Macroeconomic Insanity

Nobel laureate Paul Samuelson argues for more credit infusion into the market, as well as regulation changes to help out the mortgage borrowers. However there are others (Ben Stein et al) who argue that the problem is relatively tiny when compared to the size of the entire real estate market. And congressman Ron Paul has of course thrashed Ben Bernanke that credit infusion will lead to higher inflation and further devaluation of the dollar. Paul Krugman thinks higher saving rate leads to a weaker dollar. And if you are not confused enough, then there are the conspiracy theories that link it all to elite puppeteers, war, finance, and religion. Fun times.

Michael Lewis on Investing

Lewis outlines the story of Dimensional Fund Advisors, which advises its clients to not churn stocks unlike other firms that actively trade. Interesting quotes:

"If you wake up in the morning and see Warren Buffett's face in the bathroom mirror, go ahead and buy some stocks. If you see anyone else’s face, diversify.”



"If you put a thousand people in barrels and push them over Niagara Falls, some of them will survive. And if you take those guys and push them over again, some of them will survive. And they’ll write books about how to survive being pushed over Niagara Falls in a barrel."

Whether the efficient market hypothesis is right or wrong is beside the point - what is really important is that there is absolutely no information in the past stock price data. Without insider information, everybody is better off buying low cost index funds or ETFs.

The Consequences of Mr Bush

Joseph Stiglitz lays out the case why Bush's policies have devastated the economic landscape of the country. Very substantial indictment - goes well with Ron Paul's public spanking of Ben Bernanke.

CIA and the Iranian Coup

Interesting feature from the NYT summarizing the involvement of the CIA in the 1953 Iranian coup. Quite interesting to note how CIA's efforts in curbing communism, the evil du jour, led to the rise of islamic fundamentalism in Iran - just like it did in Afghanistan (detailed marvelously in pulitzer winning book Ghost Wars by Steve Coll)

Ron Paul Surging

The Iowa electronic markets [graph] has the gynecologist towering over John McCain and Fred Thompson. And this is right on the heels of the bookies in london upgrading his odds of winning. This could get very interesting very soon - I hope he hangs around for a while.