Bandarlog


	Interesting Iraq Datapoint Orascom Telecom a few years ago started up a mobile phone carrier in Iraq. Today Orascom announced a trade sale to MTC, for a price of $1.2bio. This represents a pretty huge multiple of what Orascom invested. The company has around 2.5mio subscribers. A valuation of $500 per sub is squarely in range of other emerging markets carriers. [Ben H.: 12/3/07 08:26]


	"NO" Wins in Venezuela The outcome of the Venezuelan constitutional reform referendum turned out closer than the last polls predicted, but NO still managed to win. In spite of the polls, many observers expected Chavez's "Bolivarian" constitution would win the vote, thanks to ample official support and possible ballot-box-fiddling. Chavez reacted in a calm and conciliatory manner. That doesn't much surprise me. For the last decade, he has employed the same tactics: escalate tensions in the run-up to an election and de-escalate once it has taken place, whether he wins or loses. The conspiracy theorist in me surmises that Chavez the shrewd tactician doesn't much mind losing this election. First, it silences critics at home and abroad who accuse him of anti-democratic behavior. You can bet it won't be long before on an episode of Alo, Presidente he compares (captiously) his quick acceptance of a close but unfavorable vote with Bush's Florida fight in 2000. Second, had Chavez won unfettered power to impose his socialist vision, the inevitable coming economic collapse could be laid only at his feet. Reform or no reform, Venezuela's economy is heading for a day of reckoning. Now, when it comes, Chavez will claim that disaster could have been averted if only the opposition had granted him the power to usher in the socialist workers' paradise... [Ben H.: 12/3/07 08:13]


	Santana I'm going to simply assume that since we're talking about the Yankees here, the $25mio price tag doesn't much matter. Let's focus on the relinquishment of prospects. Pitching proved the team's weak spot this past season, partly as a result of injuries, but also partly because of a roster that offered -- call it -- six potential starters but only one real ace. I'm with you, Ben, that Hughes is no lead-pipe cinch. Sure, he's young, and if he pans out could provide many years of solid pitching, but then, as you point out, so's Santana. And Hughes was hardly a paragon of consistency. Joba, on the other hand, I just can't see dealing. Melky Cabrera is a solid young player, but let's face it -- center field in the Bronx is hallowed ground. And notwithstanding that Johnny Damon -- at his age -- won't cut it (or if so, not for much longer), Cabrera doesn't give indications of being a worthy heir to DiMaggio, Mantle, or even Bernie Williams. For Santana, I say deal him. [Ben H.: 12/1/07 19:19]


	Santana The Santana trade represents a classic heart-vs-head decision for Yankees and Red Sox fans. It is almost impossible to overstate Santana's ability. Despite a slight drop last season, he remains the best pitcher in baseball. And he is only 28. The price seems likely to be one upper tier prospect (for the Yankees Hughes/Chamberlain, for the Sox Ellsbury/Buchholz), one solid big leaguer (Cabrerra or Crisp), and two other highly promising minor leaguers. In addition, signing Santana could require upwards of $25M a year. My judgment: he's worth every penny. Pitching prospects are notoriously unreliable. The only certainty is that for every can't-miss-kid who hits, ten more blow up. As good as Buchholtz, Chamberlain, and Hughes have looked in limited big league time, the odds say to trade potential for established value every single time. A Yankees team with Santana at the top of the rotation positively terrified me, and a Sox team with both Santana and Beckett seems like a candidate for 110 wins. Still and all, I find myself rather hoping the deal doesn't come off. I like watching the kids, and both Buchholtz and Ellsbury looked magical. Ben H, what is your sentiment here? [Ben A.: 12/1/07 15:14]


	The only scoring that Marbury's doing is with the team's interns! [Ben H.: 11/30/07 02:34]


	How 'Bout Those Knicks? [Ben A.: 11/29/07 23:16]


	Sometimes It's Difficult to Keep Hope Alive Me, sorting through the main: "Hmm, a letter from the McCain campaign, I wonder what that's about." Deb: "Dear Mr. A, thank you for throwing good money after bad..." [Ben A.: 11/28/07 08:44]


	Drug Marketing Practices The Times runs a useful and balanced piece on the phenomenon of the "Drug Lunch." No surprises for anyone who knows the US Pharma business, but recommended for anyone trying to get a better sense for the industry. [Ben A.: 11/25/07 12:22]


	Very Long Cliffhangers I used to joke that if revolutionaries really wanted to cause upheaval in America, they should quit selling copies of the Socialist Worker and start figuring out how to destroy cable TV infrastructure. Without television, how long before the streets run with blood? So far, though, all remains calm. That may not prove much, though, since many programs have a few months of scripts socked away. From what I understand (which may not be much more than you -- I don't have a TV!), the only major shows that went immediately on hiatus are the daily comedy shows, like the Tonight Show. And for these, Ambien serves as a nearly perfect substitute. As for Americans' reaction to the tumbling dollar, it does seem that average folks have finally become at least dimly aware of it. The story about that rapper featuring EUR in his video and Gisele Bundchen negotiating her pay in EUR (later disclaimed) had more to do with the realization than did any tangible consequences for Joe Consumer. What's behind the dollar free-fall has very little to do with Bush or Iraq, as far as I can tell. This is entirely a story of worries about the US financial sector. The blame belongs to the highly paid titans running the banks. Enticed by compensation linked to annual PNL, they loaded up on "carry today, consequences next comp period" products like subprime mortgages, dodgy CDO paper, and leveraged finance commitments. While the Iraq War has certainly imposed a significant fiscal cost, I don't see much evidence that the dollar bears worry much about the US fiscal position (except as regards the cost of a financial system bailout, should it become necessary). And, in point of fact, the current fiscal position of the US looks pretty decent -- the problem is long-term solvency, related to longstanding entitlement programs. [Ben H.: 11/23/07 14:06]


