Weekly Roundup 19: A Curated Linkfest For The Smartest People On The Web
Warning: Today’s list is massive & divided into two parts.
Here are some links to articles that didn’t make our front page. Several of the articles are very insightful I highly recommend reading them. As always, the articles are from different fields but should make you a more well rounded investor. Take Care.
(Click on the titles to access the articles)
47.Harvard’s masters of the apocalypse – Via Times Onine – If Robespierre were to ascend from hell and seek out today’s guillotine fodder, he might start with a list of those with three incriminating initials beside their names: MBA. The Masters of Business Administration, that swollen class of jargon-spewing, value-destroying financiers and consultants have done more than any other group of people to create the economic misery we find ourselves in. From Royal Bank of Scotland to Merrill Lynch, from HBOS to Leh-man Brothers, the Masters of Disaster have their fingerprints on every recent financial fiasco.
48. Video: Daniel Dennett Discusses the Future of Rationality – Via Big Think
49. How Economists Are Saving Our Ecosystems – Via Big Think – Comic villains are always hatching nefarious schemes. These usually involve forcing a superhero to choose between saving an entire planet or the woman he loves. Why are ecologists finding themselves in the same position? Today, real-life ecologists are being forced to decide which species to save when it’s clear that not all are going to make it. Endangered species—and plans to save them—stir up passions. But some scientists are turning to a rather dispassionate solution for this issue: economics.
50. Video: John Temple Contemplates the Future of Investigative journalism – Via Big think
51. Education Dept. Releases Data on Enrollment, Graduation Rates, and Student Aid – Via Chronicle Of Higher Education – President Obama sees a future in which the United States has a higher proportion of college graduates than any other country in the world. He set an ambitious date of 2020 for reaching that goal—and data released Tuesday provide a glimpse of just…
52. Podcast: Money, Markets, and Sovereignty (Audio) – Via Council On Foreign Relations
53. Podcast: Financial Market Turmoil: The Federal Reserve and the Challenges Ahead (Audio) – Via Council On Foreign Relations
54. Graphic: Immigration Explorer Shows Largest Foreign-born Groups Since 1880 – Via Flowing Data
55. Podcast: The Death of the Newspaper – Via Ideas Project – This podcast by Zoe Corneli of Crosscurrents, the daily news magazine from KALW Public Radio in San Francisco, documents the breakdown of traditional newspaper journalism, a big story in the Bay Area but also nationwide. With Denver’s Rocky Mountain News just the latest in a series of newspaper closings, journalists are looking for new ways to document current events, including online journalism and mobile journalism. Corneli’s interviews with Oakland Tribune’s Martin Reynolds, an editor who’s managed to survive by staying ‘lean and mean,’ Sarah Rich, of Dwell Magazine, and Alexis Madrigal, who with Rich created a wiki called the San Francisco Post Chronicle, which some are calling a model daily news organization for the future.
56. Kings of Cash: The Impact of the Global Financial Crisis on Sovereign Wealth Funds – Via Wharton – The worldwide financial crisis has raised many questions about the efficacy and role of sovereign wealth funds (SWFs), the large, state-controlled investment funds typically carrying a mix of assets. Some of the largest funds, as a proportion of GDP, reside in the Middle East — a prime example is Abu Dhabi Investment Authority, with $875 billion in assets. In the wake of the financial meltdown, most of the SWFs in the Middle East have either stopped investing or have become very risk-averse. Instead, they are now turning inward to stimulate their own slumping economies — and thus reducing purchases of foreign assets. The need to expand government spending to moderate the hit on local economies, along with lower oil revenues, is absorbing most, if not all, of any surpluses at home.
