22-10-2002 18:36									#421
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I doubt anyone here knows what I am talking about, but there is a character in Up Pompeii, an old british sitcom, called the soothsayer. She enters every episode with the catchphrase "woe, woe and thrice woe" (said very dramatically).........guess who she reminds me of?

	22-10-2002 18:39									#422
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I really got me a Cassandresque reputation, it seems...

	22-10-2002 20:11									#423
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quote: Originally posted by Adam Smith Proposed inscription for Roland's tombstone.

On another topic, the self-help book How Not to Run an Economy has just been published.

	22-10-2002 22:52									#424
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I thought you were talking about "Debunking Economics"....

	30-10-2002 23:35									#425
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Really, am I overreacting about this Japan stuff? Does anybody have a context in which to judge how severe is the situation?

http://news.ft.com/servlet/ContentS...p=1012571727092

We would have thrown the bums out after the first double-dip.

Once the dollar depreciates by another 10%, Japan could be really hurting.

Last edited by DanS on 30-10-2002 at 23:47

	31-10-2002 13:14									#426
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"We would have thrown the bums out after the first double-dip."

We will have ample opportunity to verify this hypothesis.

The main problem is with the corrupt LDP fiefdoms. And I'm not sanguine about the US situation either in that regard - just look at how the Bushies are torpedoing the SEC reforms.

	31-10-2002 14:04									#427
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RATE CUT! They're speaking of Another RATE FREAKING CUT

	31-10-2002 14:13									#428
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Alldaway down to zero. The hilarious thing is that they still have such an ample supply of braindead bulls trying to rally on this.

	31-10-2002 21:06									#429
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Saras: Talk of a half point. Don't know how serious it is, but you gotta keep people spending until the ROW is healthier (whenever that will be--2005?).

Roland: Re the LDP, I can understand it. But Americans (the only system I can compare directly) would be throwing the captain and crew overboard that got them in a similar situation. Bush '41 got thrown out after a mild recession, even though everything else he did was successful. Wouldn't the Austrian public do similarly?

So the LDP must think that they're invincible or something. Not a good situation. Depressing to watch, especially since the Japanese have a lot going for them otherwise.

"just look at how the Bushies are torpedoing the SEC reforms"

Webster isn't a name you would throw in the hopper for torpedoing. He's one of the troubleshooters of the Washington establishment. Of course, he's an attorney. Respected bipartisan. Competent, but unfortunately not an accountant. Has held just about every kind of high profile job in Washington (FBI, CIA, judge, etc.). Was looking for work.

The whole surrounding brouhaha was due to the Dems overreaching and breaking a Washington taboo--leaking a choice before it was final and then trying to ram the choice through by shear force of embarrassment. 9 times out of 10, the president will feel the need to choose somebody else, if only to protect his perogatives.

"The hilarious thing is that they still have such an ample supply of braindead bulls trying to rally on this."

As stated above, it's entirely rational, once the bonds are run up. Sten got out of his. Now what is he gonna do with all that cash?

Last edited by DanS on 31-10-2002 at 21:26

	31-10-2002 21:33									#430
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"But Americans (the only system I can compare directly) would be throwing the captain and crew overboard that got them in a similar situation. Bush '41 got thrown out after a mild recession..."

And replace him with a Democrat. Which is pretty much the same as changing power between the LDP factions. Apart from a short interlude all it caused was rotation among the LDP factions....

"Wouldn't the Austrian public do similarly?"

We have killed politicians for much less.

"Webster isn't a name you would throw in the hopper for torpedoing."

Age, agenda and background - I'm very sceptical. I also meant the withdrawing of most of the budget increase.

"Now what is he gonna do with all that cash?"

Buy lottery tickets.

	31-10-2002 22:32									#431
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"Age, agenda and background - I'm very sceptical. I also meant the withdrawing of most of the budget increase."

Agenda? Not sure what you mean there. Webster is considered a neutral. You will see that none of the Dems are attacking Webster, because by and large, they like him. They bring up the lack of accounting work, which is a fair criticism.

