State John Kerry - In America, "you have a right to be (as)
stupid (as) you want to be."
(But too many Americans are abusing the privilege)
"our economics are based on an
unjustified faith in rational expectations, market efficiencies
and the techniques of modern finance"
“The events of the past few years have revealed limits in economists’ understanding of the economy..."
“Extreme economic events have often challenged existing views of how the economy works and exposed shortcomings in the collective knowledge of economists,”
You must not believe everything you think
language intentionally designed to influence rather than inform is now ubiquitous in the business of sports and politics and markets
Why? Because it works.
Hatred is too strong an emotion to waste on someone you don't even like
Be careful who you call your friends. I'd rather have four quarters than one hundred pennies.
– Al Capone
Investing is not easy. Anyone thinking that it is, is stupid
There is no sense in being precise when you do not know what you are talking about.
John von Neumann
“ . . . there is always a well-known solution to every human problem — neat, plausible, and wrong.”
Henry Louis “H. L.” Mencken
“As skill improves, performance becomes more consistent, and therefore luck becomes more important.”
Former Dallas Federal Reserve President Richard Fisher
reason the professors teach nonsense is that if they didn’t, what would
they teach the rest of the semester?
Teaching people formulas that don’t really work in real life is a disaster for the world.”
“The expected rarely occurs and never in the expected manner.”
– Vernon A. Walters
Nations rise and fall with the quality of their leaders, and their leaders succeed and fail based upon who they are at their core – what they believe, how they think, and what they do. Nothing shapes a leader or a society like their education or lack thereof. Let me be clear: when I refer to an education, I’m not referencing earning a degree, I’m talking about developing a rich intellect – they are not always one and the same.
"If you see fraud and don't shout fraud, you are a fraud"
“We really can’t forecast all that well, and yet we pretend that we can, but we really can’t.”
Fail with honor rather
than succeed by fraud
. I do not base my forecasts on mathematical models or some finely honed methodology, but on my sense of where the economic world stands today and where I think it might likely be in the near future.
Actually, I’m going to spend the first few pages demonstrating that the mathematical models used to forecast GDP and all sorts of interesting economic events are basically nonsense.
“The essence of investment management entails the management of risk, not the management of returns.
“If you are not confused about the economy, you don’t understand it very well.”
The least competent are the most certain of their skills
"In equity markets, high-frequency traders (HFTs) ... account for a larger share of transactions. "Indeed, trading in the U.S. nowadays is concentrated at the beginning and the last hour of the trading day, when HFTs are most active; for the rest of the day, markets are illiquid, with few transactions."
The key to success is the ability to fake sincerity.
“I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”
It’s difficult to put in the hard work of reading a great work of literature, when we spend our time writing in 140 characters.
“You cannot manage returns but you can manage risk”
Peter L. Bernstein
There is an important
methodological point here — distrust conclusions reached primarily on the
basis of model results. Models are estimated or parameterized on the basis
of historical data. They can be expected to go wrong whenever the world
changes in important ways.
you think is much less important than how you think.”
“Doubt is not a pleasant condition, but certainty is absurd.”
Many aspects of investing are fun, but your future wealth isn’t a game. You should manage it in the most cold-blooded fashion. Emotion, pride, ego, dreams, and nightmares have nothing to do with the process, although some investors rely on little else. It is in this sense that volatility really matters
Make everything as simple as possible, but not simpler
“We observe the world how it is today and make these very simple projections and turn them into a terrible scenario. “This approach fails to take into account that the world is changing.”
World Bank’s Social Protection and Labor Global Practice.
The most glaring problem with current risk tolerance questionnaires is its failure to add any perspective and context to what the risk score means.
Markets are supposed to be be based on informed consumers making rational choices. Instead, the point of marketing is to create uninformed consumers who will make irrational choices often against their best interests
not cease to exist because they are ignored.
“It is not only a low interest rate world, it is also a low expected return world on any long-only investment. Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes. And maybe beyond.
your facts first, and then you can distort them as much as you please."
"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."
