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A preacher dies, and when he gets to Heaven, he sees a New York cab driver who has more crowns. He says to an angel, “I don’t get it. I devoted my whole life to my congregation.”
The angel says, “We reward results. Did your congregation always pay attention when you gave a sermon?”
The preacher says, “Once in a while someone fell asleep.”
The angel says, “Right. And when people rode in this guy’s taxi, they not only stayed awake, but they usually prayed!”
Must Read Articles for Weekly Visitors
The Real Bill Gates – via Leadon Young – For the opening piece in our series on Gates leaving daily life at Microsoft, one goal was to give a clear picture of the Microsoft co-founder’s role inside the company, as a gauge of the impact his departure will have. As part of that, I went back through the internal e-mails turned over in the antitrust suits against the company, looking for new insights into his personality. Read on past the jump for one of the gems that turned up, showing Gates in the role of chief rabble-rouser. (Original document: PDF, 5 pages.) It shows that even the Microsoft co-founder — who champions the “magic of software” — isn’t immune to the frustrations of everyday computer users. Keep in mind that this was more than five years ago, so it doesn’t necessarily reflect the specific state of things now. At the bottom, see what Gates said when I asked him about the message last week.
The dark, dark world of marketing, advertising, and trend forecasting – via LongNow & Viceland – William Gibson’s new novel, Zero History, completes a trilogy that began with 2003’s Pattern Recognition and continued with 2007’s Spook Country. In these three works, Gibson explores the dark, dark world of marketing, advertising, and trend forecasting. Unsurprisingly, it’s pretty scary stuff. Marketing has reached such a fever pitch of aggression and insidiousness today that it’s easy to feel like we’re the victims of a full-scale military campaign of propaganda, one in which slimy guys in modern glass cubicles decide that they know exactly how all of our brains work and what we all want, all the time. What it might come down to is that they think they are smarter than us. William Gibson manipulates that feeling perfectly, and shows us an all-too plausible—and often so frighteningly accurate that it’s also genuinely hilarious—idea of what the reality of marketing could be.
Fun Profile Of: Ryanair’s O’Leary: The Duke of Discomfort– via business week – Why does every plane have two pilots?” asks Michael O’Leary, chief executive officer of Ryanair (RYAAY), the largest low-cost airline in Europe. Wearing sneakers, jeans, and an off-the-rack short-sleeved shirt, O’Leary is pontificating in his office at the company’s conspicuously shabby headquarters on the outskirts of Dublin Airport. “Really, you only need one pilot,” he continues. “Let’s take out the second pilot. Let the bloody computer fly it.” What happens if the pilot has a heart attack? One member of the cabin crew on all Ryanair flights would be trained to land a plane. “If the pilot has an emergency, he rings the bell, he calls her in,” O’Leary says. “She could take over.”
Florida’s High-Speed Answer to a Foreclosure Mess – via NYT- Florida’s foreclosure mess is made murkier by what analysts and lawyers involved in the process say are questionable practices by some law firms that are representing banks. Such tactics, these people say, have drawn out the process significantly, making it extremely lucrative for the lawyers and more draining for troubled homeowners.
Economic consequences of speculative side bets: The case of naked CDS – via Voxeu- The role of naked credit default swaps in the global crisis is an ongoing source of controversy. This column seeks to add some formal analysis to the debate. Its model finds that speculative side bets can have significant effects on economic fundamentals, including the terms of financing, the likelihood of default, and the scale and composition of investment expenditures.
Roll Risk & Convexity in the US debt market 2014 – via Nick Gogerty @ Designing Better Futures – Convexity is an outcome. Convexity when plotted looks like it goes through the roof. Hyper-inflation is price convexity. Looking at extreme outcomes isn’t as interesting as understanding the drivers that create them. please note, I am not talking about typical bond convexity, but rather system behavior outcome as convex. Most complex systems have multiple inputs, lets call them X, Y and Z. In some systems these components are independent and additive. For example if I make lemonade for a living, my Lemons, Sugar and Cups are mostly independent cost inputs. Inflation may make them all correlate, but by and large they are independent and slowly rising as a function of inflation X+Y+Z=cost of lemonade.
