Monthly Archives: December 2011

2011 in Review

2011 was kind of a busy year for me, especially during the latter half of the year when — after 10 years in the part-time consulting racket — I returned to full-time employment. It really cut into my blogging time, and I want to thank all of my loyal readers for sticking around. In any case, here at Windypundit, 2011 was the year in which:

Happy New Year everyone!

Why SOPA is Bad and What You Can Do About It

This is a great explanation of how and why the Stop Online Piracy Act (H.R.3261) is going to do a lot of damage to the Internet:

And this is what you can do about it. Make waves. Talk to people. Tell your congresscritters to vote against it.

If you want to know more, you can read more about SOPA at Wikipedia, you can see its progress at GovTrack, and you can find out more about your representatives at places like Project Vote Smart and OpenSecrets.

The More I Learn About the Mortgage Crisis, the Less I Know

I’m reading Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morgenson and Joshua Rosner. It’s an account of the collapse of the subprime mortgage market at the beginning of our current economic mess. The book tells the story at an odd level of detail: It doesn’t give a lot of details about the characters and institutions involved, but neither does it present a broad economically-informed description of what was going on.

For example, mortgage originators were making bad loans to unqualified borrowers and then selling bundles of these loans as mortgage-backed securities to Fannie Mae, Freddie Mac, and a host of investment banks. The book emphasizes over and over that these loan originators had a poor incentive to produce high-quality (or at least honestly-described) mortgages because they knew they wouldn’t be holding on to them. This is an obvious agency problem, and I couldn’t understand from the book why the investors weren’t on the lookout for it.

Yet about 2/3 of the way in, the authors mention that under the terms of the securitization agreement, the originators had to buy back all loans that were materially misrepresented and all loans where the borrower defaulted early in the loan’s term. In other words, the purchasers had sought to protect themselves from agency risks by requiring the originators to shoulder substantial default risks. In that case, why didn’t the originators pay more attention to the quality of the loans?

As it happens, according to the book, the loan portfolios were so toxic that the originators would have gone bankrupt if forced to buy them all back, which would have cut off the flow of new loans, so the investment banks didn’t force them to take a loss. But that just raises more questions: Could threatening bankruptcy really have been the originators’ plan for protecting themselves from the consequences of their poor loans? How did the investment banks not see that coming?

So far, when it comes right down to it, I’ve reached two conclusions:

(1) Unscrupulous sociopaths can make a lot of money in the financial markets, especial during the manic phase of an asset bubble.

(2) I’ve got to figure out how to get a piece of that.

Update: Not directly connected, but I’ve just noticed that Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds is available as a Kindle download for only $0.99. It’s a classic work about asset price bubbles and other types of craziness. And it was published in 1841. If nothing else, spend the 99 cents (or just get it free here) to read the extraordinary story of the seventeenth century Dutch tulip bulb craze.

A Brief Word of Advice to Mystery Writers

I’m not naming any names or spoiling any books, but here’s a plotting tip from a longtime reader: If you want us to be surprised that one of your characters is a bad guy, don’t have him quoting Friedrich Nietzsche the first time we see him.

It’s not subtle foreshadowing. It’s giving the game away.

in Writing


I spend a day away from the internet and come back to find out that Vaclav Havel died.

Update: Oh, but there’s good news too. Kim Jong Il is also dead.

Boys Beware

I generally find anti-gay bigotry disturbing, but sometimes it’s also kind of amusing. I know that’s wrong — that gay people face real threats of discrimination and violence — but some anti-gay nonsense just makes me want to point and yell, “I didn’t know they still made people like you!”

Which brings me to Rick Perry’s culture-war campaign ad:

Aside from the fact that he’s a bit mixed up about school prayer, this is just plain embarassing. It’s like that older relative who keeps calling black people “colored” because he doesn’t realize times have changed. I immediately flashed back to an infamous Sid Davis classroom film called Boys Beware about the dangers of homosexuality. The whole thing is about 10 minutes long, but here’s a taste:

At its most basic, Boys Beware is vile crap that conflates homosexuality with predatory pedophilia. Yet it’s so disconnected from our current day and age that I can’t really get angry about it. I mean, it features a homosexual man who prowls the streets trying to seduce young boys by — I’m not making this up — taking them fishing at the duck pond. I guess there weren’t a lot of gay dance clubs.

(Boys Beware‘s odd style is pretty typical of Sid Davis’s social guidance films: The subject is alarming, but it’s shot with what Ken Smith in Mental Hygiene: Better Living Through Classroom Films 1945-1970 described as “a trancelike style, stripped of anything even remotely approaching drama or human emotion.” You never even hear the actors speaking; the narrator just describes what they’re saying. I suspect’s that’s because Davis couldn’t afford synchronized sound.)

And how can you not love the line “You never know when the homosexual is about”? If I were gay, I’d wear that on a T-shirt.

I don’t really have a point here, except that to me, Perry’s anti-gay attitude seems like something from another era. I hope it seems that way to most other people too.

Death to Pennies

Here’s something I never thought about before: It’s time to stop using pennies.

Aside from its actual subject — the uselessness of pennies — this video is also worth watching because it’s a terrific example of how to make an argument. It’s clear, it’s concise, and in four minutes and 31 seconds I went from not thinking about pennies to being completely convinced they should be eliminated. They fail as money.

And frankly, the nickel doesn’t look to good either. Let’s just drop the last digit from prices and be done with it.

(Hat tip: Alex Tabarrok)