A lie can travel halfway around the world while the truth is getting its boots on.
A wise man can
learn more from a foolish question that a fool can learn from a
The power to understand and predict the quantities of the world should not be restricted to those with a freakish knack for manipulating abstract symbols...
In the absence of regulation, someone will always be willing to exploit our irrational tendencies, leading to a “phishing equilibrium” in which individuals are harmed.
Phishing for Phools; George Akerlof and Robert Shiller
A fact with an unknown truth value (a FWUTV)
Knowledge is a rumor until your body knows it
Most economics students are not required to study psychology, philosophy, history, or politics. They are spoon-fed models of the economy, based on unreal assumptions, and tested on their competence in solving mathematical equations. They are never given the mental tools to grasp the whole picture. The economists are the idiots savants of our time.
"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."
New economics does not accept the orthodox theory that has dominated economics for the past several decades that humans are perfectly rational, markets are perfectly efficient, institutions are optimally designed and economies are self-correcting equilibrium systems that invariably find a state that maximises social welfare. Social scientists working in the new economics tradition argue that this theory has failed empirically on many points and that the 2008 financial crisis is only the latest and most obvious example.
“Essentially, all models are wrong, but some are useful.”
George E.P. Box
A Single Death is a Tragedy; a Million Deaths is a Statistic
“The general change in our culture toward numerical formulations will give room for explicit reference to uncertainty,”
There are decades where nothing happens; and there are weeks where decades happen.
Great spirits have always encountered violent opposition from mediocre minds
Contrary to the current regulatory trend concerning extreme risks, the purpose of this paper is to emphasize the necessity of considering the Value-at-Risk (VaR) with extreme confidence levels like 99.9%, as an alternative way to measure risks in the “extreme tail”. Although the mathematical definition of the extreme VaR is trivial, its computation is challenging in practice, because the uncertainty of the extreme VaR may not be negligible for a finite amount of data. We begin to build confidence intervals around the unknown VaR. We build them using two different approaches, the first using Smirnov's result (Smirnov, 1949 ) and the second Zhu and Zhou's result (Zhu and Zhou, 2009 ), showing that this last one is robust when we use finite samples. We compare our approach with other methodologies which are based on bootstrapping techniques, Christoffersen et al. (2005) , focusing on the estimation of the extreme quantiles of a distribution. Finally, we apply these confidence intervals to perform a stress testing exercice with historical stock returns during financial crisis, for identifying potential violations of the VaR during turmoil periods on financial markets
The median age in the United States will rise to about 40 by 2040, up from 37.7 today. That’s partly because the average American lives three years longer today — reaching nearly 79 years old — than in 1995. The Congressional Budget Office credits population aging for a substantial portion of its projected increase in health care spending — from 5.5 percent of the economy today to almost 9 percent by 2046.
But research suggests that living longer, by itself, isn’t a big driver of rising health care spending. Because the baby boom generation is so large — members of which are now in their 50s to late 60s — the average age of Americans would rise even if life expectancy didn’t. For every 100 working-age American today, there are about 25 Americans over 65. By 2040 there will be 37.
Older people need more health care, and they spend more. Compared with the working-age population (people 19 to 64 years old), those 65 to 74 spend two times as much; those 75 to 84 spend four times as much; and those 85 and older spend six times as much. And the growth in health care spending is faster for retirees than for younger Americans.
The vast majority of the seven years of life expectancy gains in the latter half of the 20th century were because of better — and more costly — treatments for premature infants and cardiovascular disease,. smoking rates and education levels — also influence longevity.
Just how much longer life spans boost spending depends on how many of those extra years are spent in good health versus poor health. Several studies warn that Americans will spend more of those years in poor health and with disability, which would push health spending higher.
other analysis suggests that the leading causes of death, including cancer, heart disease and stroke, are being pushed off until later in life, giving us more years of good health. A recent study by Mr. Cutler and researchers from Harvard and the National Bureau of Economic Research found that between the early 1990s and the late 2000s, the elderly population gained more disability-free years than years with disability.
