Friday, April 30, 2010

Linkism

A fabulous article about the history and, hopefully, destiny of the rating agencies. Kevin Drum makes a related point:
Rating the securities issued by U.S. banks is one thing, but can you imagine the United States government downgrading the sovereign debt of friendly countries? I can't. And if they did, can you imagine the reaction? I can. Oh yes, I surely can.

The ratings process, obviously, has big problems. But although putting ratings under the thumb of the U.S. government might solve one of those problems, it would also create a whole set of new ones. This remains a very difficult problem.


Tom Haberstroh is an NBA statistical analyst who I’ve been reading a fair bit of recently, and he has two good ones: the problems with offensive rebound rate as currently measured and why the Celtics will struggle to score inside on the Cavs (insider).

A good look at Rory Stewart, who's running as a Conservative for an MP position; he wrote a really good book on Iraq a few years ago.

On the continuing struggle of the Green Movement in Iran:
Beyond the leadership of the Green Movement, there are additional signs of fissures within Iran’s governing elite. On Ahmadinejad’s trip to the city of Qom earlier this month, according to one report, virtually every major ayatollah refused to meet with him—despite direct pressure from Supreme Leader Ali Khamenei himself. The Qom ayatollahs provide the theological legitimacy for the regime and their support is essential for any president’s success. While none publicly explained their reasons for refusing to meet Ahmadinejad, the symbolism was hard to miss.
This is a critical move, of course. Recall that the revolution was able to throw out the Shah only after the Ayatollah Khomenei and the clerics of Qom decisively intervened—before that, the movement was merely one of intellectuals and Communists, mostly in Tehran.

The culture of violence in Ciudad Juarez.

Excellent question—should we be restarting the consumer debt machine?:
Even though America is one of the world's richest countries, the American consumer has spent more than a decade living outside his means. As panelists discussing the problem of the "Frugal Consumer" pointed out, Americans hold debt equal to about 130 percent of their income. The average American household spends only about 14 percent of its income actually paying off any part of that debt. With a 17 percent real unemployment rate, household incomes are naturally continuing to fall; PIMCO chief Mohammed El-Erian warned that unemployment is now a "structural" problem, an eroding pillar of our economy. Real-estate magnate Richard LeFrak noted that so many homeowners are now underwater on their mortgages—owing more than the houses are worth—that they feel poor, and said that consumers won't spend as long as they feel poor.

The weakness of India’s Hindu nationalist party.

More problems with the California high speed rail project.

The carbon emissions of cloud commuting.

An interesting breakdown of the Tory Party in the UK ahead of their accession to power.

The pictures in this comparing L.A.’s smog in the 50s to Beijing’s smog now are really quite good.

Health care efficiency follies, payment edition. NYT version:
Last year, a study published in the health policy journal Health Affairs found that physicians in private practice on average spent nearly three weeks in time and $68,000 in staffing per year dealing with the particular administrative constraints of third-party payers. Doctors who were specialists could better afford to support these costs; but primary care physicians devoted as much as a third of their average yearly income (including benefits) to these interactions with the various health plans.
And this Slate article goes with an overheated headline but gives a nice overview of bundled payments and their general wonderfulness.

Matt Taibbi’s latest on Goldman.

Playoff Stuf

Rick Carlisle made a typical coach’s error last night: in seeking to eradicate mistakes, he made one. I’m referring, of course, to not playing Rodrigue Beaubois after it became clear as a cloudless day that the Spurs had no one to check Beaubois. This in a game where the Mavs had trouble scoring without Beaubois’s presence. But Beaubois is a rookie, and rookies make mistakes, hence no Beaubois. In a way, Carlisle’s reticence was justified: after he reinserted Beaubois in a desperation situation, he turned the ball over.

Carlisle’s typical of the coaching profession: look at George Karl/Adrian Dantley mysteriously giving Anthony Carter 16 minutes/game over the course of the regular season when you have Ty Lawson (rookie), a more productive option instead. My favorite examples, Bulls-wise, is Tyrus Thomas, a player who never learned better than making mistakes because he was never taught. Skiles simply yanked Thomas arbitrarily. He didn’t trust Thomas because Thoams made a few too many mistakes; instead, he played thoroughly mediocre Malik Rose instead, who didn’t make any dumb mistakes…but never made any good plays either.

This isn’t an argument that if you’re to make good plays you must accept the bad—though that’s true too—it’s that players, especially young players, are enthusiastic to produce and in the process they make some bad plays. Coaches like to obsess about the bad plays and ignore the good ones; it’s human nature, I suppose, to have the bad stuff stick in your craw and forget the good stuff.

Anyway, it’s damaging to their career. Your typical low-mistake player that a coach clings to like his security blanket (why do you think Kevin Ollie still has a job?) doesn’t make mistakes, but doesn’t make plays either. That means you’re wasting a spot on the floor on someone who might as well not be playing. An obsession with mistakes blinds you to production.

****

If the Lakers decide to play well, there’s no doubt: they close out the series. If they don’t, the outcome of the game is in doubt. I wouldn’t be surprised either way: it’s clear they prefer to play below their capabilities.

***

Speaking of the Mavs series, let’s cut it out about Dirk. I’m defensive about Dirk (as I used to be, by the way, about Tracy McGrady), because he gets an unfair amount of crap. What’s the best player Dirk’s played with? Steve Nash, for a few years before Nash’s peak? Josh Howard was OK for a few years. But Dirk’s never been paired with a near-elite talent. And all he does is produce, even in the playoffs. Check out his basketball reference page—look under “Playoffs—Advanced.” Is that a profile in chokery? I think not. And yet people hound him.

It’s a weirdly similar bond Nowitzki and Pau Gasol share: when their teams lose, they have a disproportionate amount of the blame assigned to them, when frequently they play their hearts out. They’re players with weaknesses, sure, but all players have weaknesses, many as significant as these two. To take a critically acclaimed athlete, Steve Nash—he can’t guard anyone. He’s not at Derek Fisher level, but still. Their strengths and weaknesses are so unusual for players their size, and their European heritage means they have no natural defenders, just a slight almost xenophobic tinge to criticism, an assumption that no one plays basketball, a quintessentially American game, like Americans. Well, as it turns out, Europeans have their own way of going about things, and it can be pretty effective. So, again, let’s lay off Dirk.

***

If the Lakers win tonight, they’ll beat their second round opponent in five or six. The Jazz have always had trouble with the Lakers, and this year—even in the depths of the Laker’s doldrums—they’ve been unable to win. The Nuggets are less likely to emerge, but with Nene facing significant injury, they don’t have the bodies in the frontcourt to even think about it. To say nothing of the fact that between J.R. Smith and Kenyon Martin, there’s a significant Insanity Quotient on the team that wasn’t quite exorcised by the removal of Dahntay Jones, America’s foulingest guard. They’ll have to move J.R. for a frontcourt body, I think.

On the other side of the Western bracket, I have Spurs over Suns in five or six. The Suns hide Nash on a nonfactor on offense. Sadly, the Spurs have no nonfactors for Steve to hide in: the game will be more “seek” that “hide.” The Spurs have to worry about Amare Stoudemire, who still has the athleticism to torch the Spurs—they have a weakness playing against athletic PFs—but I think it’s outweighed by the Spurs’ guard play, particularly Manu Ginobili, who oddly still remains misunderstood and underrated.

In the East, both series are 4 or 5 game affairs. I’m surprised by the critical consensus that the Celtics might push the Cavs: the Celtics have no good defender for LeBron (Pierce has lost a step since that epic Game 7 two years ago), and they lack the ability to exploit Shaq. They just don’t have the weapons, though the Mike Brown-Doc Rivers coaching matchup should be good for at least one comical error.