57. Audio: An Interview With Overstock.com CEO Patrick Byrne – Via Mc Alvany – Patrick Michael Byrne is chairman and CEO of Overstock.com, Inc., a Utah-based internet retailer that has been publicly traded since 2002. Under Patrick’s leadership the company’s annual revenue has grown from $1.8 million in 1999 to $760.2 million in 2007. In 2005, Patrick began a vigorous campaign against corruption in our capital markets through securities manipulation. His stance quickly caught the attention of Wall Street analysts and reporters and remains a point of high controversy today.
58. BlogTalkRadio Lets Anyone (Including the Pentagon) Start Talk Shows – Via Media Shift & PBS – Levy has a background as an entrepreneur in the telecom industry, selling Destia for $1 billion to Viatel and using some of those proceeds to launch BlogTalkRadio. This startup allows anyone to host an online talk-radio show for free, providing a call-in number for listeners and live streaming audio. The archives are then turned into audio podcasts. BlogTalkRadio sells sponsorships in its more popular shows and shares the revenue with hosts, and also has a premium offering for organizations like Hachette Book Group or the Pentagon to have their own “private radio network” online. Levy also hosts his own show on the site.
59. Bailed Out Bank Had Friends in High Places– Via Pro Publica – The queue of banks seeking bailout money is a long and winding one. They can’t even get a “hi there” from Treasury officials, bankers complain . But OneUnited Bank is that rare success story. Even though it was scolded by regulators  in October for poor lending practices and executive perks (like a Porsche), it landed $12 million in bailout money in December.
60. Why women are more religious. Part 1: It ain’t Pascal’s Wager – Epipheom – Rodney Stark, a professor of sociology and comparative religion at the University of Washington, flips the question around: Why are men less religious? “Studies of biochemistry imply that both male irreligiousness and male lawlessness are rooted in the fact that far more males than females have an underdeveloped ability to inhibit their impulses, especially those involving immediate gratification and thrills,” Stark argued in a 2002 paper in the Journal for the Scientific Study of Religion. The upshot is that some men are shortsighted and don’t think ahead, Stark said, and so “going to prison or going to hell just doesn’t matter to these men.”
61. A Realistic Map Of Scientific Thought – Via Eco Tone – Tracking citation data (i.e., which papers cite which other papers) has traditionally been the method for understanding the interconnectivity of different fields and subfields of research. But in the age when most researchers access their information online, the printed word can sometimes be years out of date.
62. A 300 million year old fish brain … – Via Greg Laden Blog – has been found. Inside the fish’s skull, in fact. This is from a chimaeroid fish, which today are fairly rare but during the Carboniferoius were quite common and diverse. There are really two aspects of this find that are especially interesting. One is the 3D imagery that was obtained of the ancient fossilized brain, and the other is the analysis of the fish’s ear canals. The brain is cool just because it is cool (and shows some interesting morphology). The ear canal study is interesting because it shows a pattern different than expected for a fish: This creature was probably really good at keeping track of it’s position in the horizontal plane, but not the vertical plane. That is odd for a fish.
63. Neuroscientists Map Intelligence In The Brain – Via ScienceDaily – Neuroscientists at the California Institute of Technology (Caltech) have conducted the most comprehensive brain mapping to date of the cognitive abilities measured by the Wechsler Adult Intelligence Scale (WAIS), the most widely used intelligence test in the world. The results offer new insight into how the various factors that comprise an “intelligence quotient” (IQ) score depend on particular regions of the brain.
64. Scientists Identify Neural Circuitry Of First Impressions – ScienceDaily — Neuroscientists at New York University and Harvard University have identified the neural systems involved in forming first impressions of others. The findings, which show how we encode social information and then evaluate it in making these initial judgments, are reported in the most recent issue of the journal Nature Neuroscience.
65. Cocktail Party Effect – Via Psy Blog – For psychologists the ‘cocktail party effect’ is our impressive and under-appreciated ability to tune our attention to just one voice from a multitude. At a party when bored with our current conversational partner — and for the compulsive eavesdropper — allowing the aural attention to wander around the room is a handy trick. Perhaps only the most recidivist eavesdroppers are aware how special this ability is. But even they might be surprised — and worried — by just how much we can miss in the voices we decide to tune out.
