August 23, 2011

Markets hate uncertainty

Filed under: Economics, Government, History — Tags: , , , — Nicholas @ 13:34

I’ve often remarked that the economy won’t — can’t — recover as long as governments (the US government in particular) keep messing around with the rules of the game. Amity Shlaes explains why:

One product makes clear exactly how unusual this year’s slide has been, and offers a clue as to why 2011 broke the rules. It’s called the Congressional Effect Fund. Founded by Wall Streeter Eric Singer in 2008, the fund is premised on the idea that equity markets dislike a hostile Washington, tolerate a friendly Washington, but prefer an inactive Washington above all.

It follows that stock-market rallies would come most often when Congress is idled — in recess, at home, in the districts. From 1965 until early this summer, the Standard & Poor’s 500 Index, Singer’s proxy for stocks, rose 17 percent while Congress was out of session versus only 0.9 percent while Congress was working in Washington.

In one study, four scholars took a step back to look at a century of returns — from 1897, just after the Dow Jones Industrial Average was founded, to 1997 — and found that average daily returns when Congress was out of session were almost 13 times higher than when it was in. Their explanation: “Perhaps the market enjoys the temporary certainty exhibited by the absence of Congressional decisions.”

Singer is blunter. About Washington’s impact on the economy, he says simply: “Congress subtracts value.”

The regulators are still on the job, but the legislators appear to be the ones causing the greater degree of uncertainty — and thereby limiting market opportunities. Nice work, government.

A nice reminder that I haven’t listened to “Finlandia” recently

Filed under: Europe, History, Media — Tags: , — Nicholas @ 13:23

Which I quickly remedied while reading this article:

Wildly popular a century ago as an icon of Finnish nationalism in a late-Romantic vein, Jean Sibelius was largely dismissed by music aficionados after World War II as something of a conservative lightweight. So why is the Bard Music Festival this month featuring his work in a series of concerts titled “Sibelius and His World”?

Because his condemnation, much like his popularity, was based on reductive assumptions colored by politics. Sibelius’s aesthetic paradoxes mirror those of his biography, and his iconoclastic work deserves close, fresh, sustained, and open-minded attention. A modernist in traditional musical trappings, a globalist whose work spoke in a nationalist dialect, an innovator whose pleasing tonalities snuck his inventions into the popular ear, Sibelius is as underappreciated today as he was perhaps overlionized between the world wars.

[. . .]

Like many of his Finnish contemporaries, as a young man Sibelius embraced the idea and dream of Finland. The notion of the distinct Finnish nation was redefined along the lines of a mythic and literary heritage embodied in the epic The Kalevala. Ironically, the generational embrace of the Finnish language was somewhat awkward for him, because Swedish was his primary and dominant language. Nonetheless Sibelius, more than any other artist, managed to define and embody the spirit and aspirations of an emergent national movement. By 1914 he had become recognized worldwide as the standard-bearer of Finland. For the rest of his life (and to this day), Sibelius’s primary reputation has been as that nation’s granitelike icon.

Ah, “Finlandia”, followed by the “Karelia Suite” and the “Lemminkäinen Suite”. Lovely.

Blatchford comes not to praise Jack, but to bury him

Filed under: Cancon, Media, Politics — Tags: , , , , — Nicholas @ 13:16

Christie Blatchford displays great courage in saying publicly in her column what others may only be thinking in the privacy of their own minds:

Yes, his death at 61 was sad and too soon; yes, he made an enormous contribution to his party and a significant one to Canada (though I would quibble with NDP MP Libby Davies’ characterization that “He gave his life for this country”); yes, he fought a brave battle against cancer, as, mind you, does just about anyone who has it; and yes, he was a likeable, agreeable, smiley man.

Yet what was truly singular about him was how consumed by politics he was and how publicly, yet comfortably, he lived.

