H McKee Stewart Jr

Musings on Business, Finance, and Economcs.

Archive for May 2010

Memorial Day, 2010

leave a comment »

A holiday in remembrance of things that we wish that we didn’t have to remember. Things that we’ve sterlized, or tried to avert our eyes. Yet the same sacrifices are being made on our behalf today.

In Flanders Fields
By: Lieutenant Colonel John McCrae, MD (1872-1918)
Canadian Army

In Flanders Fields the poppies blow
Between the crosses row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.


Written by hmstewartjr

31 May 2010 at 9:21 AM

Posted in Uncategorized

Grim Tidings on M3

leave a comment »

So what? What’s M3, and why should I care? For the uninitiated, M3 is a measure of money supply. M1 is essentially cash and near cash and checking accounts. M2 consists of M1 plus small, short term savings deposits. M3 is M2 plus large savings instruments, Eurodollars, etc.

So, what are the grim tidings? The Telegraph’s Ambrose Evans-Prichard reports that M3 fell at an annualized rate of 9.6% in the three months to April. That’s comparable to the monetary contraction of the Great Depression. Well, thank goodness that the Fed doesn’t bother to publish M3 data anymore. If they don’t publish it, it can’t be a problem, right? Right?

Except for the fact that monetary contraction, in conjunction with prohibitive tariffs on imports put the “Great” in the Great Depression.

From John Williams’ “Shadow Government Statistics”, here’s the skinny:

Chart of U.S. Money Supply Growth

If M3 contraction continues at this rate, it will be very, very bad news. As in “move your investment portfolio into canned beans, spam, and bullets”. And gold and silver coins in your physical possession.

Too soon to panic, but not too soon to start losing sleep.

Written by hmstewartjr

27 May 2010 at 10:38 PM

Posted in Uncategorized

Book Review: Super Freakonomics, Steven D Levitt & Stephen J Dubner

leave a comment »

If you were looking for a nice, tightly structured book about what most people think of as ‘economics’, this isn’t the book for you. Indeed, one strongly suspects that you can’t write that kind of book and generate the sales and celebrity* that Levitt & Dubner have.

It’s an entertaining book, but the author’s Jumble-o-Stuff style only makes the structure apparent in retrospect. That’s probably a strength; books focused on reaching the public don’t get very far if they are focused on tables, equations, and footnotes. Jumble-o-Stuff allows Levitt & Dubner to focus on providing illumination of costs, tradeoffs, and decisions.

Some of the key points:

1.People respond to incentives. The extent of those incentives are far more broad than what most people think of as economics. One of the great strengths of the book is re-pointing to human action as the core basis for economics.
2.People behave differently when they know that they are part of a study or are under observation. This tends to limit the value of social science ‘lab’ experiments.
3.Just about nothing is as cut and dried as you think. Who knew that “drunk walking” was not safer for the drunk than “drunk driving”?
4.The law of unintended consequences is the one that Congress always passes. People and the series of interactions that we call society are far more complicated than a central authority can understand.

There’s a lot of debate around quite a few of Super Freakonomics examples. The global warming discussion is particularly incendiary – most of Gore’s disciples are in deep denial concerning the fact that government and university scientists are subject to all of the incentives to deliver results that will keep the grant money flowing. After all, what government wants to let a good crisis go to waste?

It’s also heresy to even consider the notion that the costs associated with the most commonly suggested “fixes” of carbon taxes, “renewable” energy, etc. may outweigh the potential costs of doing nothing, or are even significant.

Even worse is the notion that we may be able to use technology to solve the problem. (Certainly, some of the technology presented sounds pretty iffy.) Still, assuming what the climate crowd says is true, most of the currently proposed mix of taxes, regulation, and subsidies to “renewables” won’t have a significant impact, technology may be the only way out. Assuming that the worst case scenarios a) materialize, and b) actually are as bad as expected.

You don’t have to be Al Gore to believe that burning stuff may not be the best for the environment. The relevant question might be, “are the alternatives less worse, or enough less worse to offset the costs of moving away from fossil fuels?”. Currently, at the present level of technology, wind, solar, and wave power are only feasible assuming that the government transfers massive amounts of money from the taxpayer to subsidize these efforts, and they carry their own environmental impacts as well.

It’s not a discussion we’re likely to have – at least on a serious level. It all goes back to incentives. The government has powerful incentives to be seen to “do something”. The subsides come from a wide base of taxpayers who have a very diffused interest. The subsides go to corporations, think tanks, universities, and labs who have a very focused interest in the money. This provides additional incentive to the politicians in the form of donations and favorable publicity from the beneficiaries.

Spoiler Alert: Why should suicide bombers buy life insurance? Hint: Data Mining.

Link to Amazon: SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance .

Here’s a link to the Freakonomics blog. Bookmark it.

* At least for an economist. The nearest parallel that comes to mind would be Milton & Rose Friedman’s “Free to Choose” a best seller and TV series.

Written by hmstewartjr

19 May 2010 at 10:46 AM

Posted in Uncategorized

Principles of Economics, Translated

leave a comment »

An insider’s look at Mankiw’s Principles of Economics.  Please keep in mind that I just saved you $156.07. I need to add a tip jar….

Written by hmstewartjr

11 May 2010 at 9:53 PM

Posted in Uncategorized

Is Powerpoint Making Us Stupid?

leave a comment »

Or just allowing more of us to display our stupidity?

Every couple of years, a disaster strikes, and PowerPoint catches the blame. This year, it’s the war in Afghanistan. Next up, the BP disaster in the Gulf.

Edward “Powerpoint is Evil” Tufte has been beating PowerPoint like a rented mule for years; yet somehow, we’re still surprised to find that PowerPoint isn’t a very good tool for the presentation of complex information. PowerPoint does have it’s defenders, but like any powerful tool in the wrong hands, it’s relative ease of use contributes directly to bad results.

What is good for the presentation of complex information is detailed written reports. Unfortunately, that assumes that a) the person preparing the report can actually compile the data and write in a clear, concise, and meaningful way, b) the audience is capable of following a written, sustained argument, and c) people will actually read the thing. Good luck meeting that set of conditions.

So, is PowerPoint – through encouraging endless bulleted lists, meaningless graphs, and embedded video – making us dumber? Is it a plot by Bill Gates to rule the world? Or is it just an easy crutch for poor presenters – those folks who we are constantly told fear public speaking more than death itself?

A classic chicken or egg problem. Unfortunately, the combination of the limits of PowerPoint and poorly thought out presentations are working in tandem to achieve this end.

As in many cases, there’s no escaping Dilbert:




Update: Ha! At least I got here a day ahead of Farhad Manjoo of Slate. From my keyboard to conventional wisdom in a day.

Written by hmstewartjr

4 May 2010 at 1:31 PM

Posted in Uncategorized

%d bloggers like this: