Yes, I am a genocidal maniac

This has me flabbergasted, or maybe bumfuzzled. Some stooge is posting special pleading to make the rules to tax hedge fund managers weaker. I pointed out a couple factual errors, and the loophole closing need for taxing sale of interest. Typical replacement McArdle, except for a couple of things. The guy was anonymous, and spreading some absolutely self serving drivel. In other words, almost certainly part of The Atlantic's new business model, aka Everything has a Price. Not something that you'd defend passionately, right? In fact, "Dr. Manhattan" never showed up, even when it was pointed out that the language he was complaining about had already been withdrawn. Ah, but the loyal acolytes of the Cult of the Hand are everywhere.

And of course, ready to jump in with something completely irrelevant.

surrealityslovak 1 day ago in reply to Downpuppy If I start a corporation and raise equity in the future, I inherently only participate in gains and not losses. Are all entrepreneurs thus not actually engaged in risk taking endeavours? This attitude is incredibly ignorant and obsolete. That most of its proponents are also proud of their own "anti-corporatism" is not exactly surprising. Neither is the fact that they haven't thought through the inevitable results of there proposals - an economy that is solely the province of elite family groupings with roughly no growth. We've been through a period without corporations, with unlimited liability, and where only rich families could start businesses. It was called the Dark Ages for a reason. This pose should only be attractive to genocidal enviromentalists, and anyone who adopts it should be scene as an ipso facto genocidal maniac

If anyone can translate this from Ferengi, I'd be much obliged. I already wrote the essay on why Corporations have ABSOLUTELY NOTHING to do with carried interest rules. You can guess, to a round number, how much response that got.

Red X Maintenance

This morning has been time to go through the lbog & fix busted pictures. It means having to look at way too many pictures of Kate Beckinsale ass, butt I do it for you.

If I missed any - other the Ricks, that I'm still working on, please drop a comment. While here, might as well continue Thursdays look at the Kaplan Test Prep Daily with a mention of what they call "Fact Checking" - Pure Wingnut Spin! Pure shell game - comparing pre-recession spending with post, because Shut Up, that's why.

Everybody Lies, but only some get paid for it

That core parts of our economy & government are openly & severly corrupt is not really a secret. Consider securitized mortgage lending, in all its stages, as it existed 6 years ago: Borrowers lie routinely. Mortgage brokers both lie for borrowers, and to them. If the borrower was unqualified, they would qualify them. If they were qualified for a decent loan, the brokers would sell them on a worse one, to increase their kickbacks. Originating lenders happily accepted either way, knowing they could dump the garbage on securitizers. The securitizers really went big, into billions of dollars, stealing from both ends & the middle. Then, once the loans started to go bad, the servicers filed mounds of utter BS to foreclose on the borrowers, and keep them out of decent modifications. Judges & sheriffs looked the other way at the crap passing from the banks, so the property went back onto the market.

Which isn't really the topic, but just to point out how pervasive and blatant it all is. What we need to do is look at how many ways this all should have been stopped, and why each of them isn't functioning. I smell long running series! An easy to understand one is the Press. Take Washington Post reporters chats. Please. Despite persistent faceplants, they keep sending out their troops to amuse us with their ineptitude. This weeks highlight was an apologia for Bain by someone claiming to be a Rabbi but unfamiliar with the Rabbinical tradition of having a clue what you're talking about.

Q.pension funds how much money did bain leave for taxpayers to pickup after they removed pension funds from companies they bankrupted? – May 23, 2012 12:00 PM Permalink A.Brad Hirschfield : Quite a bit actually, because the profits get taxed, but that is not what you are asking. I think that you are asking about the lives of those workers who lost out when a business was closed by Bain. And there is no doubt that that did occur. Of course the profits from those closures went to other pension funds, including billions to public employee funds, that sustained other workers.

Wouldn't "I don't know, and have no busines discussing this until I find out" have been a much btter answer?

Q.Rate of job losses You said earlier: "The rate of job loss in those companies Bain controlled were w/in 1% of the average durring those years.". Do you have any sources for that? I'll wait. – May 23, 2012 1:39 PM Permalink A.Brad Hirschfield : Ah an easy one. Just a simpl request for more information. I love it. Check out today's Washington Post, especially the Editorial page. As I am on line writing you, i can not get you the link. Thanks for understanding!