66. Gratitude Enhanced by Focusing on End of Pleasurable Experience – Via Psy Blog – One of the greatest challenges to achieving happiness through gratitude is routine, familiarity and habit. We behave as if the things we enjoy now – health, job, family and friends – will continue forever, despite knowing it’s impossible. Usually only a change of some kind really captures our attention. Attacking this complacency is at the heart of a new study which can be used to enhance the power of gratitude. Dr Jaime L. Kurtz, reporting her research in Psychological Science, hypothesises that one way to increase people’s subjective well-being is to focus on when pleasurable experiences will end.
67. Book Review: More Percisely – Via Petemandik – I like when people I like write books I like (what’s not to like?). Case in point: More Precisely: The Math You Need to Do Philosophy by Eric Steinhart, my good buddy and colleague at the Department of Philosophy of William Paterson University. [Link to publisher’s website.] (Have you Brain Hammer-heads seen the ad on Leiter’s blog?) I am geekily excited to own a single reference work where I can look up philosopher-friendly explanations of, for example, Bayes’s theorem, transfinite cardinalities, counterpart-theoretic modal semantics, and finite state automata. Damn! That’s cool. Dig this table of contents: [link].
68. The Metrosexual: Men & Beauty – Via Everyday Sociology Blog – The term “metrosexual” entered our vocabulary in 1994 thanks to British Journalist Mark Simpson’s article, “Here Come the Mirror Men.” In this article, he claims that men are becoming vain; they are grooming, adoring, and flaunting their bodies in ways we have never seen before. These men, who he calls metrosexuals, spend money on expensive clothes, trendy hair products, and elaborate facials. Many people mistake the metrosexual for homosexual, but Simpson’s point is that straight men are spending more and more money on clothes and beauty products. This phenomenon challenges the stereotype that it is only gay men who care about how they look. We should not be surprised then when a man spends money on “boytox” or does a double-take when he passes a mirror.
69. Gerard O’Neill Psychology of Recession and Recovery – Via Geary Behavior Institute – Gerard O’Neill gave a superb talk on the current economic climate in the Geary Institute last Monday. Full details of his talk are available below. From a research perspective, it reinforced to me the need to more fully understand whats happening with consumption. The view among many in the audience is that precautionary saving and some form of ricardian equivalence (saving now for future tax increases) were driving increased saving even among those with secure public sector positions. Others argued that perhaps no jobs feel secure now. Another potential reason for increased saving among those who have not seen an income decrease is reference effects, with the need to purchase conspicuous items being a lot lower and perhaps even seen as gaudy among the economically secure given the trouble that others are in.
70. OECD RSS feeds – Via Geary Behavior Institute – I came across a very useful list of RSS feeds you can select from the OECD website. You can choose the country you are interested in or the topic. Some relevant topics for the Geary researchers might include: Economics and growth, health, education, social and welfare issues etc.
71. Course On – Discrete Choice – Via Geary Behaviora Institute – A really good resource below, and in general Greene’s website has fantastic links to his courses.
72. New book – ‘The Oxford Handbook of Philosophy of Mind’ – Via My Mind On Books – The Oxford Handbook of Philosophy of Mind (Oxford University Press, 2009) is available, with “Look Inside” at Amazon for a preview of the Table of Contents and part of Jaegwon Kim’s article on “Mental Causation.”
73. Experience induces global reorganization of brain circuitry Via Science Blog – One of the central dogmas of neuroscience, which persisted for much of the history of the discipline, was that the adult human brain is immalleable, and could not change itself once fully developed. However, we now know that this is not the case: rather than setting like clay placed into a mould, the brain remains pliable, like a piece of putty, so that each new experience makes a lasting impression upon it. This phenomenon, referred to as synaptic (or neural) plasticity, involves reorganization of the connections between nerve cells, and is arguably the most important discovery in modern neuroscience. It is well established, from research carried out in the past 20 years or so, that the brain can adapt itself to any circumstance; this therefore opens up the possibility of therapies for a wide variety of neurological conditions.
