Friday, November 30, 2012

The "real" fiscal cliff

From Tyler Cowen at the Marginal Revolution blog, what he terms "the truly important news". I'll agree with his assessment.
Forget post-election dissection and the fiscal cliff, here is the stunner
The U.S. birthrate plunged last year to a record low, with the decline being led by immigrant women hit hard by the recession, according to a study released Thursday by the Pew Research Center
The overall birthrate decreased by 8 percent between 2007 and 2010, with a much bigger drop of 14 percent among foreign-born women. The overall birthrate is at its lowest since 1920, the earliest year with reliable records. The 2011 figures don’t have breakdowns for immigrants yet, but the preliminary findings indicate that they will follow the same trend. 
That’s the real fiscal cliff.  Yet The Washington Post reports that its most popular article today is “Starbucks’ new $7 coffee is its priciest ever."
Yeah, that's not good. As I mentioned on Twitter this morning, over the long run, without population growth there can be no economic growth. Worse yet, a steady decline in the ratio of non-working (retired) citizens to working age citizens means that there's virtually no way to keep Social Security solvent, or to have any hope of paying down our national debt.

Want to know why Japan's economy can't seem to get out of its own way? This is why:

Too few working people (we could also call them "taxpayers"), too many unproductive people to support, and not enough aggregate savings among the latter to support themselves without help from the former. That's a problem, and it's one that's difficult if not impossible to reverse.

When a population ages dramatically, in relative or absolute terms, that always creates issues from an economic standpoint. It's a simple problem, and yet it's one that no amount of modern economic complexity (or monetary policy) can overcome. As Tyler wrote, this is the real fiscal cliff.

[Marginal Revolution]

Clip of the Week

Time to go into the weekend strong with a couple of posts. First up is your Clip of the Week, which was basically uncontested this week.

We did have a bunch of cool videos shared by Barry Ritholtz, including this clip from Switzerland (anyone wanna go there with me? It looks pretty awesome and I hear they've got universal health care...), this compilation of a cappella theme songs, this very cool presentation of time-lapse photography, and this collection of some of the greatest soccer goals ever (my vote goes to Zidane... ridiculous).

But my favorite clip from this week was most definitely this extended advertisement for The Guardian (the U.K. media outlet), which borrows from the Three Little Pigs to illustrate a point. This is amazing, and it honestly comes across as almost a self-parody of the media industry and its role in society. For better or for worse, this is what today's media world is, and how it operates. Enjoy.

Tuesday, November 27, 2012

Shipping container homes

This bit of creative awesomeness comes courtesy of my man Killagroove: turning expired shipping containers into housing projects. It's resourceful, it's creative, and it's actually pretty attractive stuff, considering the source material. Pretty cool. Let's call it "recession chic".
The first U.S. multi-family condo built of used shipping containers is slated to break ground in Detroit early next year. 
Strong, durable and portable, shipping containers stack easily and link together like Legos. About 25 million of these 20-by-40 feet multicolored boxes move through U.S. container ports a year, hauling children’s toys, flat-screen TVs, computers, car parts, sneakers and sweaters. 
But so much travel takes its toll, and eventually the containers wear out and are retired. That’s when architects and designers, especially those with a “green” bent, step in to turn these cast-off boxes into student housing in Amsterdam, artists’ studios, emergency shelters, health clinics, office buildings. 
Despite an oft-reported glut of unused cargo containers lying idle around U.S. ports and ship yards – estimates have ranged from 700,000 to 2 million – the Intermodal Steel Building Units and Container Homes Association puts the number closer to 12,000, including what’s sold on Craigslist and eBay. 
Joel Egan, co-founder of HyBrid Architecture in Seattle, which has built cottages and office buildings from shipping containers for close to a decade and coined the term “cargotecture” to describe this method of construction, warns that although containers can be bought for as little as $2,500, they shouldn’t be seen as a low-cost housing solution. 
“Ninety-five percent of the cost still remains,” he says.
Cost-effective or not, it's definitely a novel way of re-using our scarce resources, and there's definitely value in that. Here's a quick look at some of the projects, all of which I've captioned.

Rosa Parks; Detroit, MI
The Box Office; Providence, RI
Aprisa Mexican Cuisine; Portland, OR
The Shipping Container House; Nederland, CO
[ABC News]

More stadium financing follies

I've written about the lunacy of publicly-funded sports arenas and stadia here before, and I think the issue deserves to be revisited given recent developments. On the one front, there is the city of Miami, which was taken to the cleaners by the disgrace that is the Miami Marlins franchise. Unfortunately for that city, their woes may just be beginning, as the Dolphins are also reportedly looking for public funding to fix their dilapidated home.