The study he referred to was on Private Equity refis overall, not Bain. And, thank you DougJ:

Q.Bipartisanship I love your blog because you're one of the few bipartisan centrists who realize that both sides do it, where "it" is pretty much any bad thing. You're like the post-punk David Broder. Have you always been so fair and balanced or is it something you learn over time as journamalist? – May 22, 2012 11:14 AM Permalink A.Alexandra Petri : ALL RIGHT, WHO FILLED THIS CHAT WITH PLANTS WHO ARE BEING MUCH TOO KIND? I'm going to start using "post-punk David Broder" on my promotional materials. Thank you for saying this. I don't know how often I succeed at this, but I really, really try. When I finally retrieved my mail after several months of allowing it to suppurate in the mail room, I was pleased to have notes from both sides complaining in strident terms that I was ruining everything. Some weeks the bar swings one way and some weeks it swings the other, but obviously no one party has a monopoly on idiocy. That would make things too easy.

I read some of her other entries. She's very careful to say or know nothing. Not quite as bad as Shailagh Murray. Her dismissive stupidity set a standard none could hope to match. And now, she's paying the price. Time to remember what a good reporter is:

Hillbilly Hipsters

There's pretty good video called "Cursing the Ohio" Average song, very distinctive style. Suspenders & flop hats. Seems it got picked up by a band called the "Lumineers"

In general, I kind of prefer their music. Anyhow, the style is also used by BR549 & a few other groups (oddly enough, not including BR549s evil twins, The Derailers) Point is, it's false. Roots by people who were raised no such way. False in a good way, not the evil false of SE Cupp or the mortgage industry. The fraud in the mortgage business - from borrower to agent to bank to bundler to servicer & through courts back to borrowers - is tomorrow's topic. Tonight, let's just dance.

Investment Theory is Bunk

So I'm in the middle of grinding out the CPE for renewing a couple licenses. Fortunately, they're pretty much the same, so I can do investment theory twice. Could do it in my sleep, now. Risk versus return, right?

OK, let's go calculate some expected values based on Beta, the sacred ratio of a stocks volatility to the market! Alas, maybe not. Seems that since, oh, about forever, the way to make money is invest in companies that make money. Who knew? Haugen & Harris. They documented in 1972 that more stable stocks performed better. Then Haugen showed that it held in 1970-1990. Now, they've shown it for 1991-2010. So, how has portfolio theory reacted?

Yes, you're shocked. But now that you've peeled yourselves off the floor from the realization that all the investment professionals are trained in utter bull, is this an opportunity? Heck, yes. Like in more important endeavors, it's just a matter of finding what the herd ignores.

I'll be needing those eyebrows back. And kids: a warning about what happens if you mention Hittites on the internet: If Henny Youngman were a pelecypod amellibranch, he’d be you. (By the way, Phra the Phoenician says “hello”!)

The James Russell Lowell Memorial Circle Jerk

Derek Lowe turns 39 in 2 weeks. He's 6-1 for the Indians, and threw a shutout today. The Derek Lowe that appears often in the Atlantic is a drug researcher with a successful drug development record of 0/life. While Megan McArdle is off producing a book-shaped object, various losers are filling in. On the whole, they are less inept propagandists than Blenderella, but are being widely ignored. Which is, of course, what they deserve. So why am I dragging them into the light for the benefit of the dozens of you who will look at this for the pictures?

Because "Make the rubble bounce" has always been the motto here. So let's consider the Manzi/Rossman convergence. The 2 of them have been regaling us with some utterly basic observations on inference, livened only by their nominating each other for Nobels for material any undergraduate should find routine.

Not that I have any evidence that there is no edible food in Canada. Just that there is reliable data that people really eat this crap. Which is really aboot all that Manzi & or Rossman have to say. Manzi:A physicist generally answers that question by assuming that predictive rules like the law of gravity apply everywhere, even in regions of the universe that have not been subject to experiments, and that gravity will not suddenly stop operating one second from now. Except when they don't. It was the 19th century when physicists started questioning whether laws were universal. In any event Manzi rattles on a bit, never gets around to the problem of what happens when your subjects have read the same stuff you have, or even the basic question of what makes a connection plausible as a testable cause or a likely artifact, and thinks he's said something brilliant. Rossman introduces the notion that correlation might be different in selected subpopulations:

ie, if you select for the maximum of one of 2 variables, it will seem that people tend to have one or the other. ((He managed to mix up whether the vertical axis is intelligence or talent.In which case, Natalie Portman, Ashley Judd, Jodie Foster & She Whose Ass Must Not be Mentioned destroy the point anyhow. At least he wasn't as boring as Manzi talking about pointy shoes.) This is something that non-statistician Bill James was hammering 30 years ago. Anyhow, other than smugness & namedropping, none of this is particularly offensive. So why bother mentioning it? Wellllll, how often have you run into people who simply reject any form of statistical inference? It's not prooooven! they cry. Yes. They're idiots. Think good thoughts.

Update: I hadn't cared enough about the jargon "conditioning on a collider" to look it up, but thanks to the comment, I did. Turns out that Rossman's post was just a regurgitaion of something from 2010 & something from earlier in 2010. After over 2 years, he still had crappy labels on his axes, and hadn't thought them through.