74. Video: What Is Nudge – Via Nudge Blog
75. THE MEASUREMENT PROBLEM IN PHYSICS – Via Bayesian Heresy – The most famous fruit in physics is an apple, but the most famous animal in physics is a cat. It belongs to Edwin Schrödinger, a theoretical physicist who in the early 20th century helped to develop the radical theories of Quantum Mechanics. Schrödinger’s cat does not actually exist – it is the subject of a thought experiment – in which the rules of quantum mechanics make it appear both dead and alive at the same time. The problem of a cat that is both dead and alive illustrates the challenges of quantum physics and at the heart of this apparent absurdity is a thing called the measurement problem.
76. East meets west: How the brain unites us all – Via New Scientist – AS A SPECIES, we possess remarkably little genetic variation, yet we tend to overlook this homogeneity and focus instead on differences between groups and individuals. At its darkest, this tendency generates xenophobia and racism, but it also has a more benign manifestation – a fascination with the exotic. Nowhere is our love affair with otherness more romanticised than in our attitudes towards the cultures of east and west. Artists and travellers have long marvelled that on opposite sides of the globe, the world’s most ancient civilisations have developed distinct forms of language, writing, art, literature, music, cuisine and fashion. As advances in communications, transport and the internet shrink the modern world, some of these distinctions are breaking down. But one difference is getting more attention than ever: the notion that easterners and westerners have distinct world views.
77. Guest Column: Can We Increase Our Intelligence? – Via NYT – It’s an honor to be invited to fill in for Olivia. We’ll be writing about slow and fast forces that shape the brain: natural selection, operating relatively slowly over many generations; and environmental influences, whose effects are visible across a few generations or even within one individual’s lifetime. We’re often asked whether the human brain is still evolving. Taken at face value, it sounds like a silly question. People are animals, so selection pressure would presumably continue to apply across generations. But the questioners are really concerned about a larger issue: how our brains are changing over time — and whether we have any control over these developments. This week we discuss intelligence and the “Flynn effect,” a phenomenon that is too rapid to be explained by natural selection. It used to be believed that people had a level of general intelligence with which they were born that was unaffected by environment and stayed the same, more or less, throughout life. But now it’s known that environmental influences are large enough to have considerable effects on intelligence, perhaps even during your own lifetime.
78. Genetic influences on social network characteristics – Via Pnas – Who becomes the most central individual in a society and why? What determines how many friends a given individual has? What determines how clustered or tightly-knit the friendships in a society are? In a set of important and original new findings reported in this issue of PNAS, Fowler, Dawes, and Christakis (1) provide evidence that network characteristics such as those mentioned above are heritable: that is, they show that an increase in the overlap in genetic material in twins corresponds to an increase in the covariation of some of their social network characteristics.
79. Afraid Of Knowing Ourselves – Via The Situationist – . . . . According to an ABC News/Washington Post poll released last month, twice as many blacks as whites thought racism was a big problem in this country, while twice as many whites as blacks thought that blacks had achieved racial equality. . . . [A] CNN poll from last January found that 72 percent of whites thought that blacks overestimated the amount of discrimination against them, while 82 percent of blacks thought that whites underestimated the amount of discrimination against blacks. What explains this wide discrepancy? One factor could be that most whites harbor a hidden racial bias that many are unaware of and don’t consciously agree with. Project Implicit . . . has administered hundreds of thousands of online tests designed to detect hidden racial biases. In tests taken from 2000 to 2006, they found that three-quarters of whites have an implicit pro-white/anti-black bias. (Blacks showed racial biases, too, but unlike whites, they split about evenly between pro-black and pro-white. And, blacks were the most likely of all races to exhibit no bias at all.)