It would be easy to write this all off as Miami's loss, and theirs alone, except that it's not the case. When municipalities like these go into debt to fund stadium boondoggles, the whole country pays, as a recent Bloomberg article points out.
New York Giants fans will cheer on their team against the Dallas Cowboys at tonight’s National Football League opener in New Jersey. At tax time, they’ll help pay for the opponents’ $1.2 billion home field in Texas. 
That’s because the 80,000-seat Cowboys Stadium was built partly using tax-free borrowing by the City of Arlington. The resulting subsidy comes out of the pockets of every American taxpayer, including Giants fans. The money doesn’t go directly to the Cowboys’ billionaire owner Jerry Jones. Rather, it lowers the cost of financing, giving his team the highest revenue in the NFL and making it the league’s most-valuable franchise. 
“It’s part of the corruption of the federal tax system,” said James Runzheimer, 67, an Arlington lawyer who led opponents of public borrowing for the structure known locally as “Jerry’s World.” “It’s use of government funds to subsidize activity that the private sector can finance on its own.”...
Tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year, based on data compiled by Bloomberg on 2,700 securities. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, the last of which matures in 2047, taxpayer subsidies to bondholders will total $4 billion, the data show. 
Those estimates are based on what the Treasury could have collected on interest from the same amount of taxable bonds sold at the same time to investors in the 25 percent income-tax bracket, the rate many government agencies assume. In fact, more than half the owners of tax-exempt bonds pay top rates of at least 30 percent, according to the Congressional Budget Office. So they save even more on their income taxes, a system that U.S. lawmakers of both parties and President Barack Obama have described as inefficient and unfair.
Yes, that's right, when tax-exempt municipal bonds are used to pay for these stadiums, that means that the FEDERAL government is effectively subsidizing these projects. So when the Cowboys build a stadium with "public" funds, that "public" isn't limited to the Dallas area—it includes the entire nation. This amounts to taxation without representation for those of us who don't get to enjoy the Cowboys' new monstrosity, and that used to be something that mattered in this country (but of course, doesn't any more).

Sure, we could try to argue that some of this comes out in the wash, because it's just a transfer from taxpayers to bondholders, and there is significant overlap between those two populations—it's just taxpayers stealing from themselves. But unless every taxpayer is also a municipal bondholder (and I'm at least one taxpayer who owns no munis), then this becomes a very serious constitutional issue, and yet one that is perpetually ignored by nearly everyone in the nation. I, for one, have no interest in paying more in taxes so that Jerry Jones can build a playground for the super-rich in Texas, but I was never afforded a say in the matter.

Ultimately, this trend of public financing of private enterprise must end in all its forms. There's no reason for taxpayers to be funding private business, in Miami, Dallas, or anywhere else. This is a long-running scam that has been run on Americans who love their sports (and teams) too much to say no to this extortion. We all must stand up and say that we are unwilling to pay for stadiums that we then must pay to enter—if it's a public facility, then we should have the right to do with it what we please. Otherwise, the Jerry Joneses of the world can figure out their own ways to build the things. I'm getting out of the stadium-building business... who's coming with me?


Friday, November 23, 2012

Clip of the Week (Double Feature)

Since I never got around to posting the Clip of the Week last week, this week's super special Thanksgiving Clip of the Week will be a double feature.

If you've ever wondered about why (or whined about the fact that) MTV doesn't play music videos anymore, this video has your answer (hint: it's your fault). If you've enjoyed my previous Jimmy Kimmel clips, then you're sure to enjoy this bit on unnecessary censorship. And if you love super-slo-mo videos as much as I do, these guys do a great job of taking you behind the scenes of how they get made (it's long, but it's worth it).

There's also a few sports videos, which I don't feel like running through entirely, so... college football, college football (UVA), soccer, soccer (USA). You're welcome.

There were also a couple of posts that were directly or peripherally attached to my hometown of Wellesley, MA, where I happen to be right now. This car accident was amazing (wait for it...), and I scouted out the location this week and still can't figure out how it happened. Also, this clip of historian David McCullough on 60 Minutes is very eye-opening with respect to the historical ignorance of the coming generation of Americans. McCullough happens to live in the Boston area, and his son is a teacher at my old high school here in town—his "you're not special" commencement speech earlier this year went viral and garnered national attention.

But let's get to the point. Here's your first Clip of the Week, of an elephant painting an elephant. Just watch it... in fast forward, if you insist.

And the second one comes to you via Barry Ritholtz, and it's a product of the Red Bull Kluge project. It's a human Rube Goldberg machine, and it's pretty awesome to watch.

Happy Thanksgiving, people. Enjoy your weekend.

Wednesday, November 21, 2012

3-D printing meets Skyfall

Yeah, I know, shut up about the 3-D printing already... but this is seriously cool, and it's becoming clear that 3-D printing is being used in more and more applications all the time these days.
If you thought producers spent millions on James Bond’s Aston Martin DB5, which was put through a series of huge explosions and stunts during the filming of Skyfall, including one scene where the priceless vehicle exploded in flames – think again. 
Three replicas of the classic car were created using a large scale 3D printer for the filming of the latest installment from the spy series. 
The models double for the now priceless original vehicle from the 1960s in the film’s action scenes. 
The models were made by British firm Propshop Modelmakers Ltd, which specialise in the production of film props, and used Voxeljet to print the cars, the Daily mail reported. 
“Propshop commissioned us to build three plastic models of the Aston Martin DB5,” voxeljet CEO Dr. Ingo Ederer, said. 
“We could have easily printed the legendary sports car in one piece at a scale of 1:3 using our high-end VX4000 printer, which can build moulds and models in dimensions of up to eight cubic metres,” Ederer said. 
But the British model builders were pursuing a different approach. 
“To ensure that the Aston Martin was as true to detail as possible, and for the purpose of integrating numerous functions into the film models, they decided on an assembly consisting of a total of 18 individual components,” Ederer said. 
“The entire body is based on a steel frame, almost identical to how vehicles were assembled in the past. In addition to the automotive industry, foundries, designers and artists, the film industry represents an entirely new customer base for voxeljet. 
“3D printing is on the cusp of a great future in the film industry. The technology offers fantastic opportunities, since it is usually much faster, more precise and more economical than classic model construction,” Ederer added.
Awesome. That's a perfect example of what this stuff is so great for, and I'm glad to see the creativity and innovation being put to good use. I can't wait to see what comes up next.

