Russell Roberts's Blog, page 1563

Hear no evil

The other two guys didn't get the memo. One is supposed to be covering his eyes and the other his mouth:

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These guys are trying to figure out how to save Greece and maybe Portugal and maybe Spain. (And Ireland maybe.)

Meanwhile, the Greeks are taking their austerity measures (whatever that means) in stride. Here (from the NYT) are some unemployed schoolteachers "at an anti-government demonstration in Athens":

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And  this one (from the NYT) showing a "protest of austerity measures in Athens on...

Gambling with Other People's Money

My essay on the crisis, Gambling with Other People's Money: How Perverted Incentives Created the Financial Crisis is now available online from the Mercatus Center and as a pdf. (In the online version, almost all of the footnoted articles and essays are available as links in the text if you want to go deeper.)

Here is the executive summary:

Beginning in the mid-1990s, home prices in many American cities began a decade-long climb that proved to be an irresistible opportunity for investors. Along...

Ridley

Here is a lovely ad for Matt Ridley's new book and blog, The Rational Optimist. The ad captures the power of specialization and the division of labor in helping us eat better than the kings of yore. It doesn't mention that a homeless person today gets better treatment for a heart attack than the President of the United States did 50 years ago. But it's true and the ultimate source is the same, the power of exchange which underlies civilization. Without that exchange and specialization we...

Ritholtz on GS

Here. (HT: Alvin Rabushka) Very informative.

Redortazizy is the Law of the Land

Here's my latest column in the Pittsburgh Tribune-Review.  In it, I explore legislators' blatant irresponsibility.

Wisdom from Richard Epstein

Here are two superb, recent essays by the great Richard Epstein:

On the SEC's case against Goldman Sachs

On "Progressivism" (altough I don't share Richard's softspot for antitrust and rate regulation)

Arizona and Washington

Here's a letter to the Washington Post:

Echoing Claude Rains's famous line in Casablanca, Richard Cohen rightly ridicules Arizona politicians' latest effort to "round up the usual suspects" ("Casablanca West: Arizona rounds up the usual suspects," April 27).  By demonizing immigrants, these politicians exploit voters' misinformation about the economic consequences of the alleged devils.  Good for Mr. Cohen to expose politicians' gaudy and dangerous toadying to voters who wrongly believe that...

Who paid John Paulson?

The SEC case against Goldman Sachs is bewildering in its complexity to outsiders. It is very hard to know what actually happened without being familiar with the technical world of synthetic CDOs. Ambitious readers can go here and here to get a flavor of the complexity.

But some clarity is possible. John Paulson expected housing prices to go down. The ABACUS vehicle at the heart of the transaction allowed him to profit when they did go down. Who was on the other side of the transaction? Who...

The power of mistakes

I interviewed Nassim Taleb for this Monday's EconTalk. Always fascinating and charming, the most interesting thing he talked about was the power of trial and error and the importance of mistakes. He argued that redundancy allows errors and mistakes to be relatively harmless. Debt allows the effects of mistakes to cascade more widely. Redundancy is insurance against black swans. Debt is anti-insurance.

Supply AND Demand for Labor

Commenting on my pro-immigration stance, whiskeyJim says:

Illegal aliens hurt the working poor, despite any Cato study. It is a simple supply and demand issue regarding unskilled labor.

whiskeyJim's claim reflects an incomplete picture of reality.

It's true that, all else unchanged, an increased supply of unskilled workers will drive down the wages of unskilled workers.  But when analyzing immigration's full effects, the "all else unchanged" proviso blinds us to the most important consequences o...