80. Four Authors Respond to the Social Networking Controversy– Via Neuro Narrative – When neuroscientist and Oxford Professor Susan Greenfield warned the British House of Lords about the alleged dangers of social networking, she touched off a firestorm that is still smoldering. Greenfield made several points, some that have been misrepresented in subsequent news, and others that are clearly debatable – but it’s beyond dispute that she hit a nerve, and her words are likely a foretelling of a larger debate still to come.
81. Risk, Fear, Certainty – Via Science Blogs- Although book tours can, on occasion, be frustrating and grueling – I’m so sick of airport food that I don’t even like Egg McMuffins anymore, and I’m getting to the point where I detest the sound of my own voice – one of the genuine highlights is getting to answer questions from your readers. As an author, there is nothing more exciting than learning which parts of the book people find interesting and want to know more about or which points they disagree with or which stories resonate with their own experience. It’s the thrill of seeing your words enter the world, of seeing a mass of pixels in a word processor become a collection of ink blots on pages made from dead trees. And then, because these ink blots are arranged just so, they can enter the mind of someone else, so that your sentences get remixed and reanalyzed. A single idea, typed more than a year ago on a laptop keyboard, has multiplied itself into a swarm of ideas.
82. Are you a Conformist or an Innovator? Check your Birth Order. – Via Psychology Today – I conducted a search on Google Scholar a few days ago using “birth order” as search words (as appearing in titles of the cataloged documents). I obtained 2,720 hits. Scholars and lay people alike are fascinated by the effect of birth order on a wide range of human phenomena. One common premise is that the effects of birth order manifest themselves via the differential expectations and norms imposed by parents on their children. Another commonality across most birth order research is that it has been conducted void of an understanding of the Darwinian forces that shape family dynamics. And then came long Dr. Frank Sulloway.
83. Martya Sen on Moralism, Maoism, and Capitalism– Via Aid Watch – Professor Sen has an article on Capitalism beyond the Crisis in the current New York Review of Books. He has a shorter summary in the Financial Times today. I share the universal respect for Professor Sen, but must respectfully disagree on some of his take on capitalism in crisis: He points out that even Mr. Free Market Invisible Hand, Adam Smith, was aware that you need more than self-interest to make capitalism work. You also need moral values like trust, honesty, and prudence (none of which has been too obvious in the financial sector lately), so business people can do transactions without cheating each other.
84. Contract law and loan mods: not quite as scary a combination as it might seem – Via American Banker –
A Wall Street Journal article today describes the growing anxiety among mortgage investors that the Obama administration’s new foreclosure prevention plan would make it impossible for them to sue servicers over loan modifications. Meanwhile, servicers cite their own worries about investor lawsuits as a reason for not going ahead with more loan mods. To both groups, a simple message: Get on with it! The more quickly investors start suing servicers over loan mods, the more quickly the issue will dissipate. Precedents in case law will begin to determine the kinds of lawsuits that have a chance of succeeding and those that are hopeless, thus boosting servicers’ confidence in their decisions and allowing investors to get a better sense of how their contracts will hold up under the extreme and ever-changing conditions brought about by the financial crisis. This would be progress.
85. Wearing a “Sixth Sense”: Interactive Visualization You Can Wear – Via Infosthetics – This demo, from the Fluid Interfaces Lab of Pattie Maes at MIT, and spearheaded by PhD student Pranav Mistry, was the buzz of TED. SixthSense [pranavmistry.com] is a wearable device with a projector that paves the way for profound interaction with our environment. The innovative device allows to literally overlay everyday objects with real-time visualizations, in order to inform users about normally invisible information relevant to the objects in view. Imagine ingredient pie charts beamed on top of apple pies. Imagine Facebook comments projected on people’s foreheads.