Is the US a third world country? – via Economic Logic
Of course it is not. But for a European who sets foot on the continent for the first time, several observations would lead to this conclusion:
1. Urban ghettos, homeless people, trailer parks are certainly not a showcase of an advanced and rich civilization.
2. High criminality and violence.
3. Rampant corruption, which is even legal. Politicians can be bought openly, and few people see a problem with that.
4. Crumbling infrastructure. Roads are full of potholes, in particular urban highways.
5. Telephone and electricity are still supplied through overhead cables that are high in maintenance.
6. Cellphones cannot be used to pay in stores.
7. Credit cards do not have chips.
8. No sidewalks in many places.
9. A quarter of all homes still use septic tanks.
10. Idle police officers watching every construction site on roads.
The only ones: Escaping near death – via Guardian – What does it feel like to be the only person to survive a plane crash, a boat wreck or an ambush? Sole survivors tell their stories
Thinking About Waste: “Every single thing you see is future trash. EVERYTHING.” – via The Believer – I want people to understand what you and I talked about earlier: the actual topography of New York is garbage-based. Cities all over the world, that’s what was done with garbage for centuries. There could also be—I don’t know if this would be a permanent exhibit or something that would be a show—but how have other cultures and times dealt with this problem? You talked about how we’re now at fifteen feet, and we used to be at six feet. Well, ancient Troy, ancient Rome, Babylon, Jerusalem, Paris, all these old cities, it’s the same: you’re standing on centuries of the physical detritus of those who preceded you. So we’re walking on history all the time. Wouldn’t it be cool to know that?
Hacking Commercial Quantum Cryptography Systems by Illumination – via Isayev- It is supposed to be absolutely secure – a means to transmit secret information between two parties with no possibility of someone eavesdropping. It is based on the principle that you cannot make measurements of a quantum system without disturbing it. Quantum cryptography works because a system’s quantum state cannot be observed without changing it. In the standard protocol, two users, typically known as Alice and Bob, openly share encoded information. They can only decode the information once they also share the secret quantum “key”. But they will always know if another party, typically known as Eve, tries to eavesdrop on the key, because by observing it she will always change its state. Yet it, according to Nature Photonics article published yesterday, is not without its faults.
7 Ways to Have More by Owning Less – via BrainPickings -Stuff. We all accumulate it and eventually form all kinds of emotional attachments to it. (Arguably, because the marketing machine of the 20th century has conditioned us to do so.) But digital platforms and cloud-based tools are making it increasingly easy to have all the things we want without actually owning them. Because, as Wired founder and notable futurist Kevin Kelly once put it, “access is better than ownership.” Here are seven services that help shrink your carbon footprint, lighten your economic load and generally liberate you from the shackles of stuff through the power of sharing.
Presentation: What Sociologists Study – via Global Sociology Blog – Since students have sometimes difficulty figuring out what exactly sociology does, I created this little presentation to give them interesting (at least in my view) and highly readable (for freshmen / sophomore, non-major) sociological studies. Any additional suggestions welcome (for some reason, the dang thing won’t center properly):
Video: Ted Talk – The world’s oldest living things – Rachel Sussman shows photographs of the world’s oldest continuously living organisms — from 2,000-year-old brain coral off Tobago’s coast to an “underground forest” in South Africa that has lived since before the dawn of agriculture.
10 ways data is changing how we live – via Telegraph – The availability of new sets of data has changed the way we live our lives: here are 10 examples of data which have changed everything from how we assess wars to how companies deliver milk.
What To Study: A Course Load for the Game of Life – via NYT – AS a Harvard professor who teaches introductory economics, I have the delightful assignment of greeting about 700 first-year students every fall. And this year, I am sending the first of my own children off to college. Which raises these questions: What should they be learning? And what kind of foundation is needed to understand and be prepared for the modern economy?