These findings are consistent with other work showing that higher health care spending by older patients has more to do with their proximity to death than with their age. One study found that hospital expenses grow 1,000 percent in the last five years of life, but increase only 30 percent from 65 years old to 80. Another study found that a majority of Americans over age 85 have no limitations to their daily activities because of health, which suggests that age is a poor marker of health and its associated costs.
living longer doesn’t increase health care spending so much as it delays the large amount spent near death. Some health care spending is associated with those intervening, relatively healthy years, just not much compared with that spent in one’s final years.
Fresh frozen fish at your lake today1/24:Why is work making us miserable?
Office life is better than ever before, but dissatisfaction is risingMost surveys show less than a third of workers care for their jobs, and the long-term trend is getting worse. In the UK there is some evidence we like our jobs a good deal less than we did in the 1960s.
Overall, sales at chain restaurants open at least 18 months dropped 2.4% in the fourth quarter that ended in December, the bleakest quarterly performance by the industry in more than five years, according to retail analytics firm TDn2K. December contributed significantly to that dip as store sales plunged 4.3%, the poorest monthly showing in more than three years.
Some of us will provide care to our parents in our own home for a period, but this is not always possible for all families, or always desired by the children or parents themselves. Many families find themselves searching for assisted living, an intermediate level of residential care for seniors who aren’t safe living alone.
Ideally, your parents can be full participants in the search, but when your loved one is impaired by Alzheimer’s disease or dementia, you may have to proactively take more control of the decision making.
If you see that your parents need assisted living care, here are some steps that can help you find them the right care:
The more involved your parents are in the search, the better. Of course you can do much of the legwork for them, but have discussions with your parents about their desires and preferences and, ideally, present them with a range of options. If your parent is in denial about his or her need for care, read our article about overcoming resistance in the situations.
Like it or not, money is going to be a factor in most families’ searches. Look at what your family can afford on a monthly basis. Our guide to financing senior care page could be a helpful reference. Look into veterans benefits and other creative ways to pay for care. Some seniors and families may have to consider difficult options such as pooling resources from the adult children, selling a family home or even cashing-in a life insurance policy.
This really could have been the first step on our list, as you can call us at any point in your search. A good point for your initial consultation from an A Place for Mom Senior Living Advisor is after you have already done a little investigating into what your family can afford. That way your Advisor can provide a list of seniors communities that meets the needs and preferences you have already established, and ones that are in your price range. This list of communities is an excellent starting point for your search. From there, a logical way to proceed with the decision making process is through the process of elimination. For those families who ultimately cannot afford private-pay senior care and require state assistance in the form of Medicaid (not to be confused with Medicare), your Advisor will connect you with the appropriate liaison at the Area Agency on Aging so that you can get this process started.
No amount of time viewing photos, brochures, floor plans or reviews can substitute for an in-person visit to a community. Schedule visits for you and your parent at a minimum of three communities on your short-list. If you and your parent have the time and stamina, it may be helpful to view up to five or six communities as you narrow the search. A good time to tour is during a meal, such as lunch, for example. Potential residents can try the food and get a good sense of the community’s culture; as most of the residents will be out and about during a mealtime. Based on these initial tours, narrow down your search to two or three favorites. Perform follow-up tours, perhaps even unannounced, to get a good sense for the community you and your parent are considering. Your Senior Living Advisor can make this process easier for you by arranging all your tours in one short call.
Whether your parent is choosing the community themself, or whether you need to make that decision for parents impaired by Alzheimer’s or dementia, try to make sure that everyone in your family feels good about the choice. When possible, have conversations with your parents discussing the pros and cons of each option and try to find consensus about the right option. You can always bounce ideas off of your Senior Living Advisor during your decision making process and get his or her impressions of communities on your referral list. Another smart move is reading reviews of senior communities on SeniorAdvisor.com can also help you make an informed and confident decision. Finally, you can also check the background of an assisted living community you are considering with the licensing agency in your state that monitors assisted living.