The meaning of TV is TV! Randomness through the air.

(Warning : Lame content, only left up as a reminder that I can't get away with laziness. Please do not waste 30 seconds of your life reading this.) As in television. The end of the spring season just brings it in waves.

And while I have a limited number of shows that I can watch, they're all on tonight from 8-10: How I Met Your Mother : Double episode. Sign that the show is about cooked. Which it is : There have been more unwatchable than watchable episodes this year. oest of the cast - Hannigan, Segal, Smulders, Harris, yup everyone but Ted - has an outside career going better than this show.
76ers-Celtics : There's a lot of time in a basketball game. There's a limited time I watch them. Can be good, can be painful.
Bones : Just good old fashioned TV. Forensics, silly jokes, decayed corpses - just fine without the rather lame sexual tension
America's Got Talent - but we probably won't see any this early. Haven't seen Howard Stern in a while, so there is that.
Eureka - After Robot Dystopia & Brains in Vats, the old body switch plot will be quite relaxin'

Have to nod to last nights winner - Kim Spradlin. Despite totally controlling the game, if she hadn't won the last challenge, the other 3 might have had enough basic awareness that they needed to dump her. One of the ongoing puzzles of Survivor is how often there's an obvious winner. When it comes down to the last challenge, the point where all the minions in their shadow should rise up - it never seems to happen. Having already shown you Kim, this is Kat:

For the record, like everyone else I doubted her open heart surgery story. This picture shows the scar. Girl has definitely been through some stuff. Which is inspiring : To know that the human spirit can endure suffering without obtaining depth is quite liberating. Remember Gervase?

In our main focus, Linda Katehi still has a job. Her previous job has been filled by promoting a Dean. Which didn't slow the gravy train for search firms at UI. Thanks for playing. Time to watch some TV!

What does somebody have to do to get fired around here?

Linda Katehi managed to turn the University of California at Davis into an international disgrace. She did it with incompetence, illegality, and violence. Her actions since then have been spineless and vindictive.

And she still has her job. Is it impossible to find someone who can do better? Is $400,000 per year too little to find basic competence? Or is it about the solidarity of the ruling elite? If Katehi goes, who is Charlie Reed's firewall? Clearly, there is a simple solution : Students and faculty walk. Leave the administrators to administer empty buildings.

Bugs Meany, Master of the Universe

The Encyclopedia Brown series is the endless saga of a creative lad, Brian Ash, always coming up with a new plan to enrich himself & entertain his friends.

Then that snotnose Brown kid comes in and spoils everybody's fun.

The key to understanding investments in the modern world is to realize that Brown is sitting in his garage, hoping for business, but nobody comes to see him. That other story is wildly exaggerated.

That the thought leaders of finance are producing lore, unfettered by facts or analysis, has become fairly obvious. You can get that story from the Shrill One or any of the economists still trying to do reality based work.

Knowing that what's being sold is hooey, who is doing the buying?



I've been spending some time at Seeking Alpha lately, where the lower members of the Cult of the Hand gather to share the myths.


One of the contributors describes himself as a friend of Porter Stansberry. Stansberry, long ago exposed, is still chugging along, and in fact At the latest Casey Research conference, respected investment analyst Porter Stansberry stood at the podium .

Every now and then, people with basic math competence look at stock markets. The results are pretty consistent : Chart based analysis is bunk, investment advisors are useless.

But why listen to them when there's money to be made?!
Simply by using arcane sounding, but really simple & totally useless math, you can now fill page after page with worthless detailed computations. Consider the ever popular "Dividend value formula". According to this model, a dividend of 78 cents can make a stock worth $60!

Consider a common stock that paid a $.78 dividend per share at the end of the
last year and is expected to pay a cash dividend every year at a growth rate of
15 percent. Assume the investor's required rate of return is 16.5 percent.
The value of the stock would be:
D1 = Do (1 + g) = $.78(1 + 0.15) = $.90
P=D1/(r-g)= .9/(.165-.15)=$60

Now a sane person would say: You can assume dividend growth for a year or 2. Beyond that is nuts. (Which doesn't stop people from projecting WalMart to grow at 10% for 10 more years. A finite earth is not compatible with this religion.) A 78 cent dividend justifies a stock value of maybe $6-$7 if you want 15% returns. But that's not the formula, so hordes of drones memorize the formula. Other formulae are less obviously silly, but combine massive unknowns & silly assumptions about how the future will look like the pas in the background, with trivial arithmetic that the acolyte is supposed to supply in the foreground. Beta, anyone?

