Brad DeLong Is Surprised

Surprised to find that highly educated, sophisticated people are idiots:

The unwinding of the real estate bubble in 2007-2009 is so far not going well. There is, by contrast, more financial distress than I believed possible. Who thought that quantitatively sophisticated hedge funds would have enormous unhedged exposure to subprime risk? Who would have thought that highly-leveraged investment banks with an originat-and-sell business model would keep lots of the securities they had originated in their own portfolios--and kept them because they were high yield for their rating, i.e., because the market did not believe they were as low risk as the investment banks had bamboozled the ratings agencies into claiming? Who would have thought that those buying subprime mortgage securities from the likes of Countrywide had done no investigation into how Countrywide was screening out borrowers?

Sometimes economists overestimate the rationality of people. Sometimes I understate my conclusions.

B.F.Skinner, Walden II, Twin Oaks?

Talk about a blast from the past, this obituary of one of the pioneers of the Twin Oaks commune, based on the preachings of B.F.Skinner, the once-famous behavioral psychologist, in Walden II evoked all sorts of memories.

Unfortunately, a bit of Schadenfreude (sp?), based on this quote, and my comfortable belief that the hippy style of life was short-sighted, which meant my own life choices were superior:

"Although she was involved in founding two other income-sharing communities -- in Missouri and Virginia -- she told The Post in 1998 that communal life had not measured up to her expectations.

"My mother was disappointed that Twin Oaks did not turn out to be the model for what the rest of our society would be," said her daughter, Dr. Josie Kinkade of Louisa, Va. "When she found out that it was really just a nice place for some middle-class people to live, she was disappointed."

And You Think FSA Has Problems?

Over the past years FSA (Farm Service Agency for newcomers) has made news for having computer problems, for not having the capacity to implement the new ACRE program, for paying the estates of dead people for too long, etc. (Their good work goes unreported, as is normal.)

The British counterpart of FSA has its own problems, as these excerpts from a UK Computerworld article show:

The government agency overpaid subsidies under the Single Payment Scheme by £37 million in 2005 to 2006, and some 20,000 farmers were paid incorrectly, according to the ‘progress update’ report by the Committee of Public Accounts.

A third of claims this year, or 34,499 claims, could still be affected unless farmer entitlements were properly checked, it said.

The agency also overspent by £50 million on a business change project that was intended to meet the new payments scheme, taking total project costs to near £300 million.

“The agency’s service to farmers is still undermined by weaknesses in its IT systems, such as its inability to provide farmers with a predicted amount and payment date to assist them with their financial planning,” the report said.

It is spending £750 to process each farmer’s claim for a subsidy payment, and greater automation of small claims processing as well as better use of electronic payments was “essential” in reducing these costs, the report said.

Its IT system was “rigid and task based”, and was “unsuited” to the agency’s needs, the committee said. The Accenture contract was renegotiated so that from September 2007 to 2009, Accenture will receive a managed service fee of £14 million in total, and risk will be better spread.

How To Fight the War on Terror: Attn: Obama

Orin Kerr at Volokh.com offers a suggestion:

Finally, I hope the Bush Administration will think creatively about how the Al Marri opinions handed down today could be used to bring the war on terror to a quick and victorious end. In particular, the opinions could substitute for waterboarding. Instead of waterboarding the bad guys, the government should force Al Qaeda detainees to go through all 216 pages of the different decisions in one sitting. I would think that even the hardest of Al Qaeda terrorists will break down and confess before making it through, saving many American lives.

Transgenic Foods and Offshore Drilling

I think there's a parallel between offshore drilling and transgenic food crops. Both are things many people,, particularly among the liberals of the world, would rather not do/have. But resistance to both is being undermined, and possibly is crumbling, as the prices of oil and food rise.

Here's a bit in Agweb on the improved outlook for transgenic wheat.

John Phipps on Poland

He traveled to Poland and blogs on what he learned.

Higher Meat Prices in the Future?

That's the message I took away from a John Phipps post, as he quoted from a Purdue professor:

So when does the boom in pork and hog prices come? Based on projections of U.S. slaughter supplies, prices will improve very late this fall and winter and go wildly higher by next spring and summer. When one adds the trade boom, this advances the price escalation. Trade data lags about two months so we are always slow to see those impacts. Trade will likely continue to accelerate and this will encourage even stronger prices than the supply reductions expected for late this year and 2009.

The movement upward has begun for cattle, where prices have been up nearly $10 per hundredweight in the last three weeks. Given the coming declines in pork supply and the more than vigorous export growth, hog prices should not be far behind. If U.S. consumers don’t want to buy up the last of the cheap pork, the world is anxious for the opportunity.

John is skeptical--livestock producers are currently taking it in the neck, apparently.

My Next Door Neighbors

I blogged about the sales history of the townhouse next door a while back in the context of immigrants pushing up the price of housing until the bubble burst, partially inevitably and partially due to Rep. Tancredo. Prices went up and up, then down. According to the Fairfax County real estate site, my neighbor had bought it for $369,000 in 2006, Wells Fargo took it for $265,000 and sold it to a guy in DC for $187,000 two months ago. !!!

The Definition of Poverty

An article in the NY Times on a proposed new definition of "poverty" in NYC:

The nation’s poverty measure was developed in the 1960s and was based on a 1955 study that showed that poor Americans spent roughly a third of their after-tax income on food. Ever since then, the country’s poverty levels have been gauged by tripling the annual cost of groceries.

That model, while updated for inflation, has been criticized for being out of date, inaccurate and not taking into account how expenses like housing vary nationwide. According to the federal Bureau of Labor Statistics, families nowadays spend one-eighth of their income on food, with more money going to transportation, child care and housing. Nor does the federal model measure the financial impact of government assistance programs.

I'm not sure whether this implies the cost of food has dropped so much, or that we're spending more on big cars, big houses, and big operations. I'm also cynic enough, and conservative enough, to point out that "poverty" is relative. When LBJ launched the "war on poverty", it was won.

Megan and the Drivers

Megan McArdle has a controversy going over people who ride bicycles in the city and exactly how much they should obey traffic laws. A bit amusing, as I remember the "law and order" folks back 40 years ago and [unfairly] attribute their views to modern-day libertarians and conservatives.

On a more serious note, the problem with speeding in cars and jaywalking as a pedestrian and exploiting the confusion surrounding the definition of a bicyclist is it's the liberal fallacy, or maybe the rationalist fallacy: the person believes their intellect and grasp of the situation is right and infallible, not allowing for Murphy's Law. (Of course I speed and jaywalk, even though I'm a bureaucrat I'm also human. I'm just saying, particularly for an older person, life has many surprises.)