	Sarko's Thatcher Moment? To be honest, I don't have a clear view of what's happening in the endgame of this strike. On one hand the rail and subway workers have gone back to work without forcing the government to back down, on the other hand they signed no surrender document, and I don't see anything stopping them from striking again if they so desire. The (conservative) Figaro has declared victory for Sarko. Other newspapers seem more circumspect. I'm sorry I myself don't have any more insight into the matter. Now let me ask you a question -- how is the U.S. reacting to the Hollywood strike? I have visions of a hundred million couch potatoes rubbing their eyes, stepping away from their silenced idiot boxes and into the daylight, realizing that, while they were hypnotized by Ryan Seacrest's sparkling elocution, their nation somehow came to be run by an evil scraggle-toothed man with a buffoonish sidekick, who in order to fight a preposterous war borrowed a trillion dollars, much of which went straight to their cronies' pockets, and all of which, lodged on the liabilities side of the national ledger, had sent their currency into free-fall. Of course, I realize that these visions are naive, and that the hundred million couch potatoes are now just watching reruns of Ryan Seacrest. [Doug: 11/23/07 13:06]


	Sarko's Thatcher Moment? Doug, would love to hear your view on the importance of Sarkozy's victory over the transport strike. Some people here are talking about this as his "Thatcher moment", by way of analogy with the Iron Lady's breaking of the miner's strike in the mid-80s. [Ben H.: 11/23/07 08:16]


	Nos callaramos nunca! To get a better idea of why Chavez felt empowered to mouth off and speak over his fellow Ibero-american heads of state, check out this video Iris Varela is a prominent Chavista. She agreed to appear on a Globovision talk show, from which the clip is taken. The Chavistas are kicking their nuttiness into high gear in preparation for the upcoming Constitutional Reform Referendum, whereby Chavez will open the door to unlimited self-succession in the presidency. At the same time, the U.S. Congress refuses to pass the free trade agreement with Colombia, our one Andean ally and bulward against the export of Chavismo. Smart. [Ben H.: 11/22/07 11:24]


	Chavez Slapdown/"Por que no te callas?" No doubt you have all seen the moment of regal exasperation in which King Juan Carlos of Spain tells Hugo Chavez to shut up. Spaniards, showing excellent taste, have made this clip one of Spain's most popular cell phone ringtones. How awesome is that? [Ben A.: 11/21/07 23:57]


	As Admiral Nelson Said Of France: "Ha-Ha" Another item to file under "France, suckage of." Quaero, the visionary billion-euro multi-media search engine whose patron -- and who knows, perhaps lead engineer -- was Jacques Chirac, was scrapped earlier this year, to no-one's surprise. I never quite got the vision. Was I supposed to upload a picture of myself and see who else looks like me? The Wikipedia obituary paraphrases an IHT article thus: "Many German engineers also balked at what they thought was becoming too much of an anti-Google project, rather than a project driven by its own ideals." The IHT article itself has a nice little jab: "German commitment was called into doubt after Schröder was defeated at the polls in September 2005 and a coalition took office led by the Christian Democratic chancellor, Angela Merkel, a former physics teacher." For that last clause, read: "... who might have a fraction of a clue about things technical." Alas, so many other Chirac vanity projects, like the retarded Quai Branly museum, lacked an international partner who could scrap them when it recognized them as such. [Doug: 11/21/07 13:56]


	Eternal Detroit Ah Detroit, always on the verge of the renaissance -- this time it's really for real! -- and always here. [Doug: 11/19/07 16:25]


	Eternal France I biked to the hardware store today because public transport is still on strike. While out, I took the opportunity to eat at McDonalds and have a non-Vietnamese meal. (The in-laws pretty much run the kitchen chez nous.) Reading the paper over my Royal Deluxe and Coca Light, I come across the headline of the "Fifty Years Ago Today" box: Strikes In The Public Sector. [Doug: 11/19/07 16:14]


	Jay-Z's Portfolio Preferences This is what we professionals call a "contrarian indicator." That said, I wonder whether the real reason for Jay-Z's choice is that EUR's highest denomination bill is EUR500. Even at a more typical exchange rate, that makes a suitcase of high-denomination EUR worth a heck of lot more than a valise of Benjamins. When the EUR bills were introduced, I remember some people commenting that the EUR500 would appeal to gangsters worldwide; and some conspiracy-minded folks hinted that the Europeans actually hoped the high-denomination bill would help win seignorage from the USD in global "mattress money" allocation. [Ben H.: 11/19/07 08:06]


	Too Bad Arsenal Couldn't Sign A-Rod Another sign of the declining dollar: As the greenback recently hit historic lows against other major currencies, rap mogul Jay-Z released a new video in which he flashes euros, not dollars. Hat tip to ogged. [Ben A.: 11/18/07 23:59]