[Zee News]

Tuesday, November 20, 2012

Maryland, Under Armour, and the Big 10

This is turning into a sports-heavy week, which is ironic given that in my first post yesterday I said that we probably ascribe way too much importance to sports, since they're just a form of entertainment. But given some of the things I've written about in the past, I felt that it was necessary to chime in on yesterday's decision by Maryland to leave the ACC for the Big Ten Conference (which will soon have 14 teams, because of course it will—the Big 12 has 10 teams... awesome).
The University of Maryland's Board of Regents voted Monday to accept an invitation to join the Big Ten and begin competition in the conference in the 2014-15 academic year. 
"Today is a watershed moment for the University of Maryland," said university president Wallace D. Loh in a release. "Membership in the Big Ten Conference is in the strategic interest of the University of Maryland." 
Loh added it would "ensure the financial vitality of Maryland Athletics for decades to come," and offer opportunities to boost the "education, research, and innovation" of the university... 
Sources at Maryland believe the Terps will be able to negotiate the current $50 million exit fee from the ACC to a lower amount. The additions of Maryland and Rutgers would spur the Big Ten, then, toward negotiations on a new media-rights deal when its first-tier rights expire in 2017.
There are any number of angles I could attack on this topic, and most of those angles have already been explored in my previous missives about collegiate athletics. But what I find most troubling (and unique) about this particular move is the rumored role that Under Armour CEO Kevin Plank has had in these negotiations.
Welcome to the new landscape of college sports, where billionaire boosters and eight-figure payouts cause universities to abandon rivalries decades in the making. 
On Monday, the University of Maryland Board of Regents unanimously approved leaving the ACC and joining the Big Ten conference, a decision that may trigger the next wave of college sports realignment. The move is potentially quite profitable for Maryland, which could double the TV revenue it gets by hitching its wagon to the Big Ten Network. 
However, despite the foreseeable long-term gains, breaking with the ACC comes with a high upfront cost: $50 million, an exit fee that was recently raised from only $10 million. That kind of fine could cripple the University, especially at a time of cutbacks and budget shortfalls. 
Luckily for Maryland, it has a billionaire backer who may be willing to foot the bill: Under Armour founder and Maryland alumnus Kevin Plank. At the release of the Forbes 400 in September, Plank was the 345th richest person in America, with an estimated $1.35 billion net worth. A $50 million donation would barely dent his bank account... 
According to an ESPN report, an anonymous university regent said Plank is “100 percent” behind the move to the Big Ten and added that the billionaire is “heavily involved behind the scenes with board members.” 
The final piece of the puzzle may have fallen into place last week, when Under Armour announced in a SEC filing that Plank would be selling 1.3 million shares of the company “for asset diversification, tax and estate planning and charitable giving purposes.” What would 1.3 million shares of Under Armour net Plank on the open market? Try a cool $56 million after taxes—just the amount Maryland needs to pay if it leaves the ACC for greener pastures. 
Is it a smoking gun? No. And Plank did not immediately return requests for comment. But such generosity wouldn’t be unique.
Right. "Generosity". That's what we're calling it now. The simple fact is, if Plank does indeed foot the bill for Maryland's move to the Big Ten, then the expenditure amounts to little more than a marketing expense on the part of Under Armour. The company spends a few million bucks, they put their ugly-ass Maryland uniforms on a few more cable TV screens, and they immediately get increased exposure to a whole new midwest market.

We may think we're watching student-athletes play ball out there, but what we're really watching is cleverly designed product placement, brought to you in (large) part by unpaid student labor. The setup is eerily familiar to those of us who have studied 19th century plantation economics, especially when you consider that a not-insignificant portion of the players on these teams are blacks from low-income backgrounds. I'm not sayin', I'm just sayin'...

Increasingly these days, when we talk about collegiate athletics, what we're really talking about are Nike, Under Armour, and ESPN, because those are the companies that really call the shots around here. The conferences and the schools have become little more than pawns, transformed into the marketing departments for these huge multinational corporations. Maybe that's a cynical way of looking at things, but I'm finding it increasingly difficult to view NCAA sports through anything but a cynical light, especially given how cynical the decision-makers at these schools have seemingly become.

The NCAA needs to step in immediately and put a stop to this ridiculous conference-raiding free-for-all, before the whole thing loses all credibility. If we want to master plan this thing and create four or five huge jumbo-conferences, then fine. Let's get everyone together under one big NCAA umbrella and do this thing. But doing it piecemeal, with every conference raiding every other and then forcing the schools to pay exorbitant exit fees on the way out of town is just insanity, and worse yet, it's monstrously inefficient.