Age doesn't mean much of anything in Washington, unless you're senile, in which case it might even help. Background just means he's Washington establishment as opposed to Wall Street establishment. But his credentials are blue chip.

Re the enforcement budget increase, I haven't been following it too closely. Do you have a link?

I think the two biggest issues at hand are expensing of stock options and pension funding assumptions.

"And replace him with a Democrat."

I think the system of political punishments doesn't work too badly. Our political system was able to take care of the S&L ~ $1.2 trillion (?) S&L crisis.

	01-11-2002 00:51									#432
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What's he gonna do? uh, meekly buy some back! I am just following technicals for now...

FOMC is rated at an 80% chance of a cut on Wednesday by the Fed Funds futures; I think the probability is much lower than that, but it is a very minority opinion.

The big employment report is out tomorrow and a really bad number could rally bonds again. I still think the worst is behind us, and that we will have a good holiday retail sales number, but the consumer can be fickle, so who knows.

	01-11-2002 20:52									#433
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Sort of an esoteric question...

Does anybody here have a recommendation of a good, practical article or book on negotiation theory? 2 party, adversarial, forced by statute. The "failure" being binding arbitration.

The models I am using are woefully primitive. Any place to start thinking about a model would be greatly appreciated.

Oh and Pitt was home free until his latest screw up...

Last edited by DanS on 01-11-2002 at 20:59

	01-11-2002 22:12									#434
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All such models boil down to game theory, whether it be cooperative or non-cooperative.........the best reference for beginners IMO is:

Binmore, K (1992). Fun and games: A text on game theory.

Better but more advanced is:

Osborne, M and Rubinstein, A (1994): A course in game theory.

Flawless but only for the particularly ambitious (I only use this for postgrads):

Fudenberg, D and Tirole J (1991): Game theory.

For the economic historian the following articles are seminal, and paved the way for all that came after:

Von Neumann, J, and Morgenstern O (1944): The theory of games and economic behaviour.

Nash, J (1951): Non-cooperative games.

Hope this helps.

	01-11-2002 23:25									#435
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Great! Thank you!

Is there any particular one of these I should look at if I'm trying to do up a valuation of a negotiation? I have a couple of books on game theory already, including an article survey, but I could never really get into them.

Or is there an "index" to find an article describing the game I'm playing? (I take that this is a 2-person noncooperative game, in a an n-person market. Compulsory intellectual property licensing.)

Last edited by DanS on 01-11-2002 at 23:38

	01-11-2002 23:42									#436
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It really depends on what you mean by the valuation of a negotiation. The material here is certainly applicable to such problems, and they may lead you to more specific references that suit you.

Cooperative games look at equilibrium outcomes when 2 or more agents can credibly commit to cooperation. Far more interesting are non-cooperative games, where cooperation still happens, but only as the result of individual optimisation.

From what you said earlier it seems you would find the classic 2 player non-cooperative games (prisoner's dilemma et al) useful, as well as a look at some of the material on Nash bargaining between 2 individuals. It strikes me that it would be easy to assign an expected payoff on the 2 players (you can easily use a distribution if you want) should arbitration be forced, and hence see whether there is a sustainable Nash bargain that yields a higher payoff. This will depend on the relative bargaining power, the expected payoffs should negotiation be successful, and how you model the dynamics. It is far easier for non-cooperative collusion to arise if there is a repeated element to the game.

Let me know how you get on.

	01-11-2002 23:47									#437
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The paragraph re 2 player non-cooperative games gives me enough to start, I think.

Thanks again!

	04-11-2002 13:31									#438
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"Agenda? Not sure what you mean there. Webster is considered a neutral."

Washington insider. Do you really think he's there to make the market safe for investors - or make it safe for crony capitalists.

"Re the enforcement budget increase, I haven't been following it too closely. Do you have a link?"

NY Times, but IIRC you aren't registered there ?