	Georgia The president of Georgia has, in the run-up to snap elections, named a new prime minister. He is none other than the chairman of the leading bank in the country, one with which we have done a decent amount of business. As I noted on the blog a while back (can't find the post at the moment), he also served as the host of Georgian TV's knock-off of "The Apprentice." I guess in a small country, talented people need to wear multiple hats. [Ben H.: 11/16/07 13:37]


	Golden Age Latke-flavored soda. [Ben A.: 11/14/07 04:32]


	Our friend Henry (mentioned below) reminded me tonight that he majored in Classics too, and knows you from there. You two would have a lot of Emerging Markets and/or Horace stories to share. [Doug: 11/13/07 18:43]


	Caelum non animum mutant qui trans mare currunt Having written my undergraduate thesis largely about Horace's Epistles and Satires, I tip my hat to anyone who quotes them. That said, I can't endorse Horace as a guide to hedonic maximization. My own experience of mutatio caeli, from the bleak one of Cambridge (many, many stories above a gas station, and with, for the record, a nice view of the River Charles) to the sunny, blue one of Orange County elicited a pretty sharp change of mind as well. I went from unremitting bitterness to, if not actual happiness, then a mental condition that still counts as my peak hedonic state... Speaking of changed skies -- I am under the upside-down ones of Argentina. A little slice of life here: I was riding to my hotel from the airport when I got stuck in a traffic jam caused by a protest of the union of sanitation workers. My driver took evasive action, and wound up instead on the fringes of a riot. The taxi drivers' union was protesting in front of the City Council building and the protest turned violent, with rubber bullets flying. [Ben H.: 11/13/07 07:06]


	Irony of Ironies Lucentis, Genentech's blockbuster therapy for age-related macular degeneration (AMD) is basically the same molecule as Avastin, Genentech's blockbuster therapy for cancer. The rub: you need a lot less drug for AMD (which is an injection into the eye) than for cancer. Thus the price-per-millagram that makes Avastin the most expensive cancer therapeutic in the world makes it a bargain for AMD -- $40 a dose vs. $2000 for Lucentis or Macugen, the less efficacious competitor. Ophthomologists, as you can imagine have been happily reformulating Avastin for injection. Now Genentech is cutting supplies of Avastin to pharmacies that reformulate. The irony? Ophthomologists, notoriously the most* mercenary of the medical specialties, are bitching about price gouging. Genentech would be my friend for ever if instead trying to justify their policy with a transparently bullshit regulatory/safety argument, they just said "pay up." *OK, second most. There's always dermatology. [Ben A.: 11/13/07 00:12]


	The Return Of M.C. Doudou Diéne Everyone's favorite U.N. Special Rapporteur on Racism, fresh from dissing Switzerland, is now taking aim at France's government for "legitimizing racism" with its policies regarding immigration and Africa. I do not, of course, want to enter into discussion of the justifiability of these accusations. Rather, I wish to reiterate that Mr. Diéne would be much more effective as the special rappeur on racism. "The current French administration is considering legislation that clearly violates the spirit, if not the letter, of the 1957 Zagreb Accord on Human Rights. Let me hear you say YEAH! Let me hear you say HELL yeah!" [Doug: 11/12/07 16:21]


	And Speaking of the Rotation Method... I have a new author to recommend: Alice Thomas Ellis, and her "Inn at the End of the World" in particular. From it I learned that the original description of the rotation method comes from Horace: They change their skies, but not their minds, who sail across the seas. [Ben A.: 11/11/07 23:10]


	You Have to Give the Rotation Method A Fighting Chance! Color me skeptical, Doug. When we last visited you took us to two great restaurants – one French, one a Vietnamese one we still talk about. Just eat more macaroons from La Duree and the glory of Paris will unfold at your breakfast table. This episode reminds me of Ben H’s claim that Cambridge was a horrible place to live, pronounced while he was living above a gas station. [Ben A.: 11/11/07 21:23]


