We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Our Recent Essays Behind the Front Page
Thursday, August 9. 2012
Review of the new Nikon D800
Buddy is a fan of Ann Barnhardt's website
Bruce Thornton on Roger Kimball
Has success become proof of bad character?
Defensive Medicine Kills - Not just snake oil wasting our money, but an actual snake quietly poisoning us.
Knish on the tribalism and cargo cult of the Middle East:
The Obama Administration Pays Illegal Aliens to Come Here
Why Team Obama Ran with the Dishonest ‘Mitt Killed My Wife!’ Ad
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The idea that success is indicative of bad character has very little to do with a Right/Left dynamic. I see it every day.
"It's all about not getting caught."
Well, we hear that in the Olympics, and other sporting events, don't we? If you don't get called out for something, but win, then clearly you're doing something wrong and not getting caught. This is a very common assumption.
I have heard it at cocktail parties with Wall Street bankers who are neighbors of mine. I have no idea what they may do that isn't 'getting them caught', but it's a common refrain. So many parents have used the line "as long as you don't get caught" with their kids.
I never use it. I tell my boys if they get caught, they can expect consequences, so it's better to just avoid the potential of getting caught. It's a tremendous incentive.
It's true the Left is using this as a central part of their view on life. If you're successful, it's because of something you didn't get caught at, or at least it's not because of anything you did right.
Vince Lombardi had it right, though.
"You know, we talk -- right now -- one of the great topics is American freedom, and I think we confuse it with license. There is a great difference. I think before we can embrace freedom we first have to embrace those things which underline freedom, and they are duty, respect for authority, and a development of a mental discipline."
"None of us is born equal, in spite of everything they say about it -- we are born only in certain inalienable rights. But we are born rather unequal. However, I want to say that the talented are no more responsible for their birthright than the underprivileged are and the measurement of each man should be what each does and I want to say that it is becoming increasingly difficult to be tolerant of a society who has sympathy only for the misfit, only for the maladjusted, only for the criminal, and only for the loser.
I think we should have sympathy for them, certainly. I think we should help them, certainly. But I think it is also the time in this country to cheer for, to stand up for, to slap on the back the doer, the achiever, a man who recognizes a problem and does something about it, the winner."
Well, there is the time honored "if you ain't cheatin' you ain't tryin'".
Getting caught of course is another whole kettle of fish - my kids were taught that getting caught would result in consequences. Every single one of them tested that statement and every single one of them found out that I meant every single word of it. Fortunately, I was blessed with smart kids and they caught on quick.
But still, what some call "cheatin'" is just competition taken to a whole new level. At least that's the way I look at it.
Bird Dog: “Fed study says Bush and the banks didn’t cause the Great Recession. The Fed did,”
It wasn't a Fed study, it was a book by Robert Hetzel, a senior economist at Federal Reserve Bank of Richmond.
The financial crisis was very real. Hetzel thinks the central banks should have done more to stabilize the markets. However, real estate and mortgage-backed securities were overvalued, so there still would have been the necessity of a significant realignment.
Anyone who thinks the Fed didn't cause the bubble and collapse is simply engaging passive ignorance. It doesn't take much intelligence to know that artificially reducing interest rates will lead people to borrow money they shouldn't.
To be quite honest, I'm considering being stupid right now and taking out a massive loan against my home simply because the rates are so low and, at some point in the very near future, I'll be able to earn that amount and much more back when interest rates rise. But in doing this, I will produce exactly nothing...I will only be shifting dollar bills around.
There is a role for shifting dollar bills when they are being used for capital formation and increases in productive capacity. When the shifting is done for the sake of making huge amounts from tiny margins on the side, which is essentially what has been going on for years, all you do is misallocate resources.
Nothing illegal in all this, of course. Not systemically, or economically anyway. But certainly when money is easy or politics is geared toward certain economic outcomes, moral conduct is often set aside. This is neither a Republican or a Democrat dynamic, it's simply human nature and it's one reason why the Fed is completely and utterly at the center of all that is wrong with the economy right now.
Bulldog: Anyone who thinks the Fed didn't cause the bubble and collapse is simply engaging passive ignorance.
Hetzel is arguing that central banks should have done more, not less, once the crisis occurred, and consequently, they made a bad problem worse. However, during the crisis, no one really knew how deep the problem was, as much of the trade in securities occurred in the shadow market.
Hetzel, Monetary Policy in the 2008–2009 Recession, Economic Quarterly 2009.
As for the bubble, while the Fed had some role, as did tax cuts, the primary driver was excessive demand for mortgage-backed securities.
If you've ever done work on a house, you know the phrase "measure twice, cut once."
Saying the Fed should've done more after the problems occurred is always easy in hindsight. Part of the issue with having a Fed is that you have people who say there is no problem (uh - the Fed) and then people who say more should've been done when the problem was recognized (the Fed).
Nobody takes the time to ask what role the people saying these things played.