If you’ve come this far in the process, there’s no sense in delaying the move. It’s risky to procrastinate when a parent needs care, as the delay can lead to avoidable accidents and medical problems. Our blog article, “6 Survival Tips for Moving Your Elderly Loved One” has important information about helping to assure this move goes smoothly.
January is a transition month, so activity will be softer.
Utilities get a weather-related boost, but manufacturing disappoints.EFM- add in this: At age 13, girls in households with low maternal education spend on average 6 minutes per day reading (95% CI 6-14), and 12 minutes per day in sport (95% CI 23-31), while girls in households with high maternal education spend 14 minutes reading (95% CI 11-17) and 27 minutes in sport (95% CI 27-31). Similar differences were found for boys
The share of crimes committed by the elderly in Japan has risen dramatically in recent years. According to 2015 data from the National Police Agency, 5.8% of arrests in 2005 involved people 65 years or older. Within the decade, that rate had risen to 20%,the AFP reports.
As more of these senior citizens get locked up, experts say, the more Japan's prisons are turning into nursing homes.The spike in petty crime (mostly shoplifting) can be traced to a number of factors, researcher Yuki Shinko recently told NPR. Increasingly, the elderly populations feel lonely, bored, and unafraid of the legal ramifications. Many have even come to see prison as an upgrade from their daily lives. "If you are arrested, you still get a roof over your head, you're fed three times a day and you get health checkups. So it's sort of a win-win situation either way,"Seniors in Japan often struggle to find meaningful work. Many of Japan's companies still rely on the structure of lifetime employment — once somebody jumps ship, it can be nearly impossible to reclaim their place in the hierarchy in old age. As a result, many of Japan's seniors perform low-skill, low-wage jobs. Prison offers a respite from that drudgery, replete with healthcare and financial security.
The incentive to shoplift isn't going away any time soon. Nearly 27% of Japan's population is above 65 — a proportion that could rise as high as 33% by 2035 — so there will soon be even more seniors exposed to the same incentives that elderly people face today.
Plus, younger generations are increasingly prioritizing their professional lives over starting families — fertility rates are so low in Japan that the population is actually shrinking. That has created a vicious cycle economists refer to as a "demographic time bomb," in which younger generations' consumption and social security payments aren't enough to support the elderly. The economy begins to shrink, leading to an even greater emphasis of work over family, which creates even fewer consumers, and so on.
Perhaps the most troubling short-term aspect of Japan's geriatric crime wave is that rising arrest rates compel prisons to make facilities more accommodating for the elderly. In turn, that makes them more appealing — obviously the wrong incentive for aging citizens.1/19:
ALAN L. GUSTMAN, Dartmouth
College - Department of Economics, National Bureau of Economic
THOMAS L. STEINMEIER, Texas Tech University - Department of Economics and Geography
NAHID TABATABAI, Dartmouth College - Department of Economics
The Justice Department had alleged that black and Hispanic borrowers were charged about $1,000 more for a mortgage than white borrowers.
GARRET S. CHISTENSEN, University
of California, Berkeley
EDWARD MIGUEL, University of California, Berkeley - Department of Economics, National Bureau of Economic Research (NBER)
The eight, all men, hold as much money as the 3.6 billion people who make up the world’s poorest half,
Early life investments in children promote skills and capabilities, and subsequently influence a variety of health, social, and economic outcomes in later life. In this paper, we examine heterogeneity in children’s time use using diary data from two waves of a nationally representative longitudinal cohort study. Children from disadvantaged households spend significantly less time reading and engaging in sport than their counterparts, and more time in unstructured activities and using media. Though gaps are relatively small at age 9, they widen considerably over time. At age 13, girls in households with low maternal education spend on average 6 minutes per day reading (95% CI 6-14), and 12 minutes per day in sport (95% CI 23-31), while girls in households with high maternal education spend 14 minutes reading (95% CI 11-17) and 27 minutes in sport (95% CI 27-31). Similar differences were found for boys. Using a decomposition analysis, we find that resources, preferences, initial endowments, and differential costs all play a role in explaining time use concentration across households, indicating that disadvantaged families may be constrained in how they choose their preferred time use options. Given the important role of extra-curricular activities in promoting cognitive and non-cognitive skill development, the systematic differences in time use we document in this paper are likely to contribute to cumulative disadvantage and widening skill gaps over adolescence and into adulthood.