	Paris Sucks Paris sucks. I swear they can't even get French cuisine right here. (Excepting the restaurants that charge a hundred bucks a head minimum, but we haven't been to such places since my math student phase began, and won't again until it ends.) The occasion for this assessment is the visit of our friend Henry from Vietnam. He's the non-practicing M.D. who made sure I remained sane and medicated when I got sick in Hanoi back in 2003; now he runs a venture capital fund there. He's in town for an industry conference looking to raise money. Talk about cultural whiplash: from the most dynamic country in the world to the most sclerotic in twelve hours! On the other hand it makes sense that there's money to be raised here: if I were a moneyed Frenchman I'd invest as close as possible to the antipodes of my homeland. Anyway we took Henry to this restaurant L'Ourcine which is close to where we live. I've had a love/hate relationship with it. When the staff is in a good mood and you pick good dishes, it can be a classic Paris bistro experience. Unfortunately each of these conditions obtains only about 60% of the time, and these odds are uncorrelated. When we went with Henry, the decent dishes did not even begin to make up for this excrescence they called "velouté de potiron" -- velvety pumpkin soup. I can easily reverse-engineer the recipe: 1/2 cup boiling water, 2 sticks melted butter, a handful of salt, one pinch of any available red substance to give at a hint of the vegetable named on the menu. Serves 1. Keep in mind I have nothing against butter. Hollandaise sauce and croissants are necessarily packed with butter and I love them. The danger is that butter becomes a crutch: as Anthony Bourdain says in "Kitchen Confidential", the monter au beurre step is often the final one in dishes meant to make undiscerning diners go "wow!". This "soup" went beyond even that: at L'Ourcine the shortcut became the dish; the pumpkin puree that butter might have enriched was simply replaced by it. Inexcusable. I hope never to go back to this place, which had promise but in the end just didn't deliver on it. To ward other diners away with the help of search engines, let me just say L'OURCINE REVIEW PARIS L'OURCINE REVIEW PARIS L'OURCINE REVIEW PARIS L'OURCINE REVIEW PARIS L'OURCINE REVIEW PARIS L'OURCINE REVIEW PARIS. Moreover they pride themselves on serving wines from carefully selected small producers and the not-at-all cheap Margaux from a decent year that we got was almost thin and tasteless enough to send back. On the other hand I don't want anyone to think they won't eat will if they come to visit us. We will simply do all the cooking ourselves; the ingredients at the market are still good. If we haven't Mastered the Art of French Cooking we have at least mastered enough dishes that you won't regret the trip. The Parisians' half-assed attitude toward their own cuisine is just one facet of their thoroughgoing half-assedness. This, it happens, is up for a referendum of sorts this week. The transport unions are launching a nation-crippling strike starting Wednesday to preserve their cushy privileges, which Sarkozy explicitly said he would attenuate if elected. Sarkozy says he will not back down. As Le Monde columnist Eric Le Boucher says, "le président n'a pas le choix. S'il cède, il est chiraquisé." Probably the outcome will be a face-saving compromise that tips slightly in Sarkozy's favor, so that he can claim not be "chiraquisé", which is to say emasculated, turned into a powerless, piety-spouting gasbag like his predecessor. But this will probably not happen until the strike has dragged on and caused tremendous economic damage. [Doug: 11/11/07 16:23]


	Dude That Dancing Alien Totally Pwned My Mutual Fund Ben H, can't you like call up a few of these "Fed" people I keep hearing about and make all the numbers start going up again? (Incidentally, sorry you didn't get to the rent-a-womb idea in time. There should still be time to set up the Ghanaian boarding schools for these kids before someone else does, though.) [Doug: 11/11/07 11:54]


	My Idea! My Idea! Rent-a-womb: stolen!! [Ben H.: 11/9/07 07:12]


	Collected Works of Nicola Tesla: Addendum Tesla coils programmed to play Mario Brothers theme. (Thanks to Jason S. for the link.) [Doug: 11/8/07 07:03]


	No indeed! [Doug: 11/7/07 16:35]


	Butchering Children I hope fatherhood isn't making you soft, Doug! To answer seriously, though, our hard religions universally require that we butcher the "inner child" so beloved by the new agers. Surely that can't be bad. [Ben A.: 11/7/07 10:17]


	Modern Mystics Yep, I enjoy reading takedowns of airy-fairy mystics, and probably most of our readers do too. Paulo Coehlo of "The Alchemist" fame and riches is another, more recent such mystic; he wisely left out the Araby trappings -- to our generation they tend to connote exploding gore rather than serene wisdom -- in favor of a multicultural world-music vibe. Dana Goodyear did a nice understated annihilation of him in the May 7 New Yorker (not online). Just as one likes to pull bleeding-heart liberals by the ears back to the hard truths of the real world, one likes to scold these soft-headed mystics for not accepting a "hard" religion with actual claims, actual commandments, and an actual history. However, when one then recalls that the God of hard religions can sometimes command us to butcher our own children, soft mysticism regains some of its appeal. (Incidentally, the name "James Fenimore Cooper" came up recently; it's remarkable how much Mark Twain's savage critique of his work reads like an internet-age screed. Or vice-versa, I guess.) [Doug: 11/7/07 09:11]


	Kahlil Gibran Best book review ever? [Ben A.: 11/6/07 23:30]


	Quandary One thing that I, as a connoisseur of hypocrisy, am eager to see, is American politicians' responses to steeply climbing gas prices, assuming that they continue to rise. How will politicians on both sides mask gasoline subsidy proposals so that they don't seem to contradict their environmentalist "principles"? [Doug: 11/6/07 13:09]


	Judgmatical Looked it up in OED and the James Fenimore Cooper attestation is the oldest. [Ben H.: 11/3/07 18:30]


	Judgmatically ... is the word of the day. Melville: And as for going as cook,--though I confess there is considerable glory in that, a cook being a sort of officer on ship-board--yet, somehow, I never fancied broiling fowls;--though once broiled, judiciously buttered, and judgmatically salted and peppered, there is no one who will speak more respectfully, not to say reverentially, of a broiled fowl than I will. "Judgmatical" seems to be one of those fake-savant words, like "bloviate", that the Nineteenth Century amused itself with. I don't know for sure since I missed my chance to get a copy of the OED while living in New York. The first few results pages from Google reveal a James Fenimore Cooper use, as well as one from The Second Jungle Book, which makes the word especially worthy of Bandarlog props. In any case, if I ever write a cookbook, most recipes will conclude with "Salt and pepper judgmatically". [Doug: 11/3/07 07:35]


