Some buyers remorse on Wall Street

From CNBC:

“The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’ ” said a top official at a major Wall Street firm, speaking on the condition of anonymity for fear of alienating the White House. “We are not going to play that game anymore.”

Wall Street fund-raisers for the Democrats say they are feeling under attack from all sides. The president is lashing out at their “arrogance and greed.” Republican friends are saying “I told you so.” And contributors are wishing they had their money back.

The story behind the Keynes-Hayek rap video

Here

Greece

About Greece, From National Review's Corner:

I asked him why he didn't hire more help, since his hotel wasn't all that small and he seemed to be going 24/7. What followed was a harangue about the cost of hiring a permanent worker in Greece, the difficulty of ever firing him if he proved worthless, and why he preferred to do everything himself rather than fill out all sorts of forms and hire unmotivated but tenured employees. Besides, he said, almost everyone was on some sort of pension, disability, or government benefit, and was unwilling to work, so his choices were either illegal immigrants or broke foreign students. Then he launched into a blast against socialism, and explained how he was forced to become an expert tax dodger, how he would barter for all the transactions he could, and why he hated the government. He finished by sighing that in Greece, the people spend their time either devising ways to get government money or scheming to avoid the tax collectors — or, preferably, both.

It has taken a while, but the future of Greece does not look promising.

The seeds of the next crisis?

Has the rescue of the financial system in September 2008 created the seads of the next crisis? The Inspector General for TARP released its report to Congress that suggested the basic problems remained unresolved.  The "to-big-to-fail" institutions are even bigger, the use of TARP has encouraged further risk by demonstrating that the government will bail out failures, there has been little change in the bonus culture of Wall Street, and the government has not let the housing market deflate but instead had been trying to keep housing prices up. From the report:

[E]ven if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.

Trial by ordeal

At boston.com (part of the Boston Globe?) economist Peter Leesen makes the case for trial by ordeal:

Modern observers have roundly condemned ordeals for being cruel and arbitrary. Ordeals seem to reflect everything that was wrong with the Dark Ages. They’re an icon of medieval barbarism and backwardness.

But a closer look suggests something very different: The ordeal system worked surprisingly well. It accurately determined who was guilty and who was innocent, sorting genuine criminals from those who had been wrongly accused. Stranger still, the ordeal system suggests that pervasive superstition can be good for society. Medieval legal systems leveraged citizens’ superstitious beliefs through ordeals, making it possible to secure criminal justice where it would have otherwise been impossible to do so. Some superstitions, at least, may evolve and persist for a good reason: They help us accomplish goals we couldn’t otherwise accomplish, or accomplish them more cheaply.

The system of trial by ordeal was undermined by the Church:

In the early 13th century, Pope Innocent III spearheaded a damning denunciation of ordeals on the grounds that ordeals were antithetical to Christian doctrine. His edict banned priests from further involvement with them. The Church’s condemnation of ordeals seriously undermined the superstition on which ordeals relied. If ordeals were antithetical to Christianity, how could God reveal defendants’ guilt or innocence through trials of fire and water?

 I am not surprised that an economist wrote this because behavioral economics emphasizes the placebo effect, or power of expectations to shape our perceptions the world. However, Leesen is engaging in speculation. We do not know how effective trial by ordeal was and there is no way to find out. We also do not know how effective our current criminal justice system is and there is no way to find out. What percentage of those who are found guilty are actually innocent? How many people who are guilty are never punished? No one knows. It is quite possible that trial by ordeal was a more effective system of justice than our system. And like the system of trial by ordeal, our system depends on confidence, the belief of citizens that the system works. If people lose confidence in our system, it too will become less effective.

Leesen seems to be too careless with the word "superstition." Is belief in God superstition? If we want to use the term that loosely, then there are a great many things that are superstitious, including most or all of what we believe.

Update: One the difficulty of computing the number of innocents who have been convicted, see here.

Sex education

From the Washington Post, reporting on a study of sex education:

Only about a third of sixth- and seventh-graders who completed an abstinence-focused program started having sex within the next two years, researchers found. Nearly half of the students who attended other classes, including ones that combined information about abstinence and contraception, became sexually active.
....
The study is the first to evaluate an abstinence program using a carefully designed approach comparing it with several alternative strategies and following subjects for an extended period of time, considered the kind of study that produces the highest level of scientific evidence.

Emotional voting

In his Myth of the Rational Voter Byran Caplan argues that because we do not have to bear the consequences of our votes, we choose our politics on other bases. A pretty good example of what he is saying seems to be evident in this article, in which the author expresses some buyer's remorse for one of her emotional reactions, but seems unaware that all of her political views are nothing more than emotional reactions. (The comments are brutal.)

Deep thoughts

Arnold Kling ponders why the recession has been so deep here.

Palin makes a small mistake

From Sarah Palin's Facebook notes for Jan 25:

Instead of real leadership, though, we’ve had broken promises and backroom deals. One of the worst: candidate Obama promised to go through the federal budget “with a scalpel,” but President Obama spent four times more than his predecessor.

She is wrong saying spending has increased by four time. If you follow the link, her source says that the deficit has quadrupled, not spending. However, she may get a pass on that. Anyone who points out the mistake draws attention to the deficit, and her opponents probably want to avoid discussion of how big the deficit really is.

This time it is different

A long article at businessinsider.com focuses on a quote from Reinhart and Rogoff's book:

"Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that 'this time is different.'

The next place to be watching is Greece.