Efrons Dice are like Rock Paper Scissors
for the expected utility theorist.
Chris Whalen @ PRMIA, (archives).
There is nothing you can do to "fix" a CDO, to make it liquid,
other than to standardize the terms and trade it on an exchange.
The liquidity gridlock prevailing in the secondary market for CDOs
is the normal situation for such unique and entirely opaque
instruments, whereas the past illusion of liquidity was abnormal,
a byproduct of the "irrational exuberance" described by Greenspan
himself. Buy Side investors accepted the fallacy of liquidity -- until
they asked the Sell Side dealers to bid on the paper. That's when
the current trouble really began.
See also bio at the Institutional Risk Analyst, a weekly news report.
Several comments have criticized Krugman for shifting his position,
but I think what has shifted is the second part. He still knows all the
models, and the models he prefers still work as well as ever. But as
for guessing which applies right now in the face of insufficient
information, all he can do is place a wager. It might be better than
most non-economists can do, but it might not be that much better,
and it might be worse than some people can do out of just happening
to have the right kind of intuition for the current situation--or simply
holding doggedly to the same single bullet theory until it finally
Update 2007 Sept: What's not to like about Paul Krugman.
Subprime fixed rate mortgages are performing OK.
The firms say that since first asked to rate securities based on subprime
loans more than a decade ago, they've done the best they could with the
data they've had. "The housing market has proven to be weaker than a
lot of expectations," says Warren Kornfeld, co-head of residential
mortgage-backed securities at Moody's. This summer, the firms
downgraded hundreds of mortgage bonds built on subprime mortgages.
They say those bonds represent only a small part of the subprime-mortgage
How Rating Firms' Calls Fueled Subprime Mess
By Aaron Lucchetti and Serena Ng
From The Wall Street Journal Online.
The subprime market has been lucrative for the credit-rating firms.
Compared with their traditional business of rating corporate bonds,
the firms get fees about twice as high when they rate a security
backed by a pool of home loans. The task is more complicated.
Moreover, through their collaboration with underwriters, the
rating companies can actually influence how many such securities
Moody's Investors Service took in around $3 billion from 2002 through
2006 for rating securities built from loans and other debt pools. This
"structured finance" -- which can involve student loans, credit-card
debt and other types of loans in addition to mortgages -- provided
44% of revenue last year for parent Moody's Corp. That was up
from 37% in 2002.
When Wall Street first began securitizing subprime loans, rating
firms leaned heavily on lenders and underwriters themselves for
historical data about how such loans perform. The underwriters,
in turn, assiduously tailored securities to meet the concerns of the
ratings agencies, say people familiar with the process. Underwriters,
these people say, would sometimes take their business to another
rating company if they couldn't get the rating they needed.
"It was always about shopping around" for higher ratings, says
Mark Adelson, a former Moody's managing director, although he
says Wall Street and mortgage firms called the process by other
names, like "best execution" or "maximizing value."
Executives at both ratings firms and underwriters say the
back-and-forth stopped short of bargaining over how to
construct securities or over the criteria used to rate them.
"We don't negotiate the criteria. We do have discussions,"
says Thomas Warrack, a managing director at S&P, which
is a unit of McGraw-Hill Cos. He says the communication
"contributes to the transparency" preferred by the market
unfogged, guilty pleasure group blog. Example musing and pointer
(The main problem with modeling is that any complex model
encapsulates dozens or hundreds of the modelers’ assumptions,
none of which are necessarily wrong, but many of which could
be interpreted differently by reasonable people at the next
meeting.) and erudite salaciousness in a quest for comity.
SOMA FM streams beloved CliqHop and delightful Groove Salad.
Bodybuilding emphasizes developing large, well-defined,
well-proportioned muscles. In weightlifting, on the other
hand, the goal is simply increasing muscular strength.
Now, weight training, that's something else entirely.
Weight training builds strength to improve performance
in other athletic activities. You're gonna see a lot of
basketball and football players doing weight training.
-- Glen Tuttle, 41, Glendale, AZ.
Tuttle went on to explain that it is an individual's goal for
his or her body which determines the fitness program
that particular individual should choose.
"A bodybuilder is looking to achieve a certain overall
body image," said Tuttle, who works out approximately
30 hours a week and subscribes to numerous bodybuilding
magazines, including Flex, Ironman, and Muscle And Fitness.
"It's much more than simply upping the weight on your bar."
In 1970, Laud Humphreys published the groundbreaking dissertation
he wrote as a doctoral candidate at Washington University called
“Tearoom Trade: Impersonal Sex in Public Places.” Because of his
unorthodox methods — he did not get his subjects’ consent, he
tracked down names and addresses through license plate numbers,
he interviewed the men in their homes in disguise and under false
pretenses — “Tearoom Trade” is now taught as a primary example
of unethical social research.
America’s Toe-Tapping Menace
By LAURA M. Mac DONALD
Published: September 2, 2007
For almost 40 years most police departments have been aware of
something that still escapes the general public: men who troll for
sex in public places.
That said, what results! In minute, choreographic detail, Mr. Humphreys
(who died in 1988) illustrated that various signals — the foot tapping,
the hand waving and the body positioning — are all parts of a delicate
ritual of call and answer, an elaborate series of codes that require the
proper response for the initiator to continue. Put simply, a straight
man would be left alone after that first tap or cough or look went
Why? The initiator does not want to be beaten up or arrested or
chased by teenagers, so he engages in safeguards to ensure that
any physical advance will be reciprocated. As Mr. Humphreys put
it, “because of cautions built into the strategies of these encounters,
no man need fear being molested in such facilities.”