The "demand for mortgage-backed securities" isn't something that came from nowhere. It developed because it offered outsized returns vis-a-vis the interest rate environment. Which, as you know, was created. By the Fed.
Focusing on the symptom doesn't give you a clue on how to fix the problem. When I've cut the board by 1/8th of an inch more than I needed, will more cutting fix it? Nope....but I suppose in politics you have to try and prove you're doing something - so ask for it to be cut to fit again and you can claim you're "doing something". Even if that something does nothing of value.
Bulldog: If you've ever done work on a house, you know the phrase "measure twice, cut once."
Then you disagree with Hetzel, who thought the central banks should have been much more aggressive than they were, even though they were lacking important information about the depth of the crisis.
Bulldog: Saying the Fed should've done more after the problems occurred is always easy in hindsight.
That's right, which is why we pointed out that they were working blind. Too much was hidden from the regulators, and no one knew who was left holding the hot potatoes.
Bulldog: The "demand for mortgage-backed securities" isn't something that came from nowhere.
That's right. It came from the widespread belief that prices would always go up. More particularly, the bubble was fed by the invention of new securities that were developed by gaming the ratings system.
“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower." — Alan Greenspan
The "invention of new securities" didn't occur because something needed to be invented. It occurred because an environment was created by the Fed which allowed for the invention of these securities. Once again, you focus on the symptom, not the disease. You say the buying was based on the belief that prices would only go up - but what CAUSED that belief to become so entrenched? Low interest rates. Rates that were too low, for too long.
I do disagree with Hetzel in the sense that more should've been done after the fact. This is absurdist thought at its worst. I created the problem by lowering rates, so we need to lower rates to fix the problem? I know people think the situation was caused by the Fed raising rates too far - but many have already shown that the problem wasn't that they were raised, but they were so low to begin with. That's like saying suffering through the DTs during rehab is the fault of not drinking anymore. Technically, yes, that's true. But you don't need to go through DTs if you don't drink so much in the first place.
"Which is why we pointed out they were working blind" - which has little or nothing to do with the point I was making. After the fact, I could tell you that you shouldn't have become an alcoholic, or that you should've gone through rehab earlier. Either way, it doesn't necessarily mean you. I'm not sure how that informs the current situation at all. He can always say they could have done more, and others can reasonably argue that less could've been done, for a variety of reasons. Once you're an alcoholic, you don't say we need to treat the patient with more alcohol, we need to be more aggressive in treating those DTs. You have to follow the process to get the correct result.
If the Fed knew what it was doing, and it clearly doesn't, then we would be 'better' already. If the Fed knew what it was doing, and it clearly doesn't, then the situation would never have occurred. I had a long conversation with a colleague of mine in Hong Kong in 2002, a fellow who was heavily invested in stocks and pulling out and putting money in gold over the course of the year. He said Greenspan had lost his marbles sometime in late 1997 and was irrevocably lost to the world. At that point, I didn't agree with him. Hindsight being 20/20, I know now what he meant and agree 100%. This fellow has made a mint realizing that gold is the place to be, and for all the reasons I've changed my views on the Fed over the years.
He remains convinced the dollar will collapse soon after the Euro.
I'd agree with him on the Euro, though I'm less convinced the dollar will soon follow. People will flee to it briefly assuming it is 'more stable'. This will create a short period of stability before it comes unglued.
We shall see. I blame the Fed, and I'm a former fan. And I consider Greenspan quotes post 1998 to be misleading, disingenuous, and self-serving on his part.
Bulldog: The "invention of new securities" didn't occur because something needed to be invented. It occurred because an environment was created by the Fed which allowed for the invention of these securities.
It occurred because of market psychology. Prices begin to rise. More people get into the market causing the prices to rise further. People begin to believe that U.S. real estate can't drop in value. Everyone begins to rush into the market. New securities were used to help fuel the rush into the market, which camouflaged the risk, and allowed the risk to be passed off to 'greater fools'.
It certainly wasn't only U.S. monies, but money from international markets. The shadow market rivaled the traditional markets in size, but lacked the accountability of the traditional banking system.
Bulldog: I created the problem by lowering rates, so we need to lower rates to fix the problem? I know people think the situation was caused by the Fed raising rates too far - but many have already shown that the problem wasn't that they were raised, but they were so low to begin with.
The federal funds rate were rising during the run up, as did the LIBOR. If rates were the only factor, real estate would be booming today. Obviously, something else was going on.
Bulldog: If the Fed knew what it was doing, and it clearly doesn't, then we would be 'better' already.
That doesn't follow. Once your break something, it may take time to repair.
...excessive demand was actually "yield-chasing" --the securitized mortgage bond tranches weren't the cause but the effect of excessive demand created by artifically low interest rates. IOW, the Fed-influenced ''easy money'' held in place too long to ward off recessionary forces let loose by what were seen as a pair of ''one-offs'' that bmade ''this time it's different'' seem true enough to've maintained the herd mentality. The paired 'one-offs' were the dot-com bust and the 9/11 WTC effect on investor psychology --and the downstream effect of that on the ''trees grow'' nature of a free mkt.