The conferences (and the apparel and TV companies) have become significantly more powerful and profitable than the NCAA itself, and that's clearly becoming a problem. As for me, the more days that go by, the more I think I should just quit on football altogether and start watching the sports that don't make any money, because at least there's something real left there.

As a remaining fan of the ACC (until further notice), all I can say to Maryland is "good riddance". A school that would sell out so brutally to one corporation and its CEO is not a school that I want anything to do with. God speed, Terps. Enjoy being the new Indiana.


Quote of (This) Week

As I'm still catching up around here, it's now time for this week's Quote of the Week (as opposed to last week's Quote of the Week, which I posted yesterday). This one is from one of the coolest golfers in the world, Miguel Angel Jimenez. This guy looks like a cartoon character, he's always smoking a cigar, and now he's the oldest guy to win a tournament on the European Tour. He's the best.


"There is maybe olive oil in my joints, and drinking the nice Rioja wine and those things keeps me fit and flexible... Well, the most important thing (is), I do what I like to do in my life, and golf has given me all of this pleasure."
                              - Golfer Miguel Angel Jimenez

What a fantastic line. Seriously, I love this guy. He's got an awesome attitude about everything, and he's also terrific at what he does. Congrats to him for continuing to play golf at the highest level.


Monday, November 19, 2012

Fun with sports math

Sticking with our sports theme for the day—and adding in some statistical analysis because that's what we do around here—I thought I'd share a couple of recent articles about the baseball postseason that I found interesting. First up, from the Freakonomics blog (emphasis mine):
When the playoff in baseball began, 10 teams – and their fans – were very happy.  But the playoffs being what they are, we knew that only one team – and its fans – would actually be happy when the whole thing was over... 
So what did the Tigers and all the other “losers” (and yes, that includes the Yankees) learn from the playoffs? 
For an answer, let me quote the following from The Drunkard’s Walk: How Randomness Rules Our Lives (a wonderful book by Leonard Mlodinow): 
if one team is good enough to warrant beating another in 55% of its games, the weaker team will nevertheless win a 7-game series about 4 times out of 10.  And if the superior team could beat its opponent, on average, 2 out of 3 times they meet, the inferior team will still win a 7-game series about once every 5 match-ups.  There is really no way for a sports league to change this.  In the lopsided 2/3-probability case, for example, you’d have to play a series consisting of at minimum the best of 23 games to determine the winner with what is called statistical significance, meaning the weaker team would be crowned champion 5 percent or less of the time.  And in the case of one team’s having only a 55-45 edge, the shortest significant “world series” would be the best of 269 games, a tedious endeavor indeed! So sports playoff series can be fun and exciting, but being crowned “world champion” is not a reliable indication that a team is actually the best one. (p. 70-71)
So, no, the "best" team doesn't always win the title, because there's just way too much randomness involved, even in a multiple-game sample as opposed to football's one-game sample. That's why it's entertaining. That's also why the Giants beat the Patriots twice, but I digress.

So if the "best" team doesn't always win the title, maybe the "hottest" team does? Let's ask our friends at the Harvard College Sports Analysis Collective.
Every so often, a playoff series in the NHL, MLB, or NBA will be fought between a team that has just come off of a sweep and a team that has barely survived a competitive 7-game series.  While the latter team is still battling and exerting itself in games, the former will be resting, recovering from the 4-game series, and preparing for the next round... 
Each time a series like this occurs, we are given two contrasting arguments by media figures.  On the one hand, the team that swept has had ample time to recuperate from injuries, rest their bodies and arms, and watch video on both potential teams it could face.  On the other hand, in the large gap of time between games, the team could have “lost momentum,” somehow dissolving the focus and chemistry that had led to the team’s initial success... 
Across the NHL, MLB, and NBA, and looking only at matchups where the previous round was also a best-of-7 series, this scenario has only occurred 29 times throughout history.  The team that has swept has won 20 out of these 29 occasions, and has needed, on average, 5.3 games to defeat its next opponent.  This is not too distant from what one would expect; the teams that swept, in general, have better regular season records, so they tend to be stronger than the opponent who has struggled to emerge from a previous series.  The results, however, are more interesting when broken down by sport. 
Out of the 14 times this matchup has occurred in the NBA playoffs, only twice has the team that went to 7 games in the previous series won the next series...  Much more frequently, the team that has swept in the previous series has gone on to win.  Whether the reason for its winning is that it generally has had better records, or because they were well-prepared and well-rested, is impossible to say for sure. 
The NHL had a similar pattern to the NBA, until 1993; since then, 5 out of 6 teams that went to seven games won the next series against the team that had swept... 
In the MLB, this type of matchup has only occurred four times, mainly because the LCS is the only 7-game series that occurs before another series, and the LCS has not always been a 7-game series.  In all four of these matchups... the team which went to 7 games in the LCS won the World Series...
Although the few data points we have suggest such, concluding that rest is more important in the NBA, whereas momentum is more important in the MLB and NHL is impossible.  In truth, both of these components probably impact the outcome of a playoff series, but probably even more important is how good at winning the team is. Out of these 29 series, 21 of them were won by the team with the better winning percentage (or, points for NHL).  Being well-rested is helpful — but being good is even more helpful.
Alright, then. So, over time, the best team does win more often than not, regardless of how "hot" they are. But in any given playoff series, whether the team is "hot" or "good" seems to take a serious back seat to "luck". Good talk. All of this really bring us right back around to the greatest sports cartoon of all time, from XKCD (in case you were wondering, yes, this entire post was just an excuse to run this cartoon again... I love it):

So, enjoy your sports, by all means. But don't get too carried away with building glowing and complex narratives based on the results of the games. More often than not, it's just a lot of random noise.