How fitting that his death should have been turned into such a thoroughly public spectacle, where from early morn Monday, television anchors donned their most funereal faces, producers dug out the heavy organ music, reporters who would never dream of addressing any other politician by first name only were proudly calling him “Jack” and even serious journalists like Evan Solomon of the CBC repeatedly spoke of the difficulty “as we all try to cope” with the news of Mr. Layton’s death.

By mid-day, after Prime Minister Stephen Harper had offered a few warm words about Mr. Layton’s death and rued that their oft-talked-about jam session had never happened, Mr. Solomon even expressed sniping surprise that “Jack Layton wasn’t the sole focus” of the Prime Minister’s remarks.

Mr. Harper, who clearly had not spent the day watching the national broadcaster and thus was unaware that the NDP Leader’s death was the only story of note, had gone on to mention the families of the 12 people (including six-year-old Cheyenne Eckalook; now there’s someone who died far too young) who perished in the Arctic plane crash on Saturday and the tumultuous events in Libya.

She also addresses the mawkish over-sentimentality of people who probably never met Mr. Layton leaving bunches of flowers, notes, and the like (at least in this case, we’re being spared the teddy bears) as public marks of grieving:

Held out as evidence of Canadians’ great love for Mr. Layton were the makeshift memorials of flowers, notes that appeared at his Toronto constituency office and on Parliament Hill, and in condolences in social media.

In truth, none of that is remotely unusual, or spontaneous, but rather the norm in the modern world, and it has been thus since Princess Diana died, the phenomenon now fed if not led online. People the planet over routinely weep for those they have never met and in some instances likely never much thought about before; what once would have been deemed mawkish is now considered perfectly appropriate.

Certainly, Canadians liked Mr. Layton, but the public over-the-top nature of such events — by fans for lost celebrities they never met, by television personalities for those they interviewed once for 10 minutes, by the sad and lost for the dead — make it if not impossible then difficult to separate the mourning wheat from the mourning chaff. His loss — his specific loss and his specific accomplishments — are thus diminished.

“[T]he doughnut burger was pretty much the healthiest thing offered”

Filed under: Health, Randomness — Tags: — Nicholas @ 07:37

The horror, the horror:

I wish you could see the disdain my boys are showing as they pose for this picture. They’re embarrassed for their mother that they have to pose with food that you could get at TGI Friday’s. A true Hoosier would have ordered this:

Now that’s dairy. Someday my kids will understand that there are things you do for Mom so that she doesn’t realize your next stop is this:

That’s a doughnut burger. They take a Krispy Kreme and put it on the griddle. Then they take a bacon cheeseburger and put it on top. No veggies for us. Of course, it’s topped with another Krispy Kreme. Noah, who has the most discriminating palate in the family, loved this. Aimee will deny liking this, but she darn well tried it. What makes the Indiana State Fair better than any other food adventure you can think of, though, is that the doughnut burger was pretty much the healthiest thing offered at the grill.

The value of computer models

Filed under: Cancon, Environment, Government — Tags: , , — Nicholas @ 00:06

Over the last several years, we’ve been bombarded with advice from climate scientists that in order to slow down global warming, we needed to abandon any hope of economic growth, as their models clearly showed that it was our growth that was causing increased temperatures around the world (except for the last ten years, somehow). In a case like this, we are assured that the models are (practically) infallible and that any delay in cutting our various emissions will invariably doom the planet to runaway temperature increases.

However, when we take the scientific community (or the more outspoken members thereof) at their word, and go with computer modelling, that’s dangerously irresponsible of us:

The current plan for Environment Canada is to monitor and measure less, and to rely more on modelling. Models are computer simulations based on scientific understanding that are applied to problems ranging from weather forecasting to economics. Models of complex systems can easily get it wrong, as the unanticipated economic collapse in 2008 revealed. This is not to say that models are not useful: in economics they give helpful guidance for investments and policy.

Models are, however, no substitute for measurements. No economist would suggest that we stop measuring economic performance, and neither should we abandon monitoring the environment in which we live. New data leads to better models and more accurate predictions.

H/T to Elizabeth for sending me the link and pointing out the models good/models bad case.

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