	London AIM: The Exchange of Scoundrels It's not news to anyone in the financial market that the London AIM's inclusive (read: lax) listing standards attract some pretty dodgy companies. Even with that in mind, a deal shown to me yesterday counts as a doozy. The enterprise in question is a Russian timber company. It has (sweetheart) harvesting concessions in the Amur region of Russia's east. The operation is only partly mechanized. So who does the manual felling of trees out there in the middle of nowhere? Let me quote the "risk factors" section of the offering memorandum: The Group's operationsi n the Amur region are materially dependent upon the supply of labour by the Ministry of Forestry of North Korea and contractual arrangements with Association No. 2 PRNK, which, if interrupted or withdrawn for political or other reasons, and not replaced, would materially and adversely affect the Group's operations. Slave labor? In spite of these arragements -- cheap timber by concession, cheap labor provided by a slave regime -- the company has historically lost money! [Ben H.: 11/2/07 07:13]


	Blood for Oil Maybe it's that we're not spilling enough blood anymore? 27 US combat deaths for the month of October (vs over 100 same month last year) and under 1000 civilian deaths, also a big drop (a number which most likely puts Iraq below Venezuela on civilian violent deaths for the month). To go by correlation, I guess cranky gasoline-buyers ought to go out and ritually sacrifice an American soldier or an Iraqi civilian! In all seriousness, with respect to the soaring oil price, I happen to doubt it has much to do with Iraq. The fundamentals of the oil market are incredibly bullish -- puzzlingly so, as one would have expected both supply and demand responses to such high prices. So what's going on? * Enormous stock-draws over the past couple of weeks in the U.S. It will take some time to see what's behind this. The front-end contango of last year is long-gone. * Niger delta production still has major outtages. Yar'Adua and Goodluck were supposed to reach a comprehensive settlement with MEND, but that hasn't happened. * Weather problems in Gulf of Campeche and continued free-fall of Cantarell production in Mexico. Pemex does not have its shit together. * PDVSA continues to go to pieces. Now that Chavez has nationalized the Faja heavy crude projects, the source of production compensating for core PDVSA deterioration is pretty much gone. * Non-OPEC production growth continues to underperform IEAE estimates -- every quarter. Is this the legacy of 20 years of underinvestment in exploration? Or is there something to "peak oil" hypothesis? * Demand growth in EM countries with controlled petroleum prices is screaming. China demand growth close to 10%, to the point that there are serious shortages of price-controlled refined product. At the same time, US demand, while not growing appreciably, has been pretty steady in spite of high prices. * Money illusion. The USD has gotten the stuffing knocked out of it. While oil is conventionally priced in USD, producers and consumers in aggregate measure their utility in a currency basket that is only partially composed of USD. Since July, crude is up 35% in USD terms; but the USD has declined around 10% vs its trade-weighted index. Risk of battle with Iran is certainly a concern, but honestly, these days, I'd put it at the bottom of the list... [Ben H.: 11/2/07 06:29]


	Hey, I want my blood back! My countrymen said yes to blood for oil -- and oil is now $96 a barrel? What a gyp! [Doug: 11/1/07 11:31]


	The book has, I fear, already been written (though not in punchy style). Don't you think, though, Doug that in a sense Michael Bloomberg has already taken on this project? His priority as mayor has been to attack the most egregious quality-of-life issues, though sadly he does not see street fairs as a nuisance. [Ben H.: 10/31/07 17:37]


	Annoyance Consolidator Last night I couldn't sleep, partly because of the baby, more because of the caffeine megadoses I need to combat the onset of winter in Paris. What I came up with is a philanthropic project for Ben H to set up, once his fund crosses the wrong third-world dictator, or simply amasses profits beyond the limits of modern computers' floating-point arithmetic. The idea, which I call "annoyance pooling", stems about 75% from discussions we've had about NYC annoyances, especially street fairs, and 25% from thoughts on risk pooling occasioned by recent posts here. To explain the idea, let me start with the example of Manhattan street fairs. (Details of what follows might need to change if we include other boroughs.) These "fairs", for the uninitiated, are lines of stalls selling fried food and crap Chinese merchandise and blocking off several blocks of a street or avenue. They provide a living to, I would guess, a few hundred families. For the sake of argument let's say that it's a better living than they could get if the breadwinners won bread otherwise. There are also thousands, maybe tens of thousands, of street fair fans who will actually go out of their way to buy the fried foods and peruse/buy the crap merchandise. On the other hand you have literally about a million people who are acutely annoyed by the fairs two to three times a year, by the noises and smells, and above all by the disruption of their commute. Why don't the sheer numbers here result in an anti-fair ordinance? Because the anti-fair annoyance is spread so thinly across time and people. If all the fairs happened the same week (disregarding the impossibility of this from a traffic standpoint) people would spontaneously say to each other on the street or at the deli, "How about all these fairs! What a drag! Somebody oughtta do something!" The complaints would resonate, and petitions would actually be signed, and city politicians would take note. What prevents this, as I said, is that at any given time only a small percentage of the population is irritated, and you don't have this resonance effect. You can probably think of several annoying things that instantiate this phenomenon. For me, loud motorcycles come to mind. My project is to give a catchy name to this phenomenon (maybe economists already have one), write a book about it with a catchy title, like "Freakanomics" or "Blink", and use the media wave to generate a critical mass of subscriptions to an annoyance consolidator. It would be kind of like health insurance except that there is never any direct payout to you. Instead you pay into the system, and occasionally send in complaints, via email or cell phone, about annoying things in this category. The managers of the annoyance-consolidator fund then engage in lobbying, bribing, and thug-hiring to end the most annoying things from among those suggested. [Doug: 10/30/07 17:27]