SERKAN ARSLANALP, International
Monetary Fund (IMF)
WEI LIAO, International Monetary Fund
SHI PIAO, International Monetary Fund (IMF)
DULANI SENEVIRATNE, International Monetary Fund (IMF)
This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China's influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China's financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China's capital account liberalization.
Of the 114 state plans whose data from 2009 to 2014 was sampled, 74% made some kind of benefit reductions, compared to 57% of the 132 local plans from 2009 to 2014. Overall, about 65% of plans made benefit reductions.
Of those state plans that made cuts, 65% made reductions affecting only new employees compared to 35% that made changes affecting both new and current employees. Of local plans, 60% made reductions affecting new employees, while 40% made changes affecting both.
Of state and local plans that made benefit changes for current employees, the most common types of changes were increased employee contributions and changes in the cost-of-living adjustment calculations. The brief said that COLAs in particular are “not viewed as core benefits and have less protection under the law.”
Of state plans that made changes of this kind, 17% made employee contribution changes and 9% made COLA changes, while 13% of local plans made COLA changes and 12% made employee contribution changes.
For benefit changes for new employees, those kind of “core” benefit changes are far more common, according to the brief. For example, 60% of state plans that made benefit changes for new employees changed retirement age and tenure rules, compared to 4% of state plans that made benefit changes for current employees.
It’s the worst drug crisis in American history, killing more people in the past two years than gun homicides. In the town of Wilkes-Barre, Pennsylvania, the opioid epidemic has claimed so many lives that attending funerals has become commonplace for some families. "We went to 14 funerals of my son’s friends who died of addiction in just one year,’ said Christopher Emmett, whose own son died of a drug overdose this August. NBC NEWS reports from the town that researchers dubbed ‘the most unhappy place in America’ where four times as many people die from drug overdoses than in New York City.
Central banks, finance ministries, and economic regulators all have large staffs of well-trained economists, fancy models and vast quantities of data. But when the crunch came, their theories and models could not describe what they were experiencing. The Economist reported that the Bank of England’s large macro model wasn’t much help because it didn’t have banks in it. It is hard to make policy in the middle of a banking crisis if one’s economic model doesn’t have banks in it.The reason these models and formal theories were of limited use is they were built on assumptions that people are rational, markets always clear, bubbles can’t form, and that banks are just boring bits of plumbing that shuffle money from one part of the system to another and can be safely ignored. It is therefore not surprising that when people started panicking, markets were not clearing, a massive bubble had just burst, and the banking system was on the verge of collapse, that models with such assumptions were not that helpful.
Corporate credit picked up where it left off 2016, with high yield bonds and senior secured loans strengthening this week on the back of rising U.S. equities, higher oil prices and ongoing inflows into both asset classes. In what was the asset class’s best annual performance since 2009, high yield bonds returned approximately 17.5% in 2016, led by a sharp rally in both the metals and mining and energy industries.1,2,3 Similarly, value-based areas of the high yield bond market led 2016’s rally after sharply lagging the broader benchmark in 2015. After returning -15.0% in 2015, CCC rated bonds provided gains of 36.5% in 2016 as investors exhibited a renewed appetite for risk in their ongoing search for yield.4 Senior secured loans followed a similar trajectory, with the asset class providing total returns of approximately 9.9% in 2016, with momentum building towards year-end amid rising Treasury yields and large flows into bank loan mutual funds.5 Following outflows of more than $45.5 billion across 2014 and 2015, bank loan mutual funds recorded inflows of $7.8 billion in 2016 as investors increasingly sought out investments whose values are less affected by rising interest rates.6
Last September, Luis Videgaray, then Mexico’s finance minister, arranged for Donald Trump to visit his country. The visit was a public relations fiasco for the Mexicans; the MIT-educated Mr Videgaray was branded a national traitor and resigned from his post.