"I think the system of political punishments doesn't work too badly."

It's close to not working at all. Especially as there is no alternative to the repubicrats in sight.

"Our political system was able to take care of the S&L ~ $1.2 trillion (?) S&L crisis."

Engineering bailouts has been the hallmark of US politics since 1987 at least - but that's mostly Alan's job.

	07-11-2002 00:09									#439
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US Fed move today would be a mistake. Economy is actually moving along fine and we don't need another few basis points in easing. Another ease will just make traders play the super steep yield curve and not do the corporate refinancing that is required to improve corporate cash flow. This ease won't help anyone.

	07-11-2002 00:15									#440
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Half a point!

Edit: They must have been seeing aweful numbers for the holiday season. Otherwise, why cut, when the GOP might have further stimulus in mind?

	07-11-2002 00:45									#441
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I sympathise with Sten's point, but a rate cut was the correct decision. After all the purpose of monetary policy is to close the output gap at NAIRU, and rightly so. 50 basis points gave me and my colleagues something to talk about over coffee though.

	07-11-2002 13:33									#442
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Does monetary policy work against the follow-up to an easy-money boom ? I don't think so, but the fed has set up a nice macro experiment. It's a once in a lifetime opportunity to watch....

	07-11-2002 21:03									#443
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What does everybody think of the ECB's actions (or inaction)?

http://news.ft.com/servlet/ContentS...p=1012571727092

For my own unsophisticated part, this seems like a strange zero-sum game for Germany. Growth in other parts of the EU necessitate slow growth in Germany.

	07-11-2002 21:08									#444
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"Growth in other parts of the EU necessitate slow growth in Germany."

Where do you get that ?

As for the ECB they should have cut this time. I could understand their policy so far as they seem to have a more positive take on the US economy than me (well, that's not really difficult to have, is it? ).

Btw, until recently the leading indicators looked pretty good, but that was in part fake due to the role of the US PMI in the FT and Handelsblatt indices. Now that they have turned I expect an ECB cut in December or January.

	07-11-2002 21:09									#445
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Welcome to the world of fixed exchange rates when the countries involved aren't anything like an optimal currency area.

The ECB should have cut anyway though......that's a different point. Just how long a dumbass symmetric 2% target can be maintained I don't know; I can't help but think the 'democratic deficit' sometimes talked about in conjuction with EU institutions is partly to blame here. I don't think what is quite obviously a stupid implementation of modern central banking practice could survive otherwise.

	07-11-2002 21:10									#446
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Let me be the first to say that these were interesting cross-posts.

"Where do you get that ?"

If Germany were taken alone and with inflation at a 1.2% rate, they should be cutting rates early and often. No?

"Just how long a dumbass symmetric 2% target can be maintained I don't know"

Well, the German government was maintained in this environment. I was quite surprised about that.

I expected some extra fiscal stimulus to balance this stuff out.

Last edited by DanS on 07-11-2002 at 21:17

	07-11-2002 21:14									#447
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"...aren't anything like an optimal currency area."

Good enough IMO, but let's not have another OCA debate...

"Just how long a dumbass symmetric 2% target can be maintained I don't know; I can't help but think the 'democratic deficit' sometimes talked about in conjuction with EU institutions is partly to blame here."

As you've touched it... why exactly is it "dumbass", what do you mean by "symmetric", and what has it got to do with "EU institutions" ?

Dan:

Inflation. Not growth.

	07-11-2002 21:16									#448
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Multiple DanS-ing. Arghh!!!

	07-11-2002 21:19									#449
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Does a zebra change his stripes?

"Inflation. Not growth."

What do you mean here?

	07-11-2002 21:24									#450
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Inflation in other parts of the eurozone makes it difficult to cut rates, not economic growth.

As a more general point, rate cuts won't have much effect anyway. Also in contrast to the stock market whiners, there is no lack of liquidity. But I'd still say with what I think will come from the US, ECB rates should be 100 bps lower....