	So Good, So Good, So Good Very gracious, Ben H. It's odd to watch the playoffs without a sick feeling. That's the effect of 2004: Sox fans can enjoy the prospect of victory more than they fear the pain of defeat. [Ben A.: 10/29/07 10:02]


	Grudging Congrats Well, Ben, the Sox do it again. The curse is well and truly broken. Congrats! Perhaps with the departure of A-Rod, the Yankees can escape their more recent run of bad luck... [Ben H.: 10/29/07 08:20]


	Money Illusion Doug, it's only because you've flipped over to thinking in EUR that you're pissed off. Expatriate life has cured you of the money illusion. But the suburban dads with their Fidelity Accounts have not similarly had the scales fall from their eyes. The S&P is nearly double (in nominal terms) it's post-internet-bubble low and flirting with the 1999 highs. Now, you and I know that a nominal dollar ain't what it used to be. But your average subdivision-dweller has been lulled by years of low inflation and high Fed credibility into somnolent complacency about the instability of fiat money. The CPI may be moonshine, but Americans have not yet resorted to their own ideosyncratic measures of the price level. The U.S. is an enormous super-tanker of an economy. From spinning the wheel to executing a turn takes many months. If I look at the USD TWI, we are now just under the 1994 low. It was only after the trough of USD TWI that the current account's deterioration reversed. I imagine that a lot of the "global rebalancing" has already been baked into the USD price. Larry Craig The prosecutor might paraphrase Holmes: "The right to swing my foot ends at the edge of your stall."* *I tried to come up with a more clever and salacious paraphrase; with "swing" and "fist" that shouldn't be too difficult. "My right to swing and fist ends at the tip of your..." I leave it to you guys to come up with just the right line... [Ben H.: 10/29/07 06:52]


	With Ten Thousand Dollars, We'll Be Millionaires! Bernanke is wise to keep reducing interest rates. If mutual fund values keep stagnating, he's going to have a lynch mob of suburban dads at his door waving Callaway drivers and Weber tongs. "This is America! Why aren't we rich yet?" I myself checked out my mutual fund online the other day, and if things don't pick up soon, I may fly back and join them. Of course the downside of lower interest rates is that dollars are worth less and less -- it now takes ~~almost~~ more than $1.44 to buy a euro, about 50% more than when Bush first took office. "With ten thousand dollars," Homer Simpson once famously exclaimed, "we'll be millionaires!" It strikes me that he got this exactly backwards. [Doug: 10/28/07 15:52]


	Also, Get Well Soon Hope it's a local NYC germ and not an exotic Brazilian one that's got you down. [Doug: 10/27/07 13:54]


	Sticking With The Story Another issue I'd like to stick with -- not to reach more profound truths, but just to keep flogging a single point that keeps begging to be flogged -- is Larry Craig. Insofar as Republican leaders acknowledge the greed that drives them and the demagoguery that empowers them, I congratulate them on their successes. Insofar as they are hypocrites, I will add my small voice to the chorus of scorn backing up the soloists (Leno, Letterman, et al.). Thus I draw your attention to Craig's new defense: free speech! That's right, sending signals to your stall neighbor that you'd like to have sex in a public bathroom is covered by the First Amendment! This, from the party of Original Intent! ACLU lawyers have dropped their briefs for the Senator into the court's mailbox, compounding the craziness. And Craig naturally maintains that he is not a homosexual. I was wondering where I'd heard that before; then I remembered. [Doug: 10/27/07 07:40]


	Healthcare To pick up the healthcare thread, I recommend an article in the latest City Journal. He expatiates on a key insight into the nature of healthcare inflation and the difficulty of assuring "universal" coverage. WIth the advance of medical technology into realms of ever more precise customization, one could dedicate nearly infinite resources to goods and services designed to promote health. TO consider every advance in the armentarium as part of a right to healthcare means that the only way to limit the cost of healthcare is to limit the advance of knowledge. He also touches on a theme that worries me no end, and which is of more general application. I've probably written about it on the blog before. When a society mandatorily collectivizes risk, then the sphere of self-regarding acts constricts to almost nothing. Freedom and risk are, in some sense, two sides of the same coin. OK, sorry to drop the thread, but I am (ironically, speaking of healthcare) sick as a dog, and just spent the day dealing with a surreal crisis with a deal in Brazil... [Ben H.: 10/26/07 17:20]