There are more powerful forces floating the cult, of course. It's not a coincidence that they're predominantly white males. Holding onto the runes of power, to which they know they were born, by means of belief in the creed? Can't beat that with a stick. Particularly when you were the kid who couldn't handle real math & had to take the Business type.

Want to take a dip into the chantings of the cult?

Rantings about "false prosperity", debt bombs, imminent currency collapse. I was going to do a bunch of quotes, but if you're here, you've seen it all in a hundred Megan McArdle posts and comment sections. Must clear head



Which is where this sort of turns into financial advice : Know that the people in charge of finance are mostly either believers in this bollocks or act as if they were. Mixed in with the rubbish, there's some solid work. In the Stansberry stuff, Katusa actually talked a lot of sense about why oil markets won't crash utterly. Oil fell about $8 last week. And Porter Stansberry is still a flim flam man.

The day that is not today

I just had a mildly Zen comment appear & disappear, but it got me thinking. So I looked into some Koans of questionable authenticity.
58. Arresting the Stone Buddha A merchant bearing fifty rolls of cotton goods on his shoulders stopped to rest from the heat of the day beneath a shelter where a large stone Buddha was standing. There he fell asleep, and when he awoke his goods had disappeared. He immediately reported the matter to the police. A judge named O-oka opened court to investigate. "That stone Buddha must have stolen the goods," concluded the judge. "He is supposed to care for the welfare of the people, but he has failed to perform his holy duty. Arrest him." The police arrested the stone Buddha and carried it into the court. A noisy croud followed the statue, curious to learn what kind of a sentence the judge was about to impose. When O-oka appeared on the bench he rebuked the boisterous audience. "What right have you people to appear before the court laughing and joking in this manner? You are in contempt of court and subject to a fine and imprisonment." The people hastened to apologize. "I shall have to impose a fine on you," said the judge, "but I will remit it provided each one of you brings one roll of cotton goods to the court within three days. Anyone failing to do this will be arrested." One of the rolls of cloth which the people brought was quickly recognized by the merchant as his own, and thus the thief was easily discovered. The merchant recovered his goods, and the cotton rolls were returned to the people.

This may not have been the sage I was looking for.

Learned a thing or 2 from Charlie, don't you know?

Steve Earle isn't exacty a one hit wonder. He had 2 hits! Let's get both hits right out there: As usual, this was followed by coke, rehab, and a long career as a producer, including everybody's darlin', Lucinda Williams. Thing that gets my attention is how Vietnam was so much more involving than all our automated wars against Islam. There are 2 big differences : The draft, & body armor. I'm just young enough to have missed the draft, but old enough to have known a lot of screwed up vets. Heard tales of hair trigger roomates, worked with a lot of guys who had pre-1974 veterans preference. Made an ass of my teenage self in an Arizona ghost town occupied by a crew of mellow potheads trying to adjust. A few of the Vietnam vets are still around, the Korean ones are dropping like linebackers with CTE. One thing is clear : Our current relationship to the military is absolutely diseased. Soldiers are still primarily recruited from tose with no better options. Once they're done with the service, the undamaged move back to about where they were (veterans preference and weapons training still help many into police & other civil service jobs), the damaged attempt to deal with their wounds and demons. We've elevated them in myth, though not in reality, and that's a horribly unstable situation. Another thing to remember is that historically, armor comes and goes quite often. Soon after an effective set is developed, weapons are developed that make it worse than useless. Since the 2003 sack of Iraq, we've had extremely low fatalities relative to the level of opposition. It's mostly due to the fact that we have effective body armor. I don't expect it to last much longer. In any event, there's a point somewhere in here about our society deciding reality is optional. Celebrate the soldiers. Ignore the truth of empire. Don't even mention the drone attacks. Soon our weapons will rule the world!

Gag me with a corndog.

Hang up & pedal

One of the weirdest things I see around town these days is people on bicycles talking on cell phones. Riding a bike here is a very scary thing. The bike lanes they have are narrow channels between moving traffic and popping doors, populated by trucks, taxis, buses and people on cell phones who aren't sure whether they're driving a 3 ton vehicle or sitting in their living rooms. Yet some people can zoom along in this scary, scary space talking a blue streak on the phone & navigating on autopilot. Yet they don't seem to be turning into roadkill. Perhaps they have the genes of Barbie, the Slayer of Vampyres? Local cities are attempting to save these fools from themselves. To do this, they station a couple of cops at a busy intersection & pull over all the bikers that jump the green for a couple hours. In the other 166 hours a week, & everywhere else, the truly clueless are rolling along the wrong way, riding on sidewalks, and generally following all the traditions they learned 60 years ago 10,000 miles away.

I used to be a big time city biker. Did OK, other than a bad habit of getting doored. Nowadays, there are some back issues

Alas, I fear breast reduction won't help.