of substitutes and compliments. If hotel prices fall at vacation spots, airlines may sell more tickets even though they raise prices. If the price of pepper collapses, salt sales may go up even though salt’s price is unchanged. But esp. in the short term prices are thought to be the main driver of quantity so the demand curve is usually depicted in only 2 dimensions with price as the independent variable.

    See both sides can drive the steamboat. A and not A.

    No but you do hit upon an interesting point. Perhaps the interest rate is not the main ‘price’ of saving. If that’s the case you’re not going to ‘encourage saving’ with higher interest rates.

    When we talked about savings before, I pointed out to you there’s two conflicting motivations at play. On one hand the interest rate means if I save more today, then tomorrow I get more income. On the other hand, if my goal is to have $X tomorrow, a higher interest rate means a lower amount of savings today will accomplish that goal. I don’t think you can identify this duel motivation with products and services. If airline ticket prices drop, I can buy more tickets. Assuming I like travelling to places, more tickets are better than fewer tickets.

    But savings’s cost isn’t so much the interest rate as forgone consumption. If I save the extra $100 I lucked upon today, then I loose a night out today. What do I gain? Two nights out in 20 years? The relevant prices at play here are how much I value consumption today versus how much I think I’ll value it tomorrow. When I’m 70 a happy night out may be sitting with a drink at Starbucks for two hours reading a book. $100 saved today may therefore buy my 70 yr old self a whole month of nights out. Therefore I’m inclined to save less because fun nights out today are much more expensive and tomorrow they will be much cheaper.

  10. Hello there! I know this is kinda off topic however , I’d figured I’d ask.

    Would you be interested in exchanging links or maybe guest writing a blog article or vice-versa?

    My blog covers a lot of the same subjects as yours and I believe we could greatly benefit
    from each other. If you might be interested feel free to send me an e-mail.
    I look forward to hearing from you! Wonderful blog by
    the way!

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