The mystery at the center of John Mayer's career

Lost in the whole John Mayer controversy was this very pertinent, yet mysterious question: namely, why do black entertainers enjoy John Mayer so much?

My examples:








I mean, this is a long time frame—“Ride with me” was what, like 99? “Bittersweet Poetry” was around 2006 or so, the Dave Chappelle skit was between the two of these things and the Jay-Z documentary came out this year. I think it’s safe to say John Mayer has been popular with black entertainers for quite some time. But why?!?

Thursday, April 29, 2010

Linkism

Good news!:
Americans familiar with Arizona's tough, new immigration law tend to favor it, a new poll found.

51 percent of those who have heard of Arizona's new law to crack down illegal immigration said they generally favor it, a new Gallup Poll found Thursday. 39 of those who have heard of the law opposed it, while 11 percent were unsure.
Long-term, a good immigration reform law is a political and policy winner for Democrats. Short-term, I’m not convinced at all as these preliminary numbers demonstrate. Note that immigration is an issue that’s particularly easy to demagogue in a right-populist direction. And Tyler Cowen points out some of the problems with the Democratic proposal, problems that aren’t particularly policy or politically friendly.

The history of debt: in essay and graphic form.

This news about Hungary’s possible debt problems is for two reasons: first, to remind you that the apocalypse is still a live scenario; second, and more happily to tell you that Prague, a really good novel set in Hungary (the title is deceptive), is one of three books you need to reading right now (or at least right after you finish reading this post). The other two? Then We Came To The End and Infinite Jest. Just trust me here.

This post about how television might be more difficult to break into via disruptive innovation than you'd think should be a perfect addition to my post earlier in terms of industries, though it doesn’t fit the improvised framework I set up. But it’s worthwhile to note the role of incentives here: you, the watcher, are confusingly tangential to the dollars and cents of content providers. Somewhat apropos of this discussion, note that Google is planning on introducing software to deal with TV boxes.

Remember how all the bees were dying recently, and how that was a big story? Still happening:
The Apiary Inspectors of America (AIA) and USDA-ARS Beltsville Honey Bee Lab conducted a survey to estimate winter colony loses for 2009/2010. Over 22.4% of the country’s estimated 2.46 million colonies were surveyed.

A total loss of 33.8% of managed honey bee colonies was recorded. This compares to total losses of 29%, 35.8% and 31.8% recorded respectively in the winters of 2008/2009, 2007/2008 and 2006/2007.

I thought this was an article with some very good tidbits about the NBA playoffs in the most recent Sports Illustrated.

Why industry must be smarter about its water use.

What the SAFE banking act will do.

Why one Republican is pleased to see Charlie Crist gone (convincing)

The dying languages of New York City.


Green Greenwald on Obama talking about the Supreme Court.

The power of supersition:
Dallas Mavericks owner Mark Cuban, known for basing personnel decisions on statistics, notes with bemusement the superstition of some of his highest-paid employees. "Every locker room has a comical procession of superstitions," he said in an email. "We have things based on time, on speech intonations and on specific conversation exchanges. If you look at the introductions of any NBA team and what the players do, you have an anthropologist's dream."

And:
In a test conducted by researchers from the University of Cologne, participants on a putting green who were told they were playing with a "lucky ball" sank 6.4 putts out of 10, nearly two more putts, on average, than those who weren't told the ball was lucky. That is a 35% improvement. The results suggest new thinking in how to view luck and are intriguing to behavorial psychologists.

The biggest news from this oh-my-Baidu story is that Google still has 31% market share in China, down from 35%. If it’s a durable trend, that’s a problem, but it suggests you have a fairly large group of savvy internet users in China who are very loyal to Google.

A profile of Jamie Mottram, the head of Yahoo!’s content division. Yahoo! Sports is very well done and features a lot of good content, so I’m intrigued by his future efforts.

I appreciate this roundup of the crazy laws passed by state legislatures during the year 2010. A list that inspires the confidence of every free-thinking citizen.

Department of Trivia: Similarity Edition

What do the Beach Boys and Tupac have in common?


And:


They both say California the same way (in a nonstandard way): Cali-forn-eye-a. (At 1:25 and :10 respectively; for some reason YouTube's embedding code hates me. I'm sure it's my fault but...)

And these two songs are the greatest ever named “History” (which somehow were realized around the same time; as far as I can tell Blackstar’s version doesn’t refer to the Obama election, so not that. But, damn, each of them are on point in their version of History.)



Miscellany

Because it's not really a Linkism post.

Classic Scott Skiles (insider):
Jennings, on the other hand, was forced to learn the hard way. I saw his Bucks in Portland in January, and when he was overpowered by the bigger Andre Miller, Milwaukee coach Scott Skiles yanked him from the game early. When I asked Skiles afterward what Jennings could have done differently, the coach gave a one-word response: "Try."

Scott Skiles has long reveled in his identity of Surly Yoda. Here’s my other favorite Skilesism:
REPORTER: What can Eddy Curry do to get more rebounds?
SKILES: Jump.

It’s stuff like that that makes Skiles a great coach to have for next year, but not for next year and three years afterwards. Eventually either he pisses off the players or the players piss him off. So FEAR THE DEER and all that, but realize they’re going to look a lot different soon. Love Brandon Jennings though: he’s like a mutant combination of Allen Iverson and Tony Parker (minus, as yet, shooting). So they’ve got an interesting, Skilesless future.

****

So the 808s and Heartbreak sound is going to be making a reappearance:



I was worried that that sound would be a odd intriguing singularity without imitators, but I guess not. Drake, by the way, is a kind of strange artist: he’s a mediocre rapper with uninteresting sentiment (unlike, say, Kanye who’s a mediocre rapper with interesting sentiment) but he has impeccable taste in beats. This song chooses exactly the right part of 808s to use: rather than the grim stoicism of most of the album, it takes the warmth and plays up that aspect, allowing for a more natural, poppy sound.

****

The most interesting graf on the Andrew Luck profile I posted yesterday is this:
Luck said Gerhart allowed him to overcome the freshman jitters.

"Toby was like a security blanket for me last year," he said. "If something was going wrong, you'd think, 'Toby's here, it's OK. … Sometimes I'd get around after a play fake or drop back and have no clue what was going on in the secondary or what the linebackers were doing. I would just hope that I could make a play, find an open spot."

One of the remarkable parts of Luck's game was his ability to avoid mistakes (4 INTs, 6 sacks) and to scramble out of trouble. Indeed, his scrambling ability seemed almost robotic or algorithmic: he'd wait maybe a second in the pocket and decide, "OK, that's it for me!" and run for a first down (Luck looks slow but always gets there fast--he's the Brandon Roy of quarterback scramblers). I think that quotation explains that, and it reinforces how impressed I am with his game that he was able to produce at such a high level at the understanding he had. Big things are in his future.

Expertise

With all the fuss about the allegedly sophisticated investors taken in by Goldman Sachs, it’s worth noting that some unsophisticated investors probably were also: King County in Washington, who invested $100 million into IKB, the bank that was allegedly duped by Goldman. It’s certainly not Goldman’s fault in this instance, but it’s worth realizing what these financial markets entail. For one, King County invested in IKB investing in subprime in just about the dumbest time you could: summer of 2007. One wonders whether King County was a big investor in zeppelins after the Hindenburg crashed.

Enough of that, though. King County was seduced by a system and seduced by abstraction. Here’s the sympathetic quotation in the article:
"They invested in commercial paper that they thought was as safe as Treasury bonds," said James Cox, a professor of securities law at Duke University. "They undoubtedly thought they were investing in something much more secure."

"We got caught up in the … disruptions caused by this sort of slick, extremely high-level shenanigans that were going on," said Larry Gossett, a member of the King County council.
What the financial industry values nowadays is abstraction above all: the abstraction of a rating substituting for actual informed, detailed analysis of whatever it is you’re investing in.