Miguel’s Weekly Favorites
Six of the Biggest Placebo Scams at your Drugstore – via PToday- We call a product “snake oil” if it doesn’t do what its seller claims. This can be said of several products on shelves at your local drugstore–none of which are based on credible evidence, and all of which rely on the placebo effect.
Tackling Self Deception – via Philosophy Talk – Self-deception is rampant in human affairs. And although too much self-deception is probably a bad thing, a little self-deception may be just what a person needs to get through the day. One should never underestimate the power of positive illusions. For example, psychological studies show that people who are overly optimistic about their own abilities often have enhanced motivation, which enables them to do better in the face of challenges than people with more realistic assessments of their own talents
Adam Phillips on the happiness myth – via Guardian – We all want to be happy, we want our children to be happy, and there are countless books advising us how to achieve happiness. But is this really what we should be aiming for?
Email’s Dark Side: 10 Psychology Studies – via PsyBlog- We’re used to hearing about the negative side of the balance-sheet, about email’s addictive nature and the unnecessary stress it injects into the modern worker’s life, but we downplay these problems because it’s so incredibly useful.
Why MOST smart people are better at solving other people’s problems… – via Rajesh Shetty – What is it that makes it hard to solve one’s own problems. It is one thing if they don’t have capacity to solve those problems – we are not talking about that category of people. We are talking about people who have demonstrated that they can solve those problems when they are presented by other people. The mystery is what happens when these problems show up in their own lives
Dan Ariely: Humans and the slime mould – One of the most general principles of human decision making is that we use relativity as a way to figure out how much we value things. We see a sale sign and the comparison of the current price to a more expensive past price makes us think that we are standing in front of a good deal. We see a modestly prices sweater next to a much more expensive one and we reason that is it a better deal for the money. And so on.
Finding Meaning in Your Life Makes You More Attractive – via GOOD – “A stronger sense of meaning in life was associated with interpersonal appeal,” the researchers report, “whereas self-esteem had no effect.”
Why is the Copenhagen charm offensive so successful? – via Nudge Blog – Yesterday, we featured a creative nudge in Copenhagen for getting bicyclists to park their bikes in designated spaces. “Bicycle butlers” who oil your chain, pump your tires, and leave you a note kindly asking you to park your bike in the appropriate place next time. The number of illegally parked bikes has dropped by more than two-thirds. Those are impressive results and would-be nudgers should be curious. What’s behind that big drop?
The Grand Design – via Farnam ST – Stephen Hawking and Leonard Mlodinow’s kicked off their new book: The Grand Design, with an book excerpt in the WSJ today:
Should I Stay or Should I Go? Optimal Decision Making in Penalty Kicks – via SSRN – A game theoretic analysis that takes into account the middle as an option shows that goalkeepers on average behave astoundingly close to their optimal choices. Therefore, the action bias BE identify in an enquiry of goalkeepers actually is a rule of thumb that helps the goalies to maximise the chance of stopping the penalty kick. Finally, it is shown that players are not only rational in choosing their sides in a sole penalty kick but also in a series of kicks.
Is the Just Man a Happy Man? – via AgEcon- In this paper I consider the question of whether ethical decision-making affects a person’s happiness. Using cross-country data from the World Values Survey, I find that people who agree that it is never justifiable to engage in ethically-questionable behaviors report that they are more satisfied with their life than people who are more tolerant of unethical conduct, even after controlling for other factors known to affect self-reported happiness. The size of the ethics effect is roughly similar to that of a modest increase in income, being married and attending church, while the effect is smaller than that of having poor health or being dissatisfied with one’s personal finances. These results are robust across the four countries studied (the US, Canada, Mexico and Brazil), although there is variation in the ethics and happiness relationship across countries. One implication of this study is that a consideration of a society’s ethical norms will improve our understanding of the subjective well-being of people.