Quote of (Last) Week

It's time to do a little catch-up around here, as it seems to be a lot recently. We'll start with last week's Quote of the Week, which never got posted because I'm a delinquent. It comes from NBC Sports' Mike Florio, whose "Pro Football Talk" is a staple of NFL news reporting. It's also batshit nuts. I'll give you the full context, so that you can appreciate the (lack of) development of Florio's argument.


"More than a few NFL players have made known this year their intention to miss a game in lieu of missing the birth of a child.

If push comes to shove, however, should they choose to be present for the pushing and not the shoving?

It’s a thorny issue.  My position was and is that the players have made a lifestyle choice that entails being available 16 days per year, no matter what.  If they choose not to plan their nine-month family expansion activities to coincide with the eight months per year when their work activities don’t entail playing games that count, why should their teams suffer the consequences?"
                                                        - Mike Florio, NBC Sports

Wow. "Family expansion activities," first of all, is an epic turn of phrase that deserves to be commemorated for all time in the Mike Florio Hall of Fame. The rest of the Florio piece basically speaks for itself, in a tone-deaf "football isn't everything, it's the only thing" sort of way.

Insinuating that a football player can and should have full control over when his wife gets pregnant is only a couple of small steps removed from declaring that pregnancy cannot result from a "legitimate rape". Remember that what Florio is really trying to suggest here is to say that players should only have sex with their wives during the season, so that they can reasonably be expected to go into labor in the offseason (when we include the playoffs and training camp, the offseason is a whole lot closer to 4 or 5 months than the 8 months that he suggests).

That's right, during the season, when the players are constantly on the road, or recuperating from injuries, or spending late nights at the stadium watching film because WINNING IS EVERYTHING. And if you can't get the job done this season, too bad, my friend, you better wait till next season to try again. Hopefully your wife's biological clock is kind enough to stop ticking for our benefit.

Now... to Florio's credit, he backed off of his initial statements and actually subsequently penned a much more reasonable and well-articulated piece on the topic. This incident, therefore, seems to have been a case of publishing-before-editing, which is increasingly common in the internet/blogging era of journalism.

Nevertheless, the mentality that Florio initially articulated persists among fans and journalists throughout the country, and it's an ugly and dangerous mentality. Whatever your job may be, nobody should ever suggest that performing it at the highest level should take precedence over family and good parenting. That's particularly true in an entertainment industry like professional sports, which many people take way too seriously at the end of the day.

Missing one or two games over the course of a career in order to attend to major family events should never be something that fans take issue with, especially when fans (and TV networks) already expect teams full of players to miss holidays like Thanksgiving and Christmas and New Years simply to add incrementally to our enjoyment of those same holidays. These players sacrifice large portions of their lives (and their personal health) for our entertainment, and some people would request that they sacrifice even more. That's a terrible attitude to have, no matter how much these guys get paid (some of them, a ton, others, not so much). I'd rather we just said "thank you," and went on our way.

[Pro Football Talk]

Monday, November 12, 2012

Jail the Venetian meteorologists!

Since the Italian justice system decided it was necessary to imprison the seismologists who failed to predict 2009's deadly L'Aquila earthquake, I think it's only fair that meteorologists also be forced to pay for their sins in the wake of the worst flooding in Venice in two decades. After all, Mother Nature is much easier to predict than Crazy Uncle Earthquake over there, right?

Why can't everyone be more like Nate Silver, huh?


More on 3-D printing (Japan edition)

Since I'm always talking about 3-D printing, this little news item seemed like it had to be passed along here.
3D printers – it’s a word that offers glimpses into the future that seems so far, and yet is so close. The technology, which allows you to replicate 3D objects the same way you make a photo copy, has been around for a couple years now, but, for the most part, has been far too expensive and inaccessible to the public. 
But now, what’s being called the world’s first 3D printing photo booth is set to open for a limited time at the exhibition space EYE OF GYRE in Harajuku. From November 24 to January 14, 2013, people with reservations can go and have their portraits taken. Except, instead of a photograph, you’ll receive miniature replicas of yourselves. 
Reservations are taken only through the website. You can pick from 3 sizes, S (10cm), M (15cm) and L (20cm) for 21,000 yen, 32,000 yen and 42,000 yen, respectively. But there are group discounts! This would be really fun to do with your kids, who seem to grow up just way too fast.
For those wondering about the conversions, the sizes are roughly 4 inches, 6 inches, and 8 inches, for $264, $403, or $529. Obviously not cheap, but still sort of awesome if you happen to be passing through Tokyo in the next few months (and who isn't, right?). Check out the pics:

I assume the thing is capable of capturing some sweet action poses as well, even though our Japanese models seem to have been angling for the "coffin" pose for some reason. For anyone who ever grew up wishing they could have their own action figure, this is about as close as you're gonna get. Well, unless you feel like enlisting...