And, indeed, how were they to know? Here’s the chain of investment: King County invests in IKB who invests in a synthetic CDO created by Goldman with the help of ACA at the bidding of Paulson; the CDO referenced other mortgage bonds based on subprime mortgages…and so on. That’s a complicated chain. That’s certainly more complicated than the ability of any one person to comprehend, in the thick of the action, as events are happening. And it’s clear even from books like The Big Short that even the outsiders who understood best of all did not understand everything. The people working in the system were abstracted away from whatever it was they were allegedly working on. If the goal of a financial system is to distribute capital efficiently for real-world tasks, King County was involved in a tangent of a tangent of a tangent of real-world activity. Therefore they almost couldn’t help but make mistakes: some expert’s figured this out, says its AAA, must be good. It’s the only way to deal with that kind of complexity. It wouldn’t be worth King County’s time to figure out all of the details because King County has other things to do, like governing King County. So they have to hire an expert.

Hiring an expert is pretty much routine for us at this point in human history. Specialization of work and all that. I understand the inner workings of my car no better than the cavemen understood fire. The inner workings of the car and the steps necessary to assemble or fix it are as close to me as an ideology. So I rely on experts to fix my car because I must. It’s the same for so many fields. Again, this works well the vast majority of the time, except when it doesn’t. And now that it doesn’t, the question is, what next? You can only be an expert in so many things, and efficiency dictates that. So what do we have left?

Odd Non-Controversies

It’s odd to stumble upon something old—well, old in internet time—and wonder, now why wasn’t that controversial? Ben Bernanke’s February 10th testimony to Congress contained an odd little comment that should have engendered controversy but didn’t. This comment seems to fit all the stereotypes (servant to bankers, etc.) we have of Bernanke:
The authority to pay interest on reserves is likely to be an important component of the future operating framework for monetary policy. For example, one approach is for the Federal Reserve to bracket its target for the federal funds rate with the discount rate above and the interest rate on excess reserves below. Under this so-called corridor system, the ability of banks to borrow at the discount rate would tend to limit upward spikes in the federal funds rate, and the ability of banks to earn interest at the excess reserves rate would tend to contain downward movements. Other approaches are also possible. Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation.The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.
The comment was buried in a footnote of his testimony, but that doesn’t stop the tracking parties unleashed by the internet: someone, somewhere is going to read that comment. But it didn’t happen, contemporaneously.

So Bernanke believes that banks are keeping too much in reserves at the Fed. Currently, this is probably true—banks are hoarding cash instead of lending it out—but it doesn’t have to be true. The proposal that Bernanke unveils in the beginning of the footnote (indeed, throughout the testimony) to be able to adjust the interest rate the Fed pays/charges for keeping reserves at the Fed is, while new, not terribly extreme. It’s the proposal that he ends with—ending minimum reserve requirements—that’s quietly extreme.

Currently banking operates at on a fractional reserve system. If you’re a bank, you keep some of your capital in reserve to pay off depositors should they come calling. If too many come calling at the same time, it’s a bank run and you need liquidity. Bernanke is proposing simply to have the discount window—where banks can borrow money from the Fed on short-term notice—serve as the source of funding for everything. That would free up even more money to be lent at bank’s discretion.

Ultimately, it’s a proposal that looks like it’s a servant to the bankers once again. Bernanke apparently believes that banks should have even more discretion in terms of judging their own capital needs and profit needs. The flaws with this proposal are pretty obvious: namely, that banks aren’t always so great at judging their needs, that their biases currently run towards lending too much and at too much risk, and that they can count on the government to bail them out. Bernanke appears to be further entrenching this system with the proposal.

It’s also interesting given one of Bernanke’s comments earlier in the testimony: “To preclude any future need for the Federal Reserve to lend in similar circumstances, we strongly support the establishment of a statutory regime for the safe resolution of failing, systemically important nonbank financial institutions.” This is Bernanke’s sole policy recommendation to the House. Can it be interpreted as a narrow version of Bernanke’s support for financial reform, i.e. does he disagree with the requirements in the financial reform bill for greater capital reserves? If I’m right about my earlier speculation, he is. Which I think is fairly odd.

Wednesday, April 28, 2010

Linkism

More on the incinerator storyline I’ve been following: the Times posts an op-ed on the subject.

It’s time for debt armageddon: states are angry about the credit default swaps being sold on their governments (their mere existence, natch). Actually, this has me comforted: California’s (the lowest) only sets you back $19k/year, which is many multiples fewer than our Eurozone buddies. Speaking of them, let’s play wildly differing analyses again. Here’s The Guardian on British bank’s exposure to Portugal, Greece, and Spain, and here’s the NYT on German bank’s exposure. These articles say one hundred billion pounds and twenty-eight billion euros. Let’s say a 40% haircut just because it’s a number I’ve heard widely and this is a back-of-the-envelope deal. Well, forty percent of 100 billion pounds is 40 billion pounds, which you’d imagine would do serious damage to the British balance sheet; the roughly 12 billion euro hit to German banks is probably more manageable. By the by, here’s the New York Times on humiliating Japan’s bureaucrats (remember that Greece’s debt/GDP ratio is around 120 or so; Japan’s is a very healthy 200% with an ageing population. Fun!)

A great Wall Street Journal article on the problems with electronic medical records:
A 2009 study in the American Journal of Medicine found that hospitals with more-advanced electronic systems fared no better than other hospitals on measures of administrative costs, on average, even if the systems "might modestly improve" performance on certain measures of the quality of care.
And:
Perhaps the most important strategy has to do not with how digital records are implemented, but with how they're designed in the first place.

One common complaint: The systems seem to give short shrift to improving patient care; they focus on administrative tasks such as making savvier use of complex billing codes for insurance reimbursement. "When you're trying to read the notes of your colleague [in an electronic record], it's almost impossible to figure out what happened to the patient," says Rushika Fernandopulle, an internist, instructor at Harvard Medical School and co-founder of consultant Renaissance Health. "You have to read through two pages of all this junk that's put in to increase billing."
I think the key here is to designate a common standard that’s simple and effective, in order to realize the vast potential of the system.

So, I don’t often read my alma mater’s newspaper, but this column on Arizona’s immigration law can fairly and minimally be described as ridiculous. The author, in insisting that the Arizona law was merely an extension of current federal law, didn’t think through the extent of the discretionary powers the police were granted. Now, if you want to argue that’s a good thing, that’s certainly your right. But the problem with the piece is simply its lack of empathy: it recognizes so little of its opponent’s arguments that it cannot bother to acknowledge simple, basic facts. The article did have a significant achievement, however: I think it deserves its own entry in “Politics and the English Language.” Orwell’s famous essay concerns using evasive language to deceive the reader using jargon and euphemism to soothe the mind. This is different: it uses biting attempts at humor to evade argumentation and engagement thereof. Apparently ridicule can substitute for logic. It’s a common rhetorical style nowadays, and Rush Limbaugh is probably the foremost practitioner of the style (would conservatives argue the Stewart/Colbert axis is the left’s equivalent?). In this article’s case, the only one being deceived is the author herself.

Foreshadowing? A number of NHS doctors argue that a 20% cut can lead to better health care. Would’ve liked more detail here, but it’s the kind of thinking we’ll be needing to do soon.

Do C.D.O.s serve any social purpose? (They talk mostly about synthetic CDOs, which are more useless.)

A provocative point: are the GOP’s lies actually useful for public discourse? The article points out that no one was discussing end of life issues and health care previous to Palin’s death panel Facebook status update, and that that update led to a debate. This is true, but is it useful? The debate was sparked, but it focused on—as the article note—triviality and talking points. The result was the removal of an inoffensive and inconsequential portion of the bill. I think debate can be prized too richly: if the debate has no good practical consequences (as a debate founded on lies likely will be) then it’s not a worthwhile debate. That we discussed end of life issues in the health care debate is like asking four-year-olds to debate War and Peace. (By the way…should I read that book? It’s the generic long book along with Ulysses for when we need to say “THIS IS A LONG BOOK.”)

