Why Things Cost So Much (hint: nobody knows and it’s a big, big problem)


The above might be the most intelligent survey I’ve read about what is probably the most important question of our time. 

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Trump Evolving

The most prescient of Trump commentators in my little bubble has been Scott Sumner. His point all along has been that Trump doesn’t care about anything and is just saying whatever it takes to win. He willl, Scott predicts, reverse every single position he’s ever taken.

No, this is not from The Onion:

Presumptive Republican presidential nominee Donald Trump said on Saturday that he wouldn’t characterize his immigration policies as including “mass deportations,” drawing a sharp retort from the campaign of Democrat Hillary Clinton.

Trump, in an interview at his golf course in Aberdeenshire, Scotland, said that rather than a blanket ban on Muslims coming to the U.S., a position he took in late 2015, he’d focus on those from countries with links to terrorists. The Republican also said he would start from scratch on the sweeping Trans-Pacific Partnership trade pact.

Trump said his immigration policies would have “heart,” suggesting he may be shifting tone to transition into general-election mode after the bruising primary season.

“President Obama has mass deported vast numbers of people — the most ever, and it’s never reported. I think people are going to find that I have not only the best policies, but I will have the biggest heart of anybody,” Trump said.
Pressed on whether he would issue “mass deportations,” Trump answered: “No, I would not call it mass deportations.”

I’m sure my neo-Nazi commenters will be thrilled to learn that on immigration Trump will have an even bigger heart than Obama.

The reckoning proceeds.

His opponents (ie everyone I know) could easily draw all of the wrong lessons from this of course by dismissing the success as being deeply fraudulent. It was not. Trump legitimately appealed to many and to the evil side of many more.

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Brexit and The Allure of the Sith

Brexit is about preserving the English Nation. Cowen is at his best when chenneling the darker sides of humanity. In the end this is what makes him the best commentator out there. He knows that instinctive reactions, baser reactions, are not always wrong, even if they are usually wrong.

I’ve always felt that insight comes from a deep connection with ones own failings. The Cass Sunstein podcast where they discuss the dark side of the force is an awesome exchange:

SUNSTEIN: Thank God for libertarian paternalism, that Luke has a choice. The Sith, by the way, like the Jedi, respect freedom of choice. In the crucial scene in Episode III where the question is whether Anakin is going to save the person who would be emperor, he says, “You must choose.” And so there’s full respect for freedom of choice. Nudgers have that. Good for them.

COWEN: Bad guys always tell you the deal, and then they say, “Choose evil.” It seems the good guys always mislead you.

The good guys spend too much time pretending that evil doesn’t exist. What a waste of time. It does exist and it exists in all of us and by pretending it isn’t there we become far less wise about the world. Tyler’s contribution is to frame evil in its best possible light and then reject it anyway.

Or not. Sometimes it feels good to be bad because badder is better.

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What Trump is, In the Best Possible Light

From MR of course. One bit:

Liberalism isn’t actually an automatic emotional default for most people on this planet, so being a scold is in the longer run a losing strategy.  I believe many current “democratic mainstream” thinkers genuinely do not understand how boring and unconvincing they are, as they live in bubbles filled with others of a similar bent.


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Pick The Best Stocks and Fail

here is John Cochrane reporting from the NBER Asset Pricing conference:

Robert Novy-Marx presented  Testing Strategies Based on Multiple Signals, discussed by Moto Yogo. We’re all familiar with the phenomenon that if you try 10 characteristics and pick the best few to forecast returns, t statistics are biased and performance falls out of sample.

Robert pointed out that if you put those best 3 in a portfolio, they diversify each other, reducing the in-sample variance of the portfolio, and boosting Sharpe ratios and t-statistics even further.

Many “smart beta” funds are doing this, so the fall-off in performance from backtest to real money is relevant beyond academia.

The extent of this bias is impressive. Here is the distribution of t statistics that results when you pick the best three of 20 completely useless signals, and put them in a portfolio. Critical values of 4 and 5 show up routinely in Robert’s calculations.


If you pick the three best of a bunch purely average performing stocks you will have a portfolio that looks amazing but is, in fact, crap. This is going to work for all kinds of variable asset or liability prices, including insurance.

Beware ststiatics, folks.

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David Bowie in 2002

From here.

I don’t even know why I would want to be on a label in a few years, because I don’t think it’s going to work by labels and by distribution systems in the same way. The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen. I’m fully confident that copyright, for instance, will no longer exist in 10 years, and authorship and intellectual property is in for such a bashing. Music itself is going to become like running water or electricity. So it’s like, just take advantage of these last few years because none of this is ever going to happen again.

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Hardball Debate Questions


Easily one of the most amusing things I’ve read in a long time. Very hard to go highbrow without sounding like a proper douchebag. Impressive.

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