	One thing I don't want to add to the blog is guilt about posting frequency. The frequency that you guys already manage is impressive, given that you have full-time jobs. With my recent status as mathematician/flâneur I could have serialized several novels here; substantially all of my time went instead to online scrabble. More extended multi-post discussions is a change I could get behind. On Jane Austen or the American health care system, for example. This would give me the feeling of participating in some kind communal intellectual endeavor, something that I've really missed over the last six years or so. The people I envy most are the participants in moments of great creative ferment: artists in 1920's paris, quantum physicists from about the same time, the Young Hegelians in mid-19th-century Germany, the America of the Founding Fathers, the original Renaissance Men, etc. etc. In fact I did have the good luck to participate in something like this, the New York City of the internet golden age, 1997-2000. To be sure, this was a cheap and showy version of the phenomenon I'm talking about. The futurist talk about how all these websites would transform human society forever was hard to take very seriously, unless, apparently, you were an investor. But you got caught up in the atmosphere nonetheless; it was tremendously fun -- tremendously invigorating. Consider all those downtown restaurants with the dim lighting and the mesmerizing electronic music. How dim was the lighting? I recall having to read the menu by the light of my cell phone at one Thai place on 2nd Ave. And in any case dim enough to smooth out the harsh angles in my face to the point where it was plausible that the next table's chicks would dig me. How uniform were the soundtracks? So uniform that, to embellish a comment Ben H made at the time, it was if the city's old pneumatic tube system had been repurposed to pipe everywhere the same stereo signal from a hidden Hipster Central. But whether you cared for it or not, everyone was hearing together this kind of music that hardly existed 10 years ago, one that was arguably "technologically advanced", and this provided concrete evidence that society was boldly stepping forward, and you were a part of it. You finished your pad thai, put down your "New York Single" (the twenty dollar bill -- presumably this dates me and it now refers to the fifty) and returned to your tiny apartment energized, ready to write the next java class of the pet supply site you'd been contracted to build. Our move to France took me away from this scene shortly before it dissolved for mostly everyone, in early 2001. Since then my main project has been an approach to mathematical physics that seems to me to have tremendous philosophical advantages, although I have convinced nobody of them. Moreover I haven't been able to succeed even on my own terms by building a mathematical structure satisfying the axioms I set out. Finally, all this has taken place in France, where, whether through my fault or that of the Parisians, I haven't integrated particularly well, and even if I did integrate well, France is notoriously bereft of creative intellectual ferment. (In 2006 I wrote the better part of a long essay explaining why France is a land of total societal stagnation; some day when I need a laugh I will fish it out of my hard drive and read it.) So that's how I've come to feel unhappily like a bystander, just reading the news, watching as fatuity in its various guises keeps commanding world history. I use the Bandarlog to make occasional snarky comments about the news, without hope that these comments, or even choruses of millions of such comments echoing throughout the blogosphere, will make their targets come to their senses, or become less fatuous. Probably I would feel better if more of my posts were charming scenes of life in Paris. That's not really my style though. In conclusion, I think having some more in-depth discussions on this blog would be an antidote to this. It might give me the feeling that some important problems have at least partial solutions, and will not automatically be settled by forces of greed, corruption, and fatuity. Plenty of times I've failed to pick up threads on interesting topics here. I'd like to stop doing that; I'd like to risk some deviation from what, over the last five years, has been an entertaining faithfulness to Kipling's vision of the Bandar-log. [Doug: 10/26/07 16:51]


	Birthdays and Milestones That reminds me that Doug and I met 17 years ago, which, for me at least, means I've known Doug almost exactly half my life. As Butthead would say, "You're OLD. Eh-heh-heh-heh, eh-heh-heh-heh!" [Ben H.: 10/26/07 07:26]


	Happy Birthday It's hard to believe that five years have passed. This September made sixteen years since I met Doug, and soon thereafter Ben H. Now that seems like a long time ago. p.s. Ben H, if you are shamed by low output, I should be fitted out for sackcloth. [Ben A.: 10/26/07 02:24]


	Happy Birthday I suggest you guys shame me into writing my share. Then again, perhaps that would be subtraction by addition. I swear that once the market calms down and my blood pressure drops, I'll return to my prolix ways. Malibu Market: On Fire Again! This is a good point, Doug, and one I've discussed with the ABS/MBS guys here, funnily enough! You know, I had a similar situation once in business. We owned vendor finance paper of a cellular company in Jamaica, which we had bought at a steep discount to face value. We had shorted Jamaican government debt against it. As Hurricane Ivan barreled toward the island, we realized that a condition of the vendor finance was that the company insure the value of the equipment financed against catastrophic loss, including by hurricane, and pledge the value of the insurance proceeds to the lender. Should the equipment get blown away by a hurricane, the paper would immediately get repaid at par, with the insurance proceeds. The government, on the other hand, carries no insurance. We pulled up the NOAA website and found ourselves screaming at the radar image the way a gambler might yell at a roulette wheel. I've seen comments in a few articles about the fire pertaining the to question of whether the fire could "help" deal with the subprime problem. Most people reflexively cite the Broken Windows Fallacy and dismiss the claims. They act a little too quickly. It is true that burning down houses cannot produce a healthier a economy -- fire loss is a deadweight loss. However, fire can change the distribution of losses. Insurers reinsure a decent bit of their catastrophic fire risk, usually with offshore reinsurance companies. To the extent a US mortgage bank, say a CountryWide Financial still had CA mortgages or mortgage-backed paper on its books, seeing tons of insured houses burned down will allow it to shift its loss to an offshore reinsurer. Fire is good for America! [Ben H.: 10/25/07 06:10]