For the Stanford football fan in your life: a profile of Andrew Luck. We’re attracting attention; hopefully we can live up to it. I suspect another 8 win season is in the cards.

Here’s a question I have. We know the state of our schools is unacceptable. Let’s leave aside the causes and the solutions here. What I want to know is, why is college enrollment at a record high simultaneously with this schools disgrace? Do these statistics count graduate students and undergrads both?

Debunking the paradox of choice.

A deficit group focused on cutting defense expenditures. Barney Frank remains my hero for quotations like this: "There's a big debate right now about where 3,000 Marines in Okinawa should go. My suggestion is Nebraska," he said. You go, Barney Frank.

The problem with being a trendsetter in fashion: people will knock off your fashion too quickly. The article essentially blames it on technology: the internet, the supply chain being so well managed. I think this is interesting, but true of more fields than fashion: it seems to me TV and movies feature more knockoffs and more remakes every year. I suspect the fault is the culture’s: there’s so much information out there that to gain everyone’s attention, you have to refer to old events to produce that familiar kick of “oh yeah, now that’s interesting.” That’s why we’ll have Magic 8 Ball: The Movie.

Annals of Overreaction

The Lakers are an example of one of people’s blind spots. After the thumping the Lakers delivered to the Thunder yesterday, there was a great exhaling followed by an “OF COURSE” followed by the argument that these were the Lakers finally playing like the Lakers, the champs and blah blah blah. The assumption here is that the best version of the Lakers is the real version of the Lakers; we make this assumption because we’re predisposed to thinking well of the Lakers. There are situations where the opposite applies: Allen Iverson, a complicated character, is blamed more for his worst moments than he is praised for his best because we’re predisposed to thinking well of Allen Iverson. We make excuses for the Lakers and we scrutinize for flaws with Allen Iverson. And, I submit, the problem is general—look at political partisanship, for example, and how partisans (particularly Republicans, these days) will look for facts that burnish their side and deface the other.

What technology can't touch

I got to thinking in a restaurant a few weeks ago: wouldn’t it be better if payment was easier? I was eating with a group and we had encountered the eternal difficulty of splitting the check: if you’re determined not to split evenly and instead split in proportion to what everyone’s paid, then you will inevitably run into difficulties. I’ve been a part of groups unable to properly split a check in high school (when I was dumb) through college (and I believe I’m smarter). So, at risk of making a too general a conclusion: splitting a check is hard.

But this is the type of problem that technology is supposed to make easier. Now, you’ll have to forgive me, because while I’m an avid consumer of technology, I am by no means a skilled creator of technology, meaning that what I say may be totally off-base technically, but what if you could “tag” orders by which person at the table ordered them and then pay for them via smartphone? This hypothetical solution would be great for everyone involved: we’d all save time, and the restaurant would be able to seat more groups of people thus making more money.

This Time, It Really Is Maybe The Apocalypse.

I do so love the sound of apocalypse in the afternoon. Today’s favored apocalypse, of course, is this whole Greek debt situation. With a nicely-sized slice of debt maturing in the middle of May, apparently investors decided enough was enough and pressed the panic button. (Nouriel Roubini, right on cue declares, "In a few days, there might not be a eurozone to discuss.") So, let’s walk through the consequences of This Time, The Apocalypse Will Really Work:

The first question: do we even have enough money to save everyone? A Greek bailout will apparently run 100 billion euros, and that’s a small economy. While Spain and Portugal might have better sovereign debt situations, they also may have banks to rescue too, as this chart makes clear.

In fact, how much debt do banks hold anyway? Well, the framing of the question might make clear that no one really knows: a note linked by FT Alphaville guesses 65 billion euros for all of Europe, but here’s the WSJ estimate:
Greek banks aren't the only ones at risk. French banks have nearly $80 billion in exposure to Greece, followed by Germany at $45 billion, according to the Bank for International Settlements. Within Germany, Hypo Real Estate has the largest exposure at €9.1 billion. Commerzbank holds €4.6 billion in Greek bonds, according to Germany's bank regulator, while public-sector banks known as Landesbanken hold billions of euros in Greek bonds.
I won’t bother to add that up but it’s >65 billion euros, that’s for sure. Meanwhile, there’s the issue of the European Central Bank itself, which had accepted tons of Greek bonds as collateral and will probably take a bath/haircut/favored hygienic analogy that connotes pain (a vigorous flossing?).

But what about the rest of Europe? Well, of course you have those fun credit default swaps pointing to pain in Ireland and Portugal. The WSJ seems to be betting on Portugal, with the favored “Where did it all go wrong?” piece. But some might point to Spain, what with the whole cut to AA grade by S&P. My question is, why not Italy? Don't people realize how crazy Silvio Berlusconi is?

So what’s the solution? Well, one thing that the authorities are definitely saying definitely won’t absolutely not happen is debt restructuring with this WSJ article splashing it in the headline and this buried quotation from Trichet: “ECB President Jean-Claude Trichet on Tuesday called a Greek default "out of the question."” So the question is, when does Greek default and how much of a bath/haircut/vigorous flossing does everyone take in the deal? Well, that’s for later in This Time, It Really Is The Apocalypse.

Tuesday, April 27, 2010

Linkism

Eric Schmidt describes the path to the Google IPO.

Here’s an article about why we need more industrial farming to feed the world’s hungry. I think the article is a mix of worthy thoughts and some confused points, and ultimately it runs into this problem:
What's so tragic about this is that we know from experience how to fix the problem. Wherever the rural poor have gained access to improved roads, modern seeds, less expensive fertilizer, electrical power, and better schools and clinics, their productivity and their income have increased. But recent efforts to deliver such essentials have been undercut by deeply misguided (if sometimes well-meaning) advocacy against agricultural modernization and foreign aid.
Ah! So you’re saying to build better governance through foreign aid! Well then, that’s incredibly easy!

Why the Chinese save so much (old).

What the Dodd reform would look like in: a) this past financial crisis and b) the future. Also, how financial reform should mimic the FDA.

Paul Krugman describes the eurozone crisis as a “cohesion crisis.” Felix Salmon asks, “Is it too late to save Greece?” More worryingly, the S&P also downgraded its rating of Portugal, and the CDS spreads are perking up for Portugal’s government, banks and Spanish banks.

Can solar panels in Sahara power Europe?

A great profile about a real interesting guy trying to reinvest the umbrella (old). As the article makes clear, the umbrella is surprisingly poorly designed: the break easily and they’re hard to dispose of. My favorite umbrella memory was in New York this fall when a real torrential gale opened up: rain blowing sideways, a wall of wind, etc. etc. And all around were scattered discarded, broken umbrellas which I would check periodically to see if they were salvageable. None were. Finally I saw a guy wrestling with an inside-out umbrella which he just tossed to the ground with contempt. I picked it up and found that it worked, until the next hard gust of wind finished it off. I suppose a better umbrella would have denied me that particular moment of ironic cruelty.

How Prohibition invented nightlife.

Does conservatism need Fox News?

Remember that article I posted earlier about incinerators in Europe? Well, it turns out Harrisburg tried it and is now thinking about bankruptcy to deal with the debt associated with building it. I suspect this is the first of many bankruptcies.

How cities get their advantages in the economy.

The shadow banking sector explained.

The Elaborate Yet Heretofore Misunderstood Humor Of 50 Cent

I have a conspiracy theory regarding 50 Cent. He’s faded from prominence recently—I was as surprised as you will be to discover he’s doing an album (that will be “Eurodance” influenced, apparently, which means that 50 is following a trail most recently blazed by the Black Eyed Peas. It will also be entitled "Black Magic." There's 50's irrelevance in two sentences.)—and there’s a very simple reason for that: 50 Cent has run out of jokes.