[Spoon & Tamago]
(h/t Marginal Revolution)

Friday, November 9, 2012

Pay for Congressional performance?

Sheila Bair baffles me. Every time she starts making a ton of sense, the former FDIC head says or writes something else that comes across like low-grade satire, except I don't think it is. Her most recent piece for Fortune falls into the latter camp.
Will the elections bring about improvements in our increasingly dysfunctional government? I fear not. Successfully running for office these days is more about political fundraising and negative campaigning than about the art of governing. Only one in 10 Americans thinks Congress is doing a good job, and no wonder. Our economy is stuck in low gear, and our fiscal situation is precarious. How do we motivate our national leaders to deal with these problems? As with most organizations, it comes down to economic incentives. If our elected officials can keep their paychecks by being adept at fundraising and negative campaigning, then that is what they'll do. But if at least part of their pay is based on performance, maybe we could get them to focus on doing their jobs. Pay for performance has improved management in the private sector. Why not try it with the folks in D.C.? 
For instance, one-half of compensation for corporate directors is frequently paid in stock, which they must hold for several years. The idea is to align their economic incentives with the long-term profitability of the corporation. There is no stock ownership in the federal government, obviously, but we do issue a lot of debt (boy, do we ever). So here is an idea: Let's start paying members of Congress and the President half of their compensation in 10-year Treasury debt, which they must hold until maturity. Members of Congress make roughly $180,000, so under this proposal, they would get $90,000 in cash and $90,000 in 10-year Treasuries. (We would add a housing allowance, too, given the high cost of living in Washington.) For the President, it would be $200,000 cash and $200,000 in T-bonds. If the economy does well and if they get our fiscal house in order and institute pro-growth tax and spending policies, those 10-year bonds should hold their value. But if we continue our profligate ways, inflation spikes, and interest rates skyrocket, those bonds may end up being worth as much as the stuff Czar Nicholas issued shortly before the Bolshevik revolution (some of which I bought at a flea market and now use as wallpaper in the bathroom).
She keeps going with her proposal, but I refuse to further indulge her ramblings here. Realistically, the very premise of Bair's argument is fundamentally flawed.

"Pay for performance has improved management in the private sector," she writes. No, Sheila, it hasn't. Reams and reams of research have been produced which prove your argument wrong. What pay for performance tends to do, instead, is encourage leaders and executives to make company-betting moves which promise huge potential payoffs but equally large risks. If those risks pan out, the executive in question makes millions and retires happy, but if they don't, the whole company blows up and the manager walks away scot-free, moving on to the next gullible company to rinse and repeat (see: John Thain).

These schemes have led to an epidemic of short-termism on Wall Street in particular, where traders and executives have little interest in the firm's profitability beyond the next quarter or year. Making those stocks or options or bonds vest at a later date does little to change the underlying risk/reward dynamic from the standpoint of the executive. While things may be slightly different for Congressmen than for Fortune 500 CEOs, those differences aren't nearly as great as we would like them to be. The folks in Washington have already shown themselves to be experts at trading long-term security for short-term gain, and the last thing they need is another scheme from us that encourages them to do more of the same.

You see, even if our Congressmen (and women) were to blow up the whole country under Bair's proposal, they'd still be pulling in $90k a year (oh, and a housing allowance, of course), well above the national average. That's not exactly giving them the "skin in the game" that they might need in order to ensure that they don't screw things up terribly for the rest of us.

Worse still, the plan suffers from a serious flaw in design by tying compensation to a bond price rather than some other more tangible measure of actual long-term American prosperity. If our Congressmen suddenly own millions of dollars worth of U.S. government debt, then all that does is give them a huge incentive to encourage the clowns over at the Fed to keep on keeping on with their ridiculous quantitative easing, which sends bond prices skyrocketing (and yields plummeting) even while the fiscal state of the union deteriorates by the day.

The real flaw in Bair's argument, ultimately, lies in its presumption that Congressmen and Senators control bond prices and economic outcomes with their policies—they don't. The Fed controls these things, they have for decades, and that won't be changing any time soon, regardless of any "pay for performance" scheme that you want to put into place. Not until the voters force it to be so, that is.

The truth is, the only kind of "pay for performance" scheme that will ever work in a democracy is to vote the bums out when they screw over their constituents. That requires real, actual responsibility on the part of the voters, more than some lazy "autopilot" compensation scheme that won't work and represents a further abdication of the voters' responsibility to hold their elected officials accountable.

Now as ever, we as voters get the government that we deserve. If we refuse to hold our Congressmen accountable with our votes on Election Day, then we can't expect the mess to sort itself out just because they own a few more government bonds then they used to. Bair should know better than this, and yet somehow she doesn't. Unless, of course, this is satire, in which case the joke is, once again, on me.