Mr Videgaray is back — as foreign minister, hoping to parlay the goodwill he won with Mr Trump to cut better deals for Mexico with the US-president elect. “With Luis, Mexico and the US would have made wonderful deals together,” as Mr Trump tweeted at the time.
Mr Videgaray’ appointment is Mexico’s first step in playing transactional politics with the incoming president, analysts said, and comes as Mexico braces itself for Mr Trump’s threats of high tariffs, immigrant deportations and the end of the North American Free Trade Agreement (Nafta).“[Videgaray] understands political bargaining and that’s going to be very important in the coming weeks and months,”
Many officials of the US Federal Reserve said the central bank could be forced to lift rates higher than expected if Congress passed economy-boosting tax cuts next year, according to minutes of the Fed’s final policy meeting of 2016.
Almost all Fed officials meeting on December 13-14 said the risks of growth surpassing their forecasts had grown because of the possibility of more “expansionary” fiscal policy under president-elect Donald Trump and the Republican-controlled Congress.
Make a New Year’s Resolution to Schedule an Eye Exam
Many people are making New Year’s resolutions to improve their health. However, many may not be aware that an eye exam cannot only help to protect vision, it can uncover evidence of other diseases including diabetes or hypertension.
And, for eye diseases such as glaucoma, the damaging effects may be detected through an eye exam before a patient notices any symptoms. In fact, patients in the early stages of glaucoma usually have no symptoms, no noticeable vision loss and no pain, which is why it is called the “sneak thief of sight.” By the time symptoms start to appear, some permanent damage to the eye has usually occurred.
Glaucoma is the second leading cause of blindness in the world and the leading cause of blindness in African American and Hispanic populations in America. According to the study “Vision Problems in the U.S.” by Prevent Blindness America and the National Eye Institute (NEI), there are nearly 2.3 million Americans ages 40 and older who have glaucoma.
Glaucoma is an eye disease that causes loss of sight by damaging a part of the eye called the optic nerve. This nerve sends information from the eyes to the brain. When the optic nerve is damaged, peripheral vision begins to diminish. If left untreated, over time, glaucoma may also damage central vision. Unfortunately, once vision is lost to glaucoma, it cannot be restored. Vision loss can be lessened, however, if glaucoma is detected and treated early.
Prevent Blindness America has joined other leading eye care groups to build awareness during January’s National Glaucoma Awareness Month to educate the public on what they can do to help save their vision.
“Our key message is that, unfortunately, there is no cure for glaucoma. But the good news is that if detected and treated early, the effects of vision loss can be diminished,” said Hugh R. Parry, president and CEO of Prevent Blindness America. “We hope everyone has a happy and healthy 2011 and that it includes a visit to the eye doctor.”
There are many risk factors for glaucoma including:
Age: Those that are
40 and older are more likely to develop glaucoma. The
older you are, the greater your risk.
Prevent Blindness America offers a dedicated website for free information on glaucoma at preventblindness.org/glaucoma. Additional information may also be obtained in English or Spanish by calling (800) 331-2020.
Ford said on Tuesday that it will scratch plans to build a new $1.6bn plant in Mexico and invest some of those funds instead at an existing facility in the US. The decision comes as US manufacturers brace for a shift in American policy later this month when President-elect Donald Trump moves into the White House. Mr Trump has publicly criticised companies that have shifted production to lower-cost areas outside of the US border.
After examining forecasts by major investment houses going back to 1998, Mr. Mehta found that 8 percent of individual analyst predictions called for a small market decline in subsequent years. But those predictions of decline were worse than random: In the years when the market did fall, 9 percent of forecasts — never enough to counter the bullish consensus — predicted that it would happen, essentially the same as in a year in which the market rose.
Yet, as Mr. Mehta found, the typical negative individual forecast only called for a 5 percent decline, so the size of forecast errors, like the 49-percentage-point error of 2008, was larger than would be expected from mere chance. On a statistical basis, the forecasters were “actively adding negative value” — essentially destroying value by issuing spurious numbers.