You might not associate 50 with high humor, but I’m certain his career began as an elaborate joke. “Get Rich or Die Tryin’” is up there with “The Fast and the Furious” for great, obvious titles of terrible works of art. So the title should’ve been a tip-off. Then there’s this:



Because I don’t want you to be reading a dissertation, let’s isolate the four most risible claims in the song: 50 Cent claims “When I die, they’ll read this and say a genius wrote it”; 50 Cent claims that any shooting ever committed, at any time or any place has been caused by 50 Cent; Eminem claims that al Qaeda actually meant to hit Shady Records with their airplanes; Eminem claims that 50 Cent is like “mixing Biggie and ‘Pac” and “throwing them into a pot.”

Admittedly, that song is probably the funniest song of the album, but there’s also the hilarious claim of “If I Can’t” which is all title (“If I Can’t/do that/homie it can’t be done”), and then there’s this:



In which 50 Cent claims that a) the LAPD and NYPD’s top priority is bringing 50 Cent to justice, b) 50 Cent is a better three-point shooter than Kobe (actually, if he means 2010 NBA playoffs Kobe, this may be accurate) and c) his songs “belong in the Bible like King David’s.” (A tipoff that this is all an elaborate joke: no way someone who has that extensive a knowledge of the Bible also makes such self-evidently absurd.)

Then there’s this:



In which 50 Cent claims that “every time I rhyme/something special happens every time/something like Ali in his prime.” Again, laughable claims.

The problem with 50 Cent’s fiendish plan was, like The Producers, actual success. The public (including, sadly, myself at oh, fifteen or so) appeared to buy him as a somewhat legitimate artist and he ran out of jokes. He was unable to seriously be 50 Cent, but he tried to be. And say what you will about the public, but they can spot a faker: or, someone trying to fake being a fake image. So, uh, score one for the public? I’m not sure, but I wouldn’t count on a 50 Cent comeback.

Dream Worlds

David Brooks retains the unique ability to alternately be interesting and infuriating. Usually the pattern is pretty predictable: one column interesting, the next infuriating. His most recent column, however, contains both tendencies at once. I suppose, overall, I’d recommend it.

But, here’s the thing. Whenever Brooks comments about policy—particularly in the Democratic trifecta years—he has a tendency to use policy proposals like Hitchcock used MacGuffins: a vague-yet-impressive-sounding proposal which can then be contrasted with the fallen almost sinful policy those Democrats have come up with. So instead of, say, nuclear secrets (Hitchcock) you have the ideal humble Burkean policy which recognizes the limitations of the technocrat and entrusts the little platoons of society in their quest to better themselves (Brooks). It’s a pretty common mistake that Brooks makes.

So, in this instance, what does Brooks propose? Well, begin with the scathing remark towards Democrats: “But, alas, we are living in the great age of centralization. Some Democrats regard federal commissions with the same sort of awe and wonder that I feel while watching LeBron James and Alex Ovechkin.”

Har. And what’s his counterproposal?
Both N. Gregory Mankiw of Harvard and Sebastian Mallaby of the Council on Foreign Relations have been promoting a way to do this: Force the big financial institutions to issue bonds that would be converted into equity when a regulator deems them to have insufficient capital. Thousands of traders would buy and sell these bonds as a way to measure and reinforce the stability of the firms.

As it happens, this is a pretty interesting proposal and worth thinking about. (Here’s Mankiw’s spin on the matter—at the bottom of the page.) But it’s always easy to design an elegant policy and far harder to get it passed. Take Brooks’s dig at commissions in the financial reform bill. The original idea of many was to abolish most of the useless barnacles of regulatory agencies—e.g. the OCC, CFTC, et. al.—and replace them with, say, two or three agencies. Rather than the clumsy system Brooks derides, you’d have a streamlined one. Unfortunately, this didn’t happen because, hell, it’s a political system. We saw the same game with health care. This is the world we live in, and anyone professing to take a careful, empirical look at the world as Brooks does should realize this. It would be great to change, but that’s an entirely different issue, isn’t it?

So keep that in mind with Brooks’s proposal. Let’s think it through: you have all these financial institutions issuing bonds. How can this go wrong? Well, for one, how will regulators determine which financial institutions to force to issue bonds? Flash back to the late 1990s—no regulator was aware of the trouble Long Term Capital Management posed to the system until it was too late. Lehman Brothers, similarly, didn’t seem in terms of assets to pose that big a problem. So already we have to move from the wisdom of crowds that Brooks is championing to the foolishness of regulators that Brooks is wagging his finger at—correctly, in many cases. If regulators don’t think regulating is worth it, then you have problems, and that’s a good description of the financial crisis.
But wait, there’s more! So, the regulators have determined which financial institutions have to issue these bonds. The next question is, how much? Who determines how much in bonds to issue? The regulators or the businesses? If the latter, then businesses will issue too small an amount in bonds and wait for the bailout, so that solves nothing. If the former, then the regulators are back to being micromanagers, exactly the problem that neither Brooks nor I want. And let’s say it’s the former. What’s the terms of these bonds? Do they mature in a year? Longer? Shorter? If the maturity is too long, then won’t banks be able to pull a Repo 105 type trick and make regulators believe that their liabilities are less than they actually are (and then, after issuing these bonds, proceed to leverage up again)?

Then there’s the problem of capital. Now, the TARP program was worth about $700 billion, and that’s without taking into account the various quantitative easing programs the Fed put into effect. So if you’re planning for a crisis, do you make banks sell that much in bonds? If so, won’t that crowd out other forms of investment? And let’s say these bonds are sold: what happens in a crisis? Well, regulators force large amounts of bonds in multiple institutions to convert to equity, right? So, if you own one of these bonds, you get nearly-worthless equity as opposed to a steady stream of income. That implies, in mark-to-market accounting, a discount in the value of your assets, right? So that would have the effect of massively devaluing the assets of the entire financial system, which might exacerbate whatever hypothetical crisis we’re facing.

The point here isn’t to be exactly accurate on every consequence of this proposal that’s being peddled. It has some attractive advantages. What should be clear is to contrast Brooks’s perfect policy with the messy realities of making policy. Brooks has the luxury of being limited to five hundred words or so per column, which means he has the luxury of not explaining himself. Brooks shouldn’t use that luxury of not having to spell out every consequence of a policy by criticizing others for having too-complicated, too-technocratic policies. I think we call that hypocrisy.

Monday, April 26, 2010

Linkism

More fallout in the immigration switcheroo:
A House aide e-mails TPM to say that "My boss was told in no uncertain terms from leadership that there is no way we're doing Immigration reform this year. Just no way."

Another senior Democratic adviser put the issue less starkly, telling TPM that "House members have put themselves out there taking votes on major issues first this year. It's not that we can't do it ... we just want to see the Senate move first."

A new political taxonomy.

A week-old segment of Michael Lewis, David Boies and Andrew Ross Sorkin on Charlie Rose. Sorkin is kind of boring but Lewis and Boies have some interesting things to say.

Mike Konczal is firmly in the habit of writing interesting/disturbing things about financial reform:
So if this reform takes place, the amount of derivatives traded is likely to increase. JP Morgan would lose profit, though everyone would be buying more of the product they sell. This is not like the example above. Of course, these are interested parties in reform being quoted here, but the general argument that a presumption for clearinghouses and exchanges would increase the volume of traded derivatives is an opinion I hear more often than not.

China bubble watch. An analyst warns that emerging markets are facing a hot money flood. Stephen Walt says China’s acting like a realist. Is Arizona’s immigration law like living in China? Also, a slideshow of China’s rural heartland.

