Taleb on QE2

Bestselling financial author Nicholas Nassim Taleb — who is familiar with the Hayekian critique of central planning and has written scathing attacks on mathematical economics — as usual offers an interesting perspective on this second burst of inflation. In a sense, Taleb is the anti-Cowen: whereas Cowen effectively said, "Hey, it probably won't work, but we might as well give QE2 a try," Taleb effectively argues, "Hey, it just might blow up the world financial system, so let's not give QE2 a try."


http://www.economicpolicyjournal.com/2010/11/taleb-nails-it.html
http://books.google.com/books?id=7wMuF4A4XF8C
http://mises.org/daily/4851

Notes on tonights meeting

I got to the club meeting late tonight (had to get art hw done) but here are a few things i picked up on/ were requested to be posted:

- LBJ's Great Society [Connor]
- The Millionaire Next Door
- The New Elite [Charles Murray Washington Post article] [http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102202873.html]
- How do you help people?
- Poverty is not not having money. It is socioeconomic. [Rohan: See socio part]
- Competence vs. Intelligence
- Necessity saying [someone comment with the right one, I think it is: nothing works like necessity, necessity is the mother of invention, etc.] This was used in context of how easy it is to get money in America. It is an indication that life is easy if no one is knocking on your door asking to mow your lawn etc.
- Land of the Billionaires argument. [Philip please expand this one. It's yours and I don't want to skew any points].
- 4 yrs of college vs. 4 yrs of WSJ [See my last post on higher education bubble]
- Chales Murray [http://www.youtube.com/watch?v=n8GN8g0Si7Q] [Philip - please correct me if this isn't the right video]
- On eduction: See WSJ articles: The Origins of Good Ideas; Why Some Islanders Build Better Crab Traps; and No You Can't - Is genius a simple matter of hard work? Not a chance]. Soltas and Tisdall - if you have read any more in this vein, let me know.

As I said, I got to the meeting near its end so please supplement this post in the comments.
- James

[Evan: Add that video, Cobbe: Economist article you were talking about, Tisdall: Article Jack gave you about designing your own undergraduate degree].

PEA Republican Club alumnus

Michael Hamel was a PG at the school 2 years ago. He was a Texan who initially struggled with a certain, how shall I describe it, cultural gap at the school. He found a real home in the club and was valuable contributor. He was the first to check every fact, real time, using his phone. Here is his picture at the inauguration of the Bush Library at SMU, where Michael is a ROTC student. Unfortunately the sign covers his guns, knives and clubs.

False Common Knowledge

Everyone seems to agree these days (especially around Exeter) that liberal politicians are more intellectual and worldly. Bush is recognized as somewhat of a dumbo while Gore, Kerry, and Obama are viewed as intelligent and educated. To believe that government officials are that much smarter can lead one to trust government expansion, a dangerous thing. What perhaps this article does best then, is show how academically mediocre nearly all politicians are, and not merely the republicans. In revealing this notion, one can't help but doubt their current level of trust in our elected leaders.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=553753

Thinking about Wal-Mart and recent Club discussions

Wal-Mart has been the topic of two recent articles in the WSJ that serve to reinforce subjects we've discussed in the Club recently. Miguel Bustillo writes on 11/17/10 that Wal-Mart U.S. sales fell 1.3% last quarter for the sixth consecutive time. This is attributed to "stiff" competition from Target and Dollar stores. Nearly all of Wal-Mart's growth is coming from international operations which account for one fourth of its $400 Billion in revenues.
Mariko Sanchanta writes on 11/15/10 that Wal-Mart appears to have established itself in Japan where it now owns 400 stores and plans to grow by acquisitions. While Japan has one of the largest retail markets in the world, the market is highly fragmented with numerous small, inefficient and highly politically defended family-type stores. Wal-Mart has been trying to establish itself in Japan since 2002 but has only been profitable for the past 2 years. Wal-Mart has attributed its success to Japan's 10 years of deflation making its citizens sensitive to lower prices. Wal-Mart is now focused on entering China, Brazil and India. Success is not assured. Wal-Mart sold its German operations after 8 years of failure and has exited South Korea.
- should Wal-Mart follow the great American business tradition of using gov't to defeat its rivals? Monopoly status looks to be fading if it doesn't.
- If Wal-Mart is unpatriotic because it supplies from China, should we praise it for generating $100 billion dollars in overseas revenue? That outsourcing/buy American argument can get tricky
- national culture: failure in Germany and South Korea, success in Japan. Same company.
- free markets unlock value. Think how happy all of those small Japanese retailers were to sell their stores to Wal-Mart. They can now re-invest or spend the money and Wal-Mart can bring efficiencies of scale for Japanese consumers. Of course those little stores that don't sell in time will be wiped out (Schumpeter)
- why has Japan had 10 years without growth despite massive gov't spending? Compare their "zombie" banks to our banks "toxic" assets.

The Effects of Long-Standing Liberal Government in California

One of the country's most struggling states is California. Despite its proximity to growing powers China and India, its economically supportive weather, and its plethora of great colleges: Stanford, CalTech, etc., California is being strangled by its liberal legislature and courts. While the heavily conservative and libertarian "Great Plains" have best weathered the recession, California is becoming the first US "debt state".

http://www.investors.com/NewsAndAnalysis/Article/552810/201011041910/The-Golden-State-Still-Doesnt-Get-It.htm

Bureaucrats

"The bureaucracy must be expanded to meet the needs of the expanding bureaucracy"

funny that this came from the same guy who wrote soul of man under socialism...