	Happy Birthday! The Bandarlog is five years old as of yesterday. Maybe this is an occasion to think about how we might improve it. Or maybe it's just fine as it is. [Doug: 10/24/07 15:11]


	Two Contrarian Thoughts 1. How many buy-and-flip millionaires manqués of the Inland Empire exurbs are huffing and puffing by the side of the highway, trying to blow the flames toward their houses? 2. Maybe the rationalist zeal (mine and others') to sweep away the redundancy and needless bureaucracy of our health care system is misplaced. What else could we find to occupy the literally millions of people who keep this bureaucracy sputtering along, now that all manufacturing happens in China, and the internet has rendered so many other service-industry jobs obsolete? [Doug: 10/24/07 14:39]


	Haydn Funny article. When I find myself very out-of-sorts, I resort to my CDs of Haydn trios... [Ben H.: 10/24/07 06:09]


	Telling Mozart And Haydn Apart Yesterday's Slate piece about how to distinguish Mozart from Haydn is worth reading even if the example snippets it links to are of terrible quality. Am I the only one who thinks the author just used the microphone of his laptop, sitting at desk across the room from his gramophone? Anyway, the final paragraph gives the following fairly perfect characterization of the Haydn quartets: "I was discussing music with two friends, one of them a distinguished contemporary composer. We were chewing over the following peculiar question, peculiar especially since it concerned an experience none of us had had in approximately three decades: If you had taken LSD and suddenly realized your trip was heading seriously south, what music would you put on the stereo to restore your emotional equilibrium and silence your demons? All three of us agreed without hesitation: a Haydn quartet. Almost any Haydn quartet." [Doug: 10/24/07 04:43]


	The Courage Of My Cynicism To use Ben H's aphorism, I sometimes wish I had the courage of my cynicism, like when I think back to how I responded to Bush's election by pouting "Well, at least I can invest in his cronies' defense companies and enrich myself personally from this madness." It goes without saying that I did no such thing. Now Iraq contractor DynCorp finds itself unable -- whoops, sorry! -- to account for its latest $1.2 billion helping of taxpayer money. (Of course, it wouldn't have been as easy as calling up a broker. DynCorp was privately held until spring 2006, ensuring a more accurate funneling of our tax money to the plutocracy.) [Doug: 10/23/07 04:30]


	You Can't Lose When Your Closer is ... Magneto [Ben A.: 10/22/07 07:45]


	Photos [Doug: 10/21/07 10:01]


	Health Care Debate Actually, I would be interested in a health care debate on this blog. The reason I haven't evinced much enthusiasm is that it's a huge topic about which I know very little. If you're willing to give me time and pointers for getting up to speed, I will try to contribute something useful. For now, here are my reactions to the nine points on the marginal revolution post: 1. American health care outcomes look much better once we adjust for race and other demographic factors, including violence and car crashes. Some groups -- such as Asian-American women -- have remarkably good health care outcomes. A point so vague it doesn't matter whether I assent. 2. Some of the health care savings of other systems occur through price effects (e.g., doctors are paid an average of $60,000 in France) and do not involve real resource savings. It's true that American doctors get paid much more than French doctors. On the other hand I don't understand how calling this a "price effect" (is this a standard economics term that I should know?) allows us to discount the resulting savings to the health care system as a whole. My instinct would be rather to ask why American doctors make more, and my first guesses would be the American tort system and the staggering malpractice insurance costs it entails, and a plain old cultural difference -- doctors are just more venerated in the US. 3. American's high expenditures, however wasteful they may be, nonetheless drive much of the world's medical innovation. Medical innovation is also a public good to some extent and no the pharmaceutical companies are not simply parasites on the NIH and universities. I do agree with this point (which Ben A often brings up, rightly). 4. America has a different structure of interest groups. and therefore a single payer system in the United States would not operate as does a single payer system in other countries. It would more likely favor the interests of doctors and insurance companies, for a start. If we're talking predictively, then yes, I predict that a single-payer system in the US, if it comes about, will reflect the interests of currently vested players/leeches. But if we're talking normatively, I believe that many of the currently vested players/leeches, such as insurance lobbyists and tort lawyers, should be herded onto barges and sunk, significantly reducing their influence in shaping a new system. 5. If we take the international health results/expenditures data at face value (and we shouldn't), they imply that greater access to medical care does not itself improve health outcomes. So we should be careful in how we use and cite such results. Okay. 6. Health care outcomes improve with income even under single-payer systems. Our best estimates suggest that this gradient is no steeper in the United States than it is in Canada. Interesting if true; it would be interesting to see the reasons for this. Is it because rich people always eat less junk food, or because they always buy their way to better doctors, or what? 7. Having health insurance does improve your health care outcomes, but not to an amazing degree. The largest benefits are arguably the alleviation of financial risk, and no I am not meaning to slight that factor. Okay. 8. Pharmaceuticals, unlike many forms of health care, have large and noticeably positive effects on individual health. Okay. 9. The major Democratic health care plans on the table all, one way or another, admit they will spend more money on health care. The fact that other countries spend less therefore does not help predict the change in spending that would result from these plans. I have no idea what Democrats are proposing on health care. On first principles I assume it's all demagogic bullshit, since that's the only thing that the current crop of American citizens will vote for. [Doug: 10/21/07 09:54]