The federal funds rate were rising during the run up, as did the LIBOR. If rates were the only factor, real estate would be booming today. Obviously, something else was going on. That is not to say the Fed had no influence. They could have slowed the bubble, if they had been conscious of it, but the shadow market bubbled largely out of sight of regulators. Of course, deficit tax cuts during an expansion was like throwing fuel on the fire.
"I'm considering being stupid right now and taking out a massive loan against my home simply because the rates are so low and, at some point in the very near future, I'll be able to earn that amount and much more back when interest rates rise."
Just do it. My wife and I did. We took out a home equity loan at 1%, used part of it to install a taxpayer subsidized PV system that will help us to get off the electrical power grid, another part of it to buy a vacation cruise, and yet another part of it to invest. When the low interest deal was up after a year, we paid it all back. I haven't computed the ROI on this financial sleight of hand, but I do wish to extend my thanks to all of MF's readers for having--through the tax subsidy of my PV electrical system--helped to finance my vacation, my investments in the stock market, and my home upgrade. I could not have done it without you. Also, I wish to thank Mr. and Mrs. Obama for having shown me how easy it is to sponge off the taxpayer's dime if you put this goal high on your priority list.
I consider it one of the dumbest ideas I ever came up with, but once interest rates start to rise it won't take long to cash in (particularly since I get a tax write-off, too). But I can get fixed mortgage rates that are just stupid low (and they may go lower in 2-3 weeks, so I'm going to step back and wait since I believe another ridiculous Operation Twist is about to commence, which will solve absolutely nothing, but get plenty more people deeply into debt when they see how low rates can go).
Sounds like you invested it wisely, too, so you get an immediate return. There isn't much I can do that with. Wind, solar and most other alternatives are all mediocre investments around me. I'd love to get off the grid, but even with stupid low rates, write-offs, and subsidies, it's still 20 years to break even. On the other hand I believe I could make break even in 4-5 once rates start to rise again, simply by shoveling the money into short term CDs.
I always laugh at people who think it wasn't the low rates that caused the problem, but the fact rates were rising. Or that it's the 'financial inventions' which caused the problem. These are people who don't take their cars in for a regular tune-up, start to hear a knocking in the engine, and then complain about the car manufacturer making sub-quality products. Then they take it to a mechanic and gripe when he charges them a fortune to fix a blown rod. They don't want to recognize the damage started because a simple step should've been taken and wasn't.
Even for power misers like us, when the power company charges $0.38 per kwH for electricity and taxpayers are paying 2/3rds of the cost of the solar PV system, the payback period is
Hmmm, sort of lost the tail end of my last post there. It was supposed to be, "the payback period is less than 4 years." Guess I should not use the (less than) or (more than) symbol without prefacing it by an escape character?
On another subject, the Nikon D800 is attracting a lot of attention if only because it will be the very first medium format digital camera. My friend Rob Smith, one of Australia's best landscape/outdoor photographers, just purchased one - and he is a recognized Olympus Master photographer. He told me in an email exchange today that this is going to be the wave of the future and when the price point comes down to the $1K range, will probably put the death strangle on Oly and Canon.
Love my D800. I bought mine from my local Nikon dealer because I figured Nikon was going to protect its mom & pop shops, so I got my D800 months before the folks who pre-ordered from big on-line retailers like Amazon. It's a superb camera that handles like a dream. With its 36 MP sensor, it's still considered a full frame (FF) camera, however, not a medium format one. A less costly FF version, the D600, will be coming out soon but will not be priced at $1K or anywhere close to that. In any case, most of the full cost of such a system is not in the body (even with the D4 being priced at $6K), but in the lenses. Good lenses are expensive and will remain so for a very long time, I'd guess. Even apart from the tsunami in Japan and the floods in Thailand, which hammered most of the big Japanese camera and electronics companies, the price of good glass has been creeping upwards over the past few years. That trend will continue if the pro-quality lenses continue to be made in Japan. Most of the low cost "prosumer" camera bodies are manufactured in China and Thailand to save on costs.
RE: Find this guy (Ryan) and Steal His Woman
Click through the link at AoS, "know what I mean". Ewwww. Just like in the movie Total Recall (the original, really bad acting, g-d awful version, I mean).
Gee. Nobody talked about Congress, and its law-making and encouraging of the housing market. Banks should make it easier for the poor folks to get loans...and then must make it easier...and then must be penalized if they don't have enough loans out to those who are iffy on payback.
--also, the commodity futures modernization act of yr 2000 had a large and i think deliberate role. The CDS thus assigned to the OTC market, they were the 'derivative' one always hears were decisive in the credit mkt lockup.
Look up Gary Gensler some time. The Forrest Gump of every 1990s-now destructive financial/regulatory innovation that ever blew up and then needed a far worse 'repair'.
Now Obama's CFTC chair --head commodity regulator.