Video: Psychological Effects of Being Trapped in a Mine – via Channel N – Dr. James Thompson, senior honorary lecturer in psychology at University College London, explains the impact of being trapped in a collapsed mine and what the 33 Chilean miners have and will continue to be faced with as rescue efforts proceed over the coming months. A fascinating, expert look at a disastrous situation and its psychological effects.
Is Hosting a World Cup Like Sporting a Chanel Bag? – via Miller McCune – Destitute spots hosting high-profile sporting events can at least burnish their international reputations even if they are hemorrhaging money, right? Well, probably not.
How to shrink a city – via Boston.com – But cities don’t always grow. Sometimes they shrink, and sometimes they shrink drastically. Over the last 50 years, the city of Detroit has lost more than half its population. So has Cleveland. They’re not alone: Eight of the 10 largest cities in the United States in 1950, including Boston, have since lost at least 20 percent of their population. But while Boston has recouped some of that loss in recent years and made itself into the anchor of a thriving white-collar economy, the far more drastic losses of cities like Detroit or Youngstown, Ohio, or Flint, Mich. — losses of people, jobs, money, and social ties — show no signs of turning around. The housing crisis has only accelerated the process.
Stressed Out: Teens and Adults Respond Differently – via NSF – The study also provides evidence about how an individual’s own stress influences his/her cognition and brain function versus previous studies that had induced stress in a laboratory setting. And it will show if adolescents are more susceptible to environmental stressors, potentially leading to new interventions and preventions that aim to reduce stress in clinically disordered populations.
Financial Topics & Investing
Steven Romick Publishes Quarterly Letter – via GuruFocus – Steven Romick published quarterly letter for the quarter that ended on June 30, 2010. For the first half, his FPA Crescent Fund declined 1.9% for the six-month period, versus the S&P 500’s 6.7% drop. For the past 10 years, Crescent made an average of 11.0% per year whereas S&P 500 returned -1.6% per year. Since inception of 1993, the fund returned 10.6% per year and S&P 500 returned 7.0%
Ruane, Cunniff & Goldfarb Investor Day – via Value Investing World – The following is a transcript of the question and answer session of our recent Investor Day. The remarks have been edited for clarity.
A New ‘Risky’ World Order: Unstable Risk Premiums: Implications for Practice – via SSRN – Investors have to be offered risk premiums to invest in risky assets. These risk premiums take different forms in different asset markets: equity risk premiums (ERP) in stock markets, default spreads in bond markets and real asset premiums in other asset markets. These premiums have their roots in fundamentals and will vary as a function of uncertainty about the economy, the risk aversion of investors, information uncertainty and fear of catastrophe, among other factors. In practice, analysts in developed markets have generally looked backwards to estimate risk premiums, using historical data to arrive at their estimates. Implicitly, they assume that historical averages are not only precise but also that risk premiums are stable and revert back quickly to historical norms. In this paper, we present evidence that risk premiums in equity, bond and real asset markets are not only imprecise, but are also unstable and linked across markets. We present estimation approaches that are more in line with dynamic, shifting risk premiums. We argue that the resulting estimates can help use make more informed asset allocation and asset valuation judgments in portfolio management and better investment, financing and dividend decisions in corporate finance.
Do financial statements tell the truth? – via Interfluidity – Financial statements are often referred to as “reports”. As you scan the pages, you will find neat columns of precise numbers. Financial statements look objective. Looks can be deceiving. The questions that financial statements are intended to address do not have objectively true answers. Suppose a firm builds a factory, with custom-built machinery designed to specifically to produce the firm’s product. That factory would become an asset on the left-hand side of the balance sheet. How much is that asset worth?
Video Lecture: Evolutionary biology & Sexual Selection – via Video Lectures – Sexual selection is a component of natural selection in which mating success is traded for survival. Natural selection is not necessarily survival of the fittest, but reproduction of the fittest. Sexual dimorphism is a product of sexual selection. In intersexual selection, a sex chooses a mate. In intrasexual selection, individuals of one sex compete among themselves for access to mates. Often honest, costly signals are used to help the sex that chooses make decisions.
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