86. The pursuit of human knowledge has a shape. – Via Wired – By crunching data from more than a billion user interactions on scholarly databases, Los Alamos National Laboratory researchers produced a high-resolution map of the relationships between different fields of science. They’re not the first to map science, though they insist that their map is best. Other topographers of knowledge, they say, aren’t up to date on what modern scholars search for, and rely too much on natural science databases.
87. “Consumers Can Still Spot Value in Crisis” – Amar Bhide writing at WSJ – Via Princeton – The good news is that the cutbacks are likely to be more severe in the less productive kind of consumption. History suggests that Americans don’t shirk from venturesome consumption in hard times. The personal computer took off in the dark days of the early 1980s. I paid more than a fourth of my annual income to buy an IBM XT then — as did millions of others. Similarly, in spite of the Great Depression, the rapid increase in the use of new technologies made the 1930s a period of exceptional productivity growth. Today, sales of Apple’s iPhone continue to expand at double-digit rates. Low-income groups (in the $25,000 to $49,999 income segment) are showing the most rapid growth, with resourceful buyers using the latest models as their primary device for accessing the Internet.
88. Is Digital Democracy A Myth – Via Princeton – Matthew Hindman’s new book THE MYTH OF DIGITAL DEMOCRACY has drawn interest and fire from many in the media world and blogosphere. In the spring issue of Democracy: A Journal of Ideas, Matt Bai, author and regular contributor to the New York Times Magazine, writes a review of Professor Hindman’s new book and discusses whether or not true digital democracy is a myth or a (potential) reality. Check out the article here at Democracy’s web site.
89. Investor Protection and Interest Group Politics – Via Harvard Law – The paper models how lobbying by interest groups affects the level of investor protection. In our model, three groups – insiders in existing public companies, institutional investors (financial intermediaries), and entrepreneurs who plan to take companies public in the future – compete for influence over the politicians setting the level of investor protection. We identify conditions under which this lobbying game has an inefficiently low equilibrium level of investor protection. Factors pushing investor protection below its efficient level include the ability of corporate insiders to use the corporate assets they control to influence politicians, and the inability of institutional investors to capture the full value that efficient investor protection would produce for outside investors. The interest that entrepreneurs (and existing public firms) have in raising equity capital in the future, we show, reduces but does not eliminate the distortions arising from insiders’ interest in extracting rents from the capital that public firms already possess. Our analysis generates testable predictions, and can explain existing empirical evidenceregarding the way in which investor protection varies over time and around the world.
90 Macroeconomics – Via Thinking Things Through – That back-of-the-envelope calculations are all we have should not be surprising. In Keynes’ words, macroeconomists should be humble. The referenced article provides a great overview of the state of macroeconomics. It also offers an explanation of why macroeconomists are “all over the map” concerning policy recommendations. Macroeconomics is a form of modeling, and as with all modeling, the best it can hope for is to provide rough guides regarding what will happen in the future. There are lots of macroeconomic models and lots of disagreement about which is best. My question is this: even if we knew which was best, would it be good enough to trust for guiding public policy? And how would we know?
91. Cars Will Heal Their Own Scratches and Scrapes – Via Al Fin – University of Southern Mississippi University scientists have developed a new coating material that can heal scratches within an hour when exposed to UV light.T he key ingredient of the new material created by polymer scientist Marek Urban and his doctoral student Biswajit Ghosh is a dash of a precursor to chitosan, a structural element in the shells of crabs, shrimp, insects and fungi. To the chitosan precursor, the scientists added oxetane, a ringed molecule that can be broken without much energy. Then they incorporated this new OXE-CHI molecule into polyurethane, the material that might need repair.
92. Intelligence is Inherited, More Than You Know – Via Al Fin – THE first images to reveal the quality of the brain’s wiring show that more aspects of intelligence are inherited than previously known. The finding hints at ways to boost intelligence. Intelligence is between 50% and 80% heritable. Probably closer to 80 than 50. It has been difficult to locate specific genes and gene clusters that account for differences in intelligence between matured human brains, but scientists keep trying.