D.C. politicians have in large part ascended to their lofty positions by being experts at gaming whatever system has been placed before them. Unless a pay-for-performance scheme is meticulously designed to avoid any unintended consequences, you can bet that they'll find the loopholes and design ways to maximize their compensation, regardless of the externalities that may result from their actions. What a joke of an idea. Our politicians need fewer systems and schemes to try to game, not more. Go back to the drawing board, Sheila.


Clip of the Week

Alright, Clip of the Week time. This week's clips were thoroughly dominated by election material, and I don't feel like rehashing any of it (even though The Daily Show was on fire, head over to the Cowboy if you're into that sort of thing), so I'm just going to give this one to Jimmy Kimmel, who's been doing some great stuff lately. Honorable mention goes to Chuck Pagano, by the way...


Thursday, November 8, 2012

Punishing bad predictions

I've been a little silent on here this week, in large part because I'm really trying hard to avoid talking about the election. That's not because I'm upset with the outcome or thrilled with the outcome or anything of the sort, but more because if nothing else, this election showed me just how deeply divided our nation has become. Our President was re-elected, yes, but re-elected with only 39% of the white vote nationally—Latinos and African-Americans carried the day for President Obama. As much as we may like to pretend that we inhabit a "post-racial America", that statistic would strongly suggest otherwise.

The fact is that there are entire segments of our population—gays, womens, blacks, Latinos—who largely felt that they had little choice in this election but to vote for the incumbent. Whether their feelings were correct or not is largely an immaterial matter—the feelings alone are indicative of just how ill our current political environment has become. Because of this bitter division, I feel that it's best not to weigh in with my personal opinions about the election, expecting that they would simply inflame some readers while being redundant to others. If you've read enough of my blog, you know my political leanings already, and I therefore feel no need to reiterate them at a time when nerves are a bit frayed. I'll revisit them in the not-too-distant future, to be sure. Now just doesn't seem to be the right time.

But what I would like to talk about is predictions, a topic I actually love discussing. As you may remember, I think that the incentive structure surrounding predictions and projections is badly out of whack, which leads us to be inundated with all manner of terrible prognostications. Italy, for one, decided that they'd finally had enough:
Six Italian scientists and an ex-government official have been sentenced to six years in prison over the 2009 deadly earthquake in L'Aquila. 
A regional court found them guilty of multiple manslaughter. 
Prosecutors said the defendants gave a falsely reassuring statement before the quake, while the defence maintained there was no way to predict major quakes. 
The 6.3 magnitude quake devastated the city and killed 309 people. 
Many smaller tremors had rattled the area in the months before the quake that destroyed much of the historic centre... 
The seven - all members of the National Commission for the Forecast and Prevention of Major Risks - were accused of having provided "inaccurate, incomplete and contradictory" information about the danger of the tremors felt ahead of 6 April 2009 quake, Italian media report. 
In addition to their sentences, all have been barred from ever holding public office again, La Repubblica reports. 
In the closing statement, the prosecution quoted one of its witnesses, whose father died in the earthquake. 
It described how Guido Fioravanti had called his mother at about 11:00 on the night of the earthquake - straight after the first tremor. 
"I remember the fear in her voice. On other occasions they would have fled but that night, with my father, they repeated to themselves what the risk commission had said. And they stayed."
Well, that's certainly one way to change the incentive structure surrounding predictions. Since I've often complained that pundits never face any real consequences when their predictions turn out to be wrong, this certainly provides a pretty strong counter-example. Whether or not it's a good thing is a different matter entirely.

Ultimately, if this sort of thing gained traction throughout the world, all that it would really do is give people an incentive to never make predictions of any kind, under any circumstances. That may or may not be a good thing, and it probably takes things too far in the opposite direction.

Ultimately what we all need to do is to take responsibility for our own decisions, rather than outsourcing them to "experts" and taking their predictions at face value. The more we ignore the expertise of the punditry and rely on our own research and intuition, the better off we all will be. We'll be a better-informed, better-prepared, and generally more capable populace, and that's inarguably a good thing. But the more we try to blame others for the bad outcomes that befall us, the further we're going down the wrong path.

Personal responsibility is paramount in the world, and while this ruling may help shift around the incentive structure surrounding predictions, it does absolutely nothing to promote personal responsibility. Therefore, I can't bring myself to support the move, no matter how much I might like certain elements of it. Although, maybe if we used this logic on Ben Bernanke.... nahhhhhhh.


Tuesday, November 6, 2012

Quote of the Week (Election Edition)

I'll make this one quick and just throw out some interesting words to ponder, on this Presidential Election Day. I don't agree with everything written in Douglas French's epic rant, but I do think there is some serious food for thought in there.

No matter how things break tonight, there will be a lot of very happy people, a lot of very angry people, and a lot of people like me, wishing that it didn't have to be like that. When a nation is so bitterly divided that it forgets that we're all in this together, I think that's unequivocally a negative thing. But so be it.


"There are thousands of elections every year. Political positions from constable to governor are elected constantly. So with all of these layers of democracy — this great thing that America spends so many lives and so much money exporting — is America freer? With this constant turnover of political blood, is business allowed to operate unfettered? After all, we are led to believe democracy is synonymous with freedom. No democracy, no freedom.

