Quote of the Day - Matthey

'The Old English Common Law doctrine of caveat emptor - "let the buyer beware" - was accepted in our colonies and established in the main body of American law. Up to 1933 the buyer was supposed to be able to look out for himself. The seller was permitted to tout his wares as long as he didn't blatantly misrepresent. Our heritage was one of rugged individualists who could take it as well as give it. However, not only Mr. Roosevelt but the people of this great country, shocked by the excesses of the roaring twenties, for which many groups were to blame, said "This cannot happen again." So we changed from the concept of caveat emptor to the doctrine of caveat vendor - "let the seller beware." This fundamental change in our basic thinking, in our mores, took place in but a few years.'


-Dean Matthey, Fifty Years on Wall Street, 1966.


via Michael Lewis, The Money Culture

Quote of the Day - Malkiel

'Information is disseminated too rapidly today, and it gets reflected almost immediately in market prices. By reacting so quickly, the analysts make it extremely difficult to realize a significant profit in the stock market on the basis of fundamental analysis.'


-Burton Malkiel, A Random Walk Down Wall Street, 1973.

Shame on the Atlantic

I think that Elspeth Reeve should stick to covering weddings. This tripe over at the Atlantic (?!) claims that the fact that a primary challenger to Barack Obama in Arkansas is to the left of Mr Obama is illogical. This, she sputters, is because one John Wolfe supporter claims he represents Southern Democratic values. Ms Reeve thinks this means that they think Mr Obama is 'too liberal.' Ms Reeve seems to think that everything means that Mr Obama is 'too liberal.' She'll even try to raise some segregationist Democrats from the dead if that'll do the trick.

While it's nice to see that young Ms Reeve apparently took a class in mid-20th-century American politics, it's a shame that she never got to the part where all of the Dixiecrats became Republicans. Where exactly is that space on the D-R spectrum that is to the right of Mr Obama and still marked 'D?' Any Democrat with ideological differences with Mr Obama is by definition to his political left.

I had to read this screed twice, just to make sure that I wasn't missing a weird joke. Could this be the plague that Ross Douthat hath wrought? A generation of bright, young, energetic, reactionary dunderheads?

What We Talk About When We Talk About Austerity

Tyler Cowen's Alfred-E-Newman-esque protestations notwithstanding, this is, indeed, what austerity looks like. It might be easier for the likes of Cowen to recognize this plain fact if the reality borne by ordinary people in this crisis were similarly borne by those bankrolling his sort of quasi-intellectual reactionary witchcraft. So long as the citizenry must cash the checks written by the bankers over the last thirty years, there will be unrest. So-called libertarianism's goal of maintaining the status quo at all costs will likely, in the long run, cost more than anyone can imagine.


Brad Delong:

Austerity, American Style:

Paul Krugman:
Austerity, American Style: Via Mark Thoma, Antonio Fatas has a good piece on the exceptional weakness of government spending in this recovery. I thought I might add to that observation. Let’s look at real government… purchases of goods and services — from all levels of government during three recoveries: the current expansion, the Bush Boom (such as it was), and Morning in America…. Which one is different? Now, this doesn’t include safety-net spending…. But actual government purchases have been uniquely weak, largely because of budget distress at the state and local level…

EDIT: Ezra Klein lays on more data.

Quote of the Day - Shameless Age

"The Shameless Age is over only when people on Wall Street begin to care what people off Wall Street think."

"The Street is not about to give back the emancipation it has won in the last ten years from the conventional rules of social behavior. The show goes on, muted only slightly by recent events."

-Michael Lewis, Franky's Longest Mile, 1990. 

Mankiw-Reality-Disconnect of the Day

What Greg Mankiw leaves unsaid, but seems to want his readers to believe, is that executives are not really paid as much as we think they are, and that, maybe, their pay is not actually that outsized. I think he'd rather his readers not glance casually at the y-axis of the graph. That's the axis that shows the ratio of average executive pay to that of workers. If you look closely, you'll see that it is 'only' 231. It's no wonder Mitt Romney likes this guy so much.

On a related note, Dr Mankiw has got to exercise a lot more care in choosing his sources. If he keeps looking at the EPI, he may learn some uncomfortable truths.

Fact of the Day: CEO Pay:

Source. 

The relative pay of CEOs skyrocketed during the 1990s and has since fallen by about half.