Wednesday, October 29, 2008

What's wrong with this situation?

8-year old boy goes to gun fair.
8-year old gets to fire an Uzi at a pumpkin
Uzi recoil jerks the gun upwards
8-year old shoots self in the head and dies

They should have speed limiters on mobility scooters

And from the file on how this country's Laura Norder situation is going to the dogs, we have this gem in the Herald about a man in a mobility scooter who ran over a girl.

Okay - no one expects to attacked by a dentured member of Hell's Angels on four wheels but at 14 I would have thought she ought to be a bit more agile than that. Maybe too many pies from the school canteen?

Tuesday, October 28, 2008

When it's broke, make sure it's truly f**ked

The Greens have siad the RBNZ should require the Aussie banks to suspend dividend payments.

So the global financial system is under stress. Hey, let's get in there and make sure it really dies. If the Green's believe that the RBNZ is not charging enough for making credit readily available then the proper response is to say that the RBNZ should be charging a higher effective interest rate.

But then the Green's along with CAFCA have a lifelong habit of taking pot shots at the Aussie banks, regardless of whether it is warranted or not.

Vote for M.E.*?

*Myopia Extremis

NZ First to work with anyone

According to this morning's Radio NZ news, Winston Peters is prepared to work with anyone after the election. Obviously this includes Asian jockeys ...

Brokeback Mountain anyone?

Saturday, October 18, 2008

Oddly enough I agree with Keith Locke...

... when he said:

"However, it would be quite wrong to take from [the Green's population policy] that we are asking parents to have less kids,” Mr Locke says.
It should be fewer kids.

Unless of course they are going to be skinny ones.

Thursday, October 16, 2008

The Long and the Short of It

Most of us are starting to get crisis fatigue (on top of which election fatigue is starting to set in, too). Everyday there seems to be a new story about a financial institution going under or some knee-jerk government reaction. Coming as this does just before important elections for little ol’ Aotearoa New Zealand, there is a real temptation to unhook the modem and go hide in some secluded backwater (you know, like Christchurch).

That said (being an economist, I always have a “but”), something I find fascinating about much of what is going on around us is the temporal aspect of it all. We seem to have a disconnect between what is “in our face” and the longer term outlook. The value of the mortgage backed securities is a case in point. No one wants to buy them but chances are they will have some (if not a lot) of value several years down the track, even after taking into account a proportion of constituent mortgages that default.

Similarly, the way we (well, financial institutions directly but the general populace have acquiesced in this) compensate the sellers of financial products is skewed toward the short-term. You sell the product and get the commissions. Big bonus. Several years down the track, after you have taken your golden handshake or jumped ship, the underlying turns toxic.

Of course, without having crystal balls it is a little petty to expect that we will be able to foresee all the bad stuff that will happen. But the thing is we don’t need to see it exactly. All we need to know is that something bad is going to happen. Things happen in cycles. Sometimes the cycles are elongated and sometimes they are shallow but they cycle. And if the cycle happens to be accentuated, well the drop is going to be case of “I get to see my lunch for a second time”. Why are we surprised that we are getting the payback for a) dodgy lending practises/housing policies, b) incentives for banks to put stuff off balance sheet, c) over-reliance on ratings agencies, d) a belief that the work of some executives is actually worth many millions of dollars? [How many so-called “hundred year events” have you experienced? Ok – they are not necessarily related but I’ve lived through six economic/financial crises of varying magnitudes and several “hundred year” weather patterns.]

Too many people believe they fully understand what is going on around them. They don’t. They have heuristics that are seemingly confirmed but they don’t actually understand. For some things that is ok. I get into a lift with only a rudimentary understanding of how the counterweight helps stop the thing plummeting 20 storeys down. But if I am signing up for a mortgage that has the potential to leave me homeless or even just take a massive chunk out of my disposable income in a couple of years, by closing my eyes and just signing I am abrogating my responsibilities. Worse still the grinning salesman who says “keep the pen” after I sign.

It seems that the vast majority of humanity does not want to look ahead. To paraphrase Douglas Adams, if we had foresight we may well have never come down from the trees. But all we need to know is that things will turn sour at some point in the future and then ask ourselves “How confident am I that my decisions today are going to stand me in good stead when the shit hits the fan?”

There is a wonderful comment in a Freakonomics post comparing the behaviour of mortgage lenders and pregnant teenagers – both profess to not knowing how it happened.

Why I Dislike Winston Peters, Reason #492

It was inevitable that NZF would again trot out the xenophobic rhetoric that so enamours Winston with the intellectually challenged.

"When times are tough internationally immigrants are attracted to New Zealand like moths to a neon light."

NZ Herald:
"He said immigration policy had to be "smarter" and added: "We must have a population policy - and one in which ordinary New Zealanders can have an input.
"It must be linked explicitly to labour market needs. No job - no immigrant."
Mr Peters said no one should be let into New Zealand unless they had a job and those seeking to join families in this country would have to be immediate family only."

Apart from the fact that it is already relatively hard for unskilled migrants without a job offer to come to NZ, I believe he is trying to say all those Somali taxi drivers with PhDs should not be allowed in...

The man makes me sick and I can only hope that enough peopple do not vote for either NZF or Labour so that he has no chance of getting back into parliament.

Monday, October 13, 2008

A Grey Swan?

I'm in the middle of reading "The Black Swan" by Nassim Nicholas Taleb.

I find his writing style a little tiresome after a while but the ideass in the book make for a must-read for anyone in finance and economics.

Although current events are not beyond the realm of probability - indeed, a lot of people foresaw the problems in some form or another - some of the ideas are really applicable. Hence the current "crisis" is a grey rather than a black swan.

Friday, October 10, 2008

been away from the blog

I had an extended holiday from the blog due to other commitments. Things are not much better time-wise but with the political silly season really upon us, along with some rather dubious economic decisions taking place around the globe, I feel the need to vent my spleen on occasion.