How wine grapes portend the big problems of climate change.

This profile of a charter school CEO is interesting, but displays some problems of the genre. The writer of the profile, in seeking to inhabit the profiled, too often comes to identify with and slant the article to the benefit of the profiled. You might call it a version of regulatory capture. So in this profile we begin to get the impression of Eva Moskowitz, superwoman (who is perhaps slightly over-obsessive, but just-win-baby), but the writer slips in some of the ambiguity later:
Moskowitz doesn’t buy the self-selection premise. The children in proximate zoned schools, she insists, “are the same kids we have.” She notes that Success floods the neighborhood with glossy oversize brochures (six pieces per household, at a cost of more than $300,000 per year), and that two of three eligible Harlem families actually fill one out. “Zoned schools say, ‘We have families from domestic-violence shelters’—so do we,” Moskowitz says. “They’ve got families in blah-blah situations—so do we.”

Based on available statistics, however, charter schools have fewer of these families, including the poorest of the poor. One problem with “school choice,” as writer-activist Jonathan Kozol noted, is that the “ultimate choices” tend to get made “by those who own or operate a school.” At stake is not just who gets in, but who stays in. Studies show “selective attrition” in the KIPP chain, among others, with academic stragglers—including those seen as disruptive or in need of pricey services—leaving in greater numbers. In one flagrant local example, East New York Preparatory discharged 48 students shortly before last year’s tests, among them seven poor-scoring third-graders. (Citing financial mismanagement, the Department of Education plans to revoke the school’s charter in June.)
And:
English Language Learners (ELLs) are another group that scores poorly on the state tests—and is grossly underrepresented at Success. The network’s flagship has only ten ELLs, or less than 2 percent of its population, compared to 13 percent at its co-located zoned school. The network enrolls 51 ELLs in all, yet, as of last fall, provided no certified ESL teacher to support them. After a site visit to Harlem Success Academy 1 in November, the state education department found that the school had failed to show evidence of compliance with its charter and with No Child Left Behind, which mandates ESL services by “highly qualified” teachers. The matter is currently under review. (According to Sedlis, the network hired an ESL teacher in January.)
This is no reason for completely discounting her results, merely to apply some skepticism.

Thankfully, the Senate killed this pro-Warren Buffett provision in their version of the bill:
The Senate Agriculture Committee inserted language into its derivatives bill last week at the request of Sen. Ben Nelson (D., Neb.) that would have exempted any existing derivatives contracts from new collateral requirements—the money set aside to cover potential losses.

Berkshire has $63 billion in derivatives contracts, and Mr. Buffett has boasted he holds very little collateral against these products.
The reason Berkshire can get away with this is its sterling credit rating; however, if this story reminds you of anything, it’s AIG, another company with a sterling credit rating leveraging that into derivatives (emphasis on leveraging). Definitely a way to reduce the number of derivatives written and also their potential to take down the system.

Tech companies are hoarding their money.

Are gravel batteries the solution to the problems of wind energy?

Ross Douthat writes a somewhat overheated column on the South Park-Muhammad controversy, though I agree banning it was a goofy decision. Lost in the fulminating over the controversy is that South Park itself featured a plot about a network removing Muhammad from its controversial cartoon, though that controversial cartoon was Family Guy, in South Park’s anti-Family Guy screed.

Against historic preservation districts in New York:
It is wise and good to protect the most cherished parts of a city’s architectural history. But New York’s vast historic districts, which include thousands of utterly undistinguished structures, don’t accomplish that goal. Worse, they impede new construction, keeping real estate in New York City enormously expensive (despite a housing crash), especially in its most desirable, historically protected areas. It’s time to ask whether New York’s big historic districts make sense.

An interesting article in Sports Illustrated about efforts to open baseball academies in the Dominican Republic. If you like it—hell, even if you don’t like it—make sure to watch Sugar, a movie that came out just last year.

Unanswered Questions

The most recent our-country-is-fuck(-ed, -ing odd) story happens to be this whole Lindsey Graham controversy. Graham has decided to withdraw his support from writing a climate change bill because Harry Reid wants to do immigration reform. I tried to write that last sentence as neutrally as possible, because, as with any good controversy, it mostly involves unproveable speculation that often reveals more about the speculator than the speculated.

The first theory is that Graham is pulling a Chuck Grassley: i.e. negotiating as a pretense to bait Democrats along before ultimately and dramatically withdrawing to blame Democrats for perfidy to the cause of true bipartisanship. In this scenario, Democrats get hit twice: the first for trying to make unpopular policy, the second for failing to make unpopular policy. The flaw with this theory is game theory: if Graham is a good partisan, and wants to see the Democrats suffered, his motives makes sense. But his motives make sense as to why Graham would want someone do to it, rather than Graham specifically. Graham, after all, is courting the ire of the Tea Party crowd. Graham was elected in 2008, so you’d think he’d be safe, but Democrats have managed to successfully hold a grudge against Joe Lieberman since 2006 or so, and Graham must know this. So, again, Graham would prefer someone else do the dirty deed.

So maybe Graham was sincere? This is, of course, the second theory. Graham was going out there, taking a big risk to his political career working on an important issue, and Democrats pay him back by manipulating their political calendar to bring up immigration reform next, which is a great wedge issue for the Dems. I think this critique misses something also: while it’s been a given that health care was first, and financial reform 1A, the order of tackling the remaining issues was pretty vague, though certainly immigration reform was not on the top of anyone’s mind. There’s definitely some political motivation, but not as much as you’d think: Graham would have to be a little delusional to believe that climate change was the sure-fire next issue.

The policy merits don’t look good, to be sure, so Graham has a point there. Climate change is a worldwide issue threatening a cataclysm. Immigration reform is merely a good idea. So, if Graham’s sincere, I feel a little bit sorry for him. Only a little bit, though. Immigration reform is something that, while not a must-solve-right-now problem like climate change, is a very good idea and will enhance the welfare of many Americans. And if we really need to do carbon, the EPA will do it. Could you imagine the Tea Party freakout if the EPA made its move to regulate carbon? They’d even have a little bit of a point: not exactly the most democratic way of doing things, but well, you know.

Anyway, the main thing you should realize from this whole mini-controversy (and here’s where I reveal my own bias) is how dumb the Senate is as an institution. The House passed its version of climate change bill months ago. That’s a done deal. But the Senate, with its anachronisms, lets individual Senators basically dick around with the country’s fate. That kind of institutional structure can only be sustained if you have a government full of good women and men. And, well, look at the Senators we’ve got. Proves the point, doesn’t it?

Answered Questions



Regular readers of the blog know that one of my constant, yet unanswered pleas has been for an Andrew Luck highlight video to properly display his brilliance. It was unanswered until, oh, March 16, and I just discovered it. Here it is. The picture quality is grainy, but it serves its purpose of demonstrating in visual form just how freaking good Andrew Luck is football, and presumably also life’s more esoteric pursuits—I am prepared to believe he can also construct the Eiffel Tower with toothpicks, or figure out where the Higgs boson is (without a fancy atom-smasher) should he deign to concentrate on such trivial matters.

Anyway, let this post be a nice little optimistic pick-me-up for those of us who are Stanford football fans: we’re in contention for the Pac-10, and gosh darn it we’ll be entertaining whatever the result. Isn’t that grand?

Usain Bolt: A Genetically Superior Human Being



I think that about covers it, don't you? 8.79? In-freaking-credible.

Sunday, April 25, 2010

Linkism

Millennials: Brokest generation evahh?

Carbon capture technologies may not work.

Can rising Chinese consumption drive American recovery? Meanwhile, Daimler and BYD announced they’re making an electric car for the Chinese masses. Also, speaking of the China-in-Africa storyline I’ve been linking to the past few days, here’s an article about China in Niger after its coup.

How to reform housing finance.