America was attacked on Sept. 11 because they hate us for our freedoms, we’re told. America is so free it has the highest incarceration rate in the world, with 750 prisoners per 100,000 citizens. More than 2.3 million people are locked up, and many more millions are on probation. Is this the upside of this great thing — democracy?"
                                                - Douglas French, The Daily Reckoning

Interesting stuff to think about, either way, and similar to this bit from Stephen Fry, which will be this post's parting shot.

Get out there and vote today, regardless—apathy may feel good, but it does nothing to help any of our issues.

[Daily Reckoning]

Friday, November 2, 2012

Clip of the Week

Nothing much to share this week (except devastation from Sandy, which is depressing), so yay, football! Here's a punt return by Oregon's De'Anthony Thomas. This kid did basically everything wrong here, and yet it worked out for him. Go figure.

Have a good weekend, folks.

Catastrophe bonds, QE, and you

Following up on my favorite topic (the Fed), and making a connection with this week's biggest news (Hurricane Sandy), we have this piece from last week from Businessweek.
Bonds designed to protect insurers from payouts on natural disasters are headed for the best returns since 2009 as a superstorm expected to develop from Hurricane Sandy threatens to strike the U.S. Northeast. 
Catastrophe bonds, which lose money if they’re triggered, have returned 10.3 percent this year through last week, more than triple the 2.79 percent gains in the corresponding period of 2011, according to the Swiss Re Cat Bond Total Return Index. The measure, which tracks dollar-denominated debt sold by insurers and reinsurers, includes bonds linked to potential storm damage in the U.S. 
Investor demand for the securities has grown with yields on speculative-grade corporate bonds hovering at record lows as the Federal Reserve holds down interest rates to boost the economy. About $1 billion of catastrophe bonds may be exposed to the storm, according to a “loose” estimate by Patti Guatteri of Swiss Re Capital Markets. 
“Some investors are looking for bids on specific bonds that are the most exposed to the Northeast,” Guatteri, director of insurance-linked security trading in New York, said today in a telephone interview.
Yeah, toss this one in the old "unintended consequences of QE" pile. People can't get investment yield from traditional securities, but they feel the need to do something to keep up with inflation, so they start scrambling around looking for yield wherever they can find it.

So it is that we end up with individual investors starting to play around in the catastrophe insurance business, taking on risk that even the large insurance companies don't want. As a result, the price of these things skyrockets (and the yield goes down), even as the exact opposite should be happening with Sandy bearing down on the East Coast.

This is (was) nothing but outright gambling by a bunch of desperate investors who can't see any other way of keeping up with Fed-sponsored inflation. All of this is absolutely fantastic, what could possibly go wrong? Seriously, taking all of your money to Vegas and betting on black would be a better bet than this. The investors who thought this was a good idea deserve whatever they get as a result (i.e., no bailouts), no matter how much they may have thought the Fed "forced them" to do it. Dumb investing is dumb investing.


Thursday, November 1, 2012

Money for Nothing: Inside the Federal Reserve

I talk a lot about the Fed on here, and with good reason. To be an informed citizen in today's America, I think that it's absolutely vital that you know all about the Fed and what they're doing, or else you're bound to make some very bad decisions in your financial and political lives. Regardless of the outcome of Tuesday's election, the real locus of power in our country won't be changing at all—the unelected and unaccountable Emperor Ben Bernanke will still have more power than either Obama or Romney.

My viewpoints on this are echoed by the makers of "Money for Nothing: Inside the Federal Reserve", a documentary project that's currently looking for funding on Kickstarter (the doc has been filmed and cut, they're simply soliciting funds for the final finishing and production of the ultimate film). If you want to learn more about the Fed (and you should), this seems like the absolutely ideal starting place.

I think the whole project sounds awesome, and the list of people they interviewed for this is impressive—a who's who of Fed officials, financial commentators, academics, and other well-respected industry pros. They also got Liev Schreiber on board as the narrator, so these guys clearly aren't messing around. If you're so inclined (as I was), throw them a donation on Kickstarter, or at least visit their website or blog to learn more about them. I'll give them the parting shot here, with their own description of the film.
Whether you're buying a gallon of gas in Omaha, a loaf of bread in New York, or a condo in Miami, the Federal Reserve is taking historically unprecedented actions that affect your life.  But even though Ben Bernanke is in the headlines daily, the average person knows very little about America's central bank. 
Narrated by Liev Schreiber, and made by a team of AFI and Sundance award winners, Money For Nothing: Inside The Federal Reserve is the first documentary to take viewers behind the curtain of the world's most powerful financial institution. 
The film traces 100 years of Fed history, details the Fed's central role in the 2008 financial meltdown, and asks whether today's Fed policies are sowing the seeds of an even bigger crisis.   
Whether you're a Fed novice or expert, Money For Nothing presents an incisive look at this controversial institution, and a much-needed forum for intelligent debate about its role in determining the economic future of our nation. 
Join top Fed officials (many of whom are highly critical of recent Fed policies), world famous economists, investors, and traders as they debate the decisions that led the global economy to the brink of collapse - and why we might be headed there again.
So donate, watch, or at least take a minute to educate yourselves. Thanks.