93. Financial Quants In The News – Via Money Science – There’s been an explosion of (mostly critical) coverage of Quant Finance in the last few months – and here’s the run down, in case you missed anything.
94. The Financial Crisis and the Systemic Failure of Academic Economics– Via Money Science -The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.
95. Video: Watch The FDIC Sieze A Bank – Excellent “60 Minutes” video showing what actually happens when the FDIC seizes a bank.
96. Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds – Via Harvard Knowledge – Are nominal government bonds risky investments that investors must be rewarded to hold? Or are they safe investments, whose price movements are either inconsequential or even beneficial to investors as hedges against other risks? U.S. Treasury bonds have performed well as hedges during the financial crisis of 2008, but the opposite was true in the late 1970’s and early 1980’s. John Y. Campbell, a Visiting Scholar at HBS, Harvard Ph.D. candidate Adi Sunderam, and HBS professor Luis M. Viceira explore such changes over time in the risks of nominal government bonds.
97. Grade Inflation Seen Rising – Via Higher Education – A professor who has crusaded against grade inflation by gathering and publicizing data has released his largest analysis to date — and it suggests that grade inflation continues to be a broad problem across much of higher education. The figures may embarrass some colleges and renew a debate over whether students experience enough rigor. The new analysis found that the average grade-point average at private colleges rose from 3.09 in 1991 to 3.30 in 2006. At public colleges and universities, the increase was from 2.85 to 3.01 over the same time period. The study also examines — and seeks to refute — the idea that students are earning better grades simply because they are better prepared. The greatest increases in grades appear to be coming at flagship public universities in the South and at selective liberal arts colleges.
98. Borgers on Underground Banking – Via Legal Theory – In combating and regulating underground banking, a choice can be made of roughly two models, the risk model and the assimilation model. The risk model comes down to a complete prohibition of underground banking combined with an active investigation and prosecution policy. In the assimilation model, underground banking is recognised as a form of financial services but at the same time, all rules that generally apply to financial services are declared applicable to underground bankers. An effort is made simultaneously to lower the threshold of the formal banking system.
99. Secrets of Succession – Via Wealth Bulletin- There are some simple steps parents can take to ensure their children grow up as responsible wealth owners. Here five entrepreneurial heirs relate the lessons they learnt.
100. Singapore’s Stimulus Package – Via Crisis Talk – I spent the weekend looking through some stimulus packages, and was impressed by the clarity of Singapore’s. The summary is here. I also like the name: the Resilience Package.
101. Fed Paper: Currency Crashes Can Have Good Economic Effects – Via WSJ – Historical evidence doesn’t support the commonly held view that currency crashes are harmful to big economies, according to a Federal Reserve paper. In fact, as long as they’re not triggered by an outbreak of inflation, crashes can actually have positive economic outcomes including stronger gross domestic product growth, lower bond yields and rising equity prices. “Sharp exchange rate depreciations, or currency crashes, are associated with poor economic outcomes in industrial countries only when they are caused by inflationary macroeconomic policies,” wrote Joseph Gagnon, visiting associate director of the Fed’s monetary affairs division.
102. Here’s A Mark To Market Reform That Might Really Work– Via Business Insider – At the heart of the mark to market crisis is a complaint that banks have to write down billions of dollars worth of assets to levels they regard as unrealistically low, which hurts banks’ ability to maintain regulatory capital requirements. To meet the requirements after the write-downs, banks then have to raise new capital. Knowing this, investors have been selling bank stocks to avoid dilution. So far proposals to solve this problem have focused on either attempting to have the government inflate the market value of the assets, inject new capital into the banks or obscure the accounting rules so banks can go on pretending the asset values haven’t dropped. None of these will work. Buying the assets has proved impossible, the capital injections have their own problems and fiddling with the accounting rules risks making investors even more skeptical of bank balance sheets.