Racial discrimination and subprime mortgages.

How federal policy and urban areas should work together.

More Greece follies—here’s a fun quotation: “Canada's Finance Minister Jim Flaherty said the package would end up being "more than had been said previously," declining to specify the amounts being discussed.” A New York Times op-ed blames the Greek crisis on the Greek family.

EU rules killing startups? Seems a bit over-the-top to me (the reaction).

On an the ultimate bug zapper as an anti-malaria tool.

A couple of Stanford athletics notes: Sports Illustrated notes that next year will be the year of the Pac-10 QB (though it doesn’t note how super-duper-awesome Andrew Luck is, otherwise known as the best QB in the Pac-10 now that Masoli is Gone Thievin’). Also, Landry Fields writes a blog post on Draft Express about some of the players he’s played against.

Some more playoff thoughts

Though it’s a series now, one that the Lakers have a strong chance of losing, you can’t help but wonder what’s next for the Thunder. They have their franchise player already, it’s merely a question of surrounding him with the right players.

Obviously they already have a good start, and they have tons of assets with which to make a trade: ample cap space, $11 mil in expirings, three first-rounders, and of course tons of young tradeable players. The question is: what to acquire? The problem for the Thunder is they have no shooters: their starting lineup features only one strong shooter, Durant, and their regular rotation contributes another, Harden. The Thunder, therefore, have a strategic dilemma at SG: they need a shooter, that shooter is on the bench, and yet that shooter’s defense won’t likely be at an adequate level for some time. Meanwhile, you start an elite stopper in Thabo Sefalosha, so you are faced with what Marlo Stanfield might call “one of those good problems.” Except you can only have one or the other…or so you think: option three—find another shooting guard. It’s a possibility. The other difficulty faced by the Thunder is their big men. Jeff Green is going through the overrated cycle as we speak (the overrated cycle: a good team features a mediocre player who, for whatever reason, plays tons of minutes. Commentators and announcers, seeking to justify this incongruity, overrate the player and assume he has mystical intangibles/winning ability that aren’t easily divined by production or the naked eye. Jeff Green only needs to talk to Derek Fisher to learn how this process works: Fisher has been various shades of awful the past two years—and is quickly regressing to apocalyptic—and yet people stubbornly call him a gamer, etc. etc. etc.), and yet Green is a weakness for the Thunder: he cannot shoot three pointers, he’s not especially efficient at shooting twos, and his defense is so-so because he’s undersized. Probably the best fate for Green on the Thunder would be a sixth or seventh man role, with Ibaka surging into the PF position. This, however, leaves the question of center, where Collison and Krstic are willing but not able; an improvement to that position would yield benefits. Rumor has it Chris Bosh may or may not be interested in coming, and that would be one of those end-the-league scenarios (along with the LeBron-and-Wade show in Miami—note: only works in Miami.) By the by, can we note something? With the general admiration everyone’s had for Sam Presti’s genius, it’s not really recognized that his high draft picks have been interesting: his Jeff Green pick could’ve been Jo Noah; his James Harden pick could have been the slightly intriguing Stephen Curry.

With that said, here are possible thoughts for the Thunder’s direction: a) trade for Andris Biedrins and b) trade for O.J. Mayo. Both are likely available; Biedrins because he had an awful season for a crazy franchise, and Mayo because Chris Wallace hasn’t made any bad moves recently, and Chris Wallace remains Chris Wallace, i.e. terrible. That’s obviously just spitballing a little bit, but I think the direction is correct. As you’ve likely guessed, the Thudner have a bright future.

***

Let’s not neglect the Lakers here. This mess is their own fault. And it’s a mess. You hear some people saying that the Lakers will simply flip the light switch again, that this happened against Houston last year, etc. etc. etc. Well, it doesn’t matter what position the light switch is in if the lightbulbs are blown out: this may be true. Now, the frustrating part of this argument is that it might well be true! It’s unlikely, but hell, you never know now do you?

That said, the Lakers are demonstrably worse in terms of production. Last year they had nearly a 8 point efficiency differential; this year, about a five point efficiency differential. The team has played worse, even while trying. If you don’t believe the effectiveness of this statistic—and you should—then I’m asking you, just watch the games. Does Kobe really look like the same player he was last year (even a few months ago)? Does Ron Artest really look effective to you? Other than the Laker big men, how many players look good to you? Answer honestly here.

There’s no effective rejoinder to the will-of-a-champion/they’ll-gut-it-out/flip-the-switch argument because it’s essentially faith-based: the future won’t look like the recent past (fair) but it won’t look like the past in a highly specific way. While unanswerable, it’s also unlikely.

Anyway, we could’ve avoided this whole debate had the Lakers simply chosen to be collectively smarter last summer through, oh, about ten minutes before Game 3. The most scrutinized decision was the Artest-for-Ariza swap, but that’s not all: the Lakers signed Artest with their midlevel. They could’ve resigned Ariza and then went out and gotten a midlevel player, say, a point guard to replace aging Derek Fisher. Oddly enough, a very good one went mysteriously unsigned for a long period over the summer (well, it wasn’t mysterious: teams didn’t want to risk their 2010 cap space on a player who was only very good): Ramon Sessions. The smart thing would have been to sign Ariza and Sessions and your life is better. Instead the Lakers went with the older guys. Bryant, too, deserves special blame for this entire debacle: Bryant’s finger has been hurting since last year, and he has refused to get surgery since then. This refusal is the essence of Bryant: admirably willful, yet stubborn and selfish. Bryant has been complaining about his injuries—which is somewhat justified; he doesn’t appear to have the same lift—and this could’ve been easily remedied during, say, January: get your finger surgery, sit out for a month and get rested for the stretch run. The team was good enough to survive that long sans Bryant. But Kobe decided to play anyway, risking aggravating the injury. And the entire series could’ve been played better: had Fisher and Artest and Bryant decided not to launch contested shots and instead fed the post more consistently, the Lakers are up 3-1 as opposed to being tied 2-2. But the Lakers have played dumb throughout the series and shockingly this has hurt them. If the Lakers don’t win in this series, they’ll lose afterwards. This isn’t a championship caliber team: I mean conference championship caliber, specifically.

****

LeBron basically ended the Bulls’ season today, so it’s worth eulogizing the season by noting that everyone associated with the Bulls aside from Rose and Noah and occasionally Luol Deng remains frustrating and somewhat annoying. The offseason is critical, and I am so certain it will be screwed up: has Carlos Boozer already bought a Chicago condo?

Inadvertently Funny Lyricism



California, cold and damp? Certainly some cultural rearrangement since then…



“Baby you the whole package/plus you pay your taxes.” Rejected lyrics were: “You’re awesome/plus you drive safely” and “Everything about you is perfect/plus you always turn out the lights after you leave.”

Saturday, April 24, 2010

Linkism Part II: Your Sunday Brunch Reading

Business in China: the auto boom and the music business (the latter is old from 2007). Patrick Chovanec reacts to the auto boom piece.

Private equity deals are picking up (I'd argue...bad sign!) Particularly this tidbit: "Some companies have issued "PIK toggle" bonds that allow coupon payments in the form of new debt, rather than cash."

The Bush administration flunkey you weren’t aware of: Scott J. Bloch, who:
Bloch was formerly of the Justice Department's Task Force for Faith-based and Community Initiatives, so he has been at the very heart of the administration's efforts: both unworking and also helping to fund a Christian network throughout the country. He also infamously issued a memo to the staff that advised women to not wear tight pants and "before choosing a skirt to wear, sit down in it facing a mirror." The memo, it would turn out, was plagiarized, from "student Web sites."

Hyperlocal news in Chicago with the Chicago Tribune. I think it’s a little unfortunate that the Tribune has chosen to go with the Examiner/Paid Content model of an army of low wage peons, which I think rarely attracts enthusiasm or skill. We’ll see, I suppose.


Surowiecki on the bank profits debate.

The Baseline Scenario on the weaknesses of the Race to the Top education funding. Very plausible.

Moqtada al-Sadr shows restraint after a bombing: a very good sign, I think.

Perhaps this The Awl article on the peace in Ciudad Juarez was premature: seven officers killed and one 17-year-old dead in an ambush. Nearly 22,000 have died in Mexico since 2006 in drug-related killings.

First quarter GDP growth in Great Britain was .2%. Inflation was 3.4%. Debts are high. Be very worried about Britain’s economic state. In fact, what's a good anagram involving (P)ortugal, (G)reece, (I)taly, (I)reland, (S)pain, and (B)ritain?

A riddle (I have not yet solved).

Vincent Kartheiser turns out to be just as weird as the character he plays in Mad Men (Pete Campbell, for the unfortunately uninformed).

Just Don't Do It, Or the unexpected savvy of Sarah Palin

In politics today, it’s better for your career to do nothing at all. This little secret is why Sarah Palin is much smarter than generally given credit for, as she’s gotten paid straight cash to do nothing. Well done. Instead of having to attend to governing, Sarah Palin just gets to say things and get paid, and as long as she doesn't pull a Joe McCarthy and insult a beloved nonpartisan institution, e.g. the military, she'll be a more than viable candidate in the 2012 Republican Presidential primary.

Consider Palin’s fellow grassroots gardener Scott Brown: he was hailed as a hero after being elected to take Ted Kennedy’s seat in the January special election, even earning some Brown-in-2012 speculation. Since then, Brown has been voting fairly moderately as Massachusetts’s Senator, which makes sense for him: he’s from Massachusetts. Now, I don’t want to read too much into this, but consider this: a post about Brown voting for February’s job bill earned some sharp scorn in the Corner, and a comment on another article about Brown merely considering immigration reform drew some ire from commenters calling him a “maverick” (i.e. like that icky John McCain). It may be that Scott Brown's best move at all would be to resign directly after being elected. I think that’s something worth taking a look at, don’t you?

It’s not limited to one side of the aisle: it’s pretty well-established to nominate judges who are “stealth” candidates, who have little or no written record and hence can’t be sunk by a paper trail of actual views on actual issues. The lesson here is, just don’t do it.

Democrats themselves indulged the habit in the presidential primary. Clinton was the veteran with a well-established record on the issues; Obama, on the other hand, had a comparatively short record and a well-documented ability to seem like all things to all people. Democrats chose to dream (the choice was good).

What this reveals is an unease about the actual business of politics. Instead of having honest debates about issues—which might lead the public to endorse one side of the political spectrum or another after due consideration—we’re left with obfuscation and a way to avoid establishing clear priorities. It seems it’s better to wish on a blank slate than to like a finished flawed painting.

Quick Thunder-Lakers Note

Quick Thunder-Lakers note: Pau gets it, Kobe does not, in article form.

Here’s Pau on the offense:

"They're weaker inside," he said of the undersized Thunder. "They have a disadvantage and they try to protect it by fronting, by being active, by sending other guys from behind.

"We can't fall into the mistake of settling too much because that's what they want you to do. Those long shots lead to long rebounds, long rebounds lead to run-outs, and that's where they're strong — running and finishing on the break. We're a much bigger team, slower team, older team . . . you have to understand that and you have to play accordingly to that."

Here’s Kobe:
"Fronting [the post] and doing all of this stuff is kind of mucking our offense up. We get so late into the shot clock that we wind up taking bailout shots. We've got to figure out a way to free up our post players and get them the ball in position where they can be effective."

No, it’s not. At least, it doesn’t have to be effective. Every first quarter, the Lakers throw lob passes into the post—often to spectacular effect; take a look at Bynum’s highlights from Game 3—and every first quarter the Lakers race out to a ten, twelve, thirteen point lead. Then the bench comes in. That’s a problem, since the Lakers’ bench sucks, and the Thunder come back. But then—and this is the critical part—the starters come back in and the Lakers stop lobbing into the post or attacking the post generally. Instead, Derek Fisher (52.6 playoff TS%) and Ron Artest (38.3 playoff TS%) and Kobe (47.7 playoff TS%) all decide to jack up bad midrange jumpers, not even bad three pointers. And so, the series is a lot closer than it should be and it will go at least 6. And if the Lakers escape, they’re certainly not smart enough to win the title.

Innovation and Health Care

One of the subthemes in this Economist report on innovation in emerging markets is its championing of cheapness, and I felt its sections on health care were particularly interesting:
the device that has captured the heart of the centre’s boss, Ashish Shah, is much less fancy: a hand-held electrocardiogram (ECG) called the Mac 400. The device is a masterpiece of simplification. The multiple buttons on conventional ECGs have been reduced to just four. The bulky printer has been replaced by one of those tiny gadgets used in portable ticket machines. The whole thing is small enough to fit into a small backpack and can run on batteries as well as on the mains. This miracle of compression sells for $800, instead of $2,000 for a conventional ECG, and has reduced the cost of an ECG test to just $1 per patient.

And this:
The third way to cut costs is to apply mass-production techniques in new and unexpected areas such as health care. Devi Shetty is India’s most celebrated heart surgeon, having performed the country’s first neonatal heart surgery on a nine-day-old baby, and numbered Mother Teresa among his patients. Yet his most important contribution to medicine is not his surgical skill but his determination to make this huge industry more efficient by applying Henry Ford’s management principles. He believes that a combination of economies of scale and specialisation can radically reduce the cost of heart surgery. His flagship Narayana Hrudayalaya Hospital in the “Electronics City” district of Bangalore, not far from GE, Infosys and Wipro, has 1,000 beds (against an average of 160 beds in American heart hospitals), and Dr Shetty and his team of 40-odd cardiologists perform about 600 operations a week.

The sheer number of patients allows surgeons to acquire world-class expertise in particular operations, and the generous backup facilities allow them to concentrate on their speciality rather than wasting their time on administration. Dr Shetty has performed more than 15,000 heart operations and other members of his team more than 10,000. The hospital charges an average of $2,000 for open-heart surgery, compared with $20,000-100,000 in America, but its success rates are as good as in the best American hospitals.

Dr Shetty has devoted much of his energy to boosting his customer base, largely for humanitarian reasons but also because he believes that higher volumes lead to better quality. He has established video and internet links with hospitals in India, Africa and Malaysia so that his surgeons can give expert advice to less experienced colleagues. He also sends “clinics on wheels” to nearby rural hospitals to test for heart disease. He has created a health-insurance scheme, working with various local self-help groups, that covers 2.5m people for a premium of about 11 cents a month each. About a third of the hospital’s patients are now enrolled in the scheme. A sliding scale of fees is used for operations so that richer customers subsidise poorer ones. The entire enterprise is surprisingly profitable given how many poor people it treats. Dr Shetty’s family-owned hospital group reports a 7.7% profit after taxes, compared with an average of 6.9% in American private hospitals.

Now, the question I have after this is: why not here? Don’t focus so much on the specific examples here, though I think they may have promise, but on the general theory: why can’t we have dramatically cheaper medical devices? That’s been a theme for me for a while, and to me it is utterly intuitive that improvements to technology ought to produce lower costs in medical devices…and it appears that GE agrees: improvements in technology can produce lower costs, for other countries. Our incentives are just too screwed up, though.

The second excerpt is considerably more radical, but it’s an idea that Clayton Christiensen has written about in The Innovator’s Prescription: that many of the value-added services in medicine don’t necessarily require experts. You don’t need a dentist to clean your teeth, to choose one minor example. Why can’t more medical procedures be like LASIK eye surgery? These are the questions we should be asking ourselves as we embark on changing health care for the better.