Wednesday, February 24, 2010

February 24

Economist Joseph Stiglitz, author of the new book Freefall, essentially reiterates Matt Taibbi's thesis of a global banking swindle for Forbes (my bolding):

...the rewards to the bankers were given on the basis of profits. There are two ways you can get higher profitability on average. We use the word alpha and beta. Beta means you undertake more risk, higher leverage.

On an average, if you take more risk, you get, on average, higher returns. You have an incentive system that says if you succeed, you get to keep it; if it fails, you put it onto the shareholders. That's a system of failure, because taking under more risk, anybody can do that. You know, any college graduate.

The other one we call alpha--that's outperforming the market. And that's very hard. What's so interesting is that the financial system did not even understand how to design good incentive systems because they should have been focusing on alpha, not beta. And they could have done that. They could have said, "OK, we are only going to reward you for higher returns consistent with the risk that you undertake and relative to those in the industry. If the stock price goes up because there's a stock market bubble, we're not going to give you high pay because that's not because of anything you've done. That's because of monetary policy or what's happening in the stock market."

But they didn't do that. And there are two interpretations of that. Either these guys did not understand risk, or these guys were engaged in a charade, using incentive pay as a way of taking money out of the system for their own benefit.

I also like this related point:

...when you look at the incentives, they were incentives for excessive risk-taking and short-sighted behavior. I don't call those animal spirits. I call that old-fashioned failures of corporate governance.

If it were going back to the 19th century, if it were real individuals with animal spirits risking their own money, I would feel very different. But when they're risking other people's money, that's not animal spirits in the old-fashioned sense. And that's the problem we have to deal with.

The Onion Video Network goes international with this hilarious report, "Denmark Introduces Harrowing New Tourism Ads Directed by Lars Von Trier":

Dave Kehr is a film critic I generally find insufferable, but I must admit his take on the DVD release of Leo McCarey's Make Way for Tomorrow is well-done:

Gilbert Adair also has a fine entry on this film in his book Flickers; he can scarcely believe it is an actual 1930s Hollywood release. It does sound terribly depressing and uncommercial.

The more lists you look at on the Internet, the more specialized ones you find. Here are the "five best books on British military deception"! It's an intriguing group:

Daniel Kalder, author of the excellent and funny-as-heck travel book Lost Cosmonaut, about travels in Russia's obscure European republics, muses on why Russian authors over the centuries have been so hard-assed and manly. It's not been the easiest country in the world to live in, not ever:

"In the exhibition 'Midnight Matinee,' Gary Simmons uses images of drive-in theater marquees and infamous houses from vintage horror films to reflect on ghosts and abandoned pasts" -- and the results are very distinctive:

The French illustrator Floc'h is new to me, and I like his bright graphic style a lot:

La Llotja de Lleida, besides being a pleasingly alliterative phrase, is a striking multi-purpose center in Caralonia, designed by the firm Mecanoo (architectural firms have odd names these days). Once again, ArchDaily gets me learning about an interesting city as well as an interesting building:

Adelaide in Photos presents: The Emu! (My affinity for such items reminds me of an opening Linda Ellerbee once used on NBC News Overnight: "On the theory that your body never outgrows its need for animal stories...")

Among notables born on this date are folklorist Wilhelm Grimm, librettist/composer Arrigo Boito, poet Weldon Kees, painters Winslow Homer and Charles Le Brun (France), architect Ralph Erskine, rocker George Thorogood, singer/songwriter Michelle Shocked, explorer Ibn Battuta, baseball great Honus Wagner, comedian Mitch Hedberg, popular composer Michel Legrand, film director Todd Field, soprano Renata Scotto, novelists August Derleth, George Moore (Ireland), and Stanislaw Ignacy Witkiewicz (Poland), and enough actors to cast a mid-sized play: Dominic Chianese, Dennis Waterman, Zachary Scott, Emmanuelle Riva, Billy Zane, Mark Moses, Barry Bostwick, Steven Hill, and Edward James Olmos.

Weldon Kees (1914-1955?), who at the age of 41 left his car near the Golden Gate Bridge, and may have jumped to his death, or may have escaped to a new life in Mexico -- he talked about both suicide and planned disappearance to friends -- was one of the most bewilderingly versatile creators of his time. He wrote poetry, fiction, and criticism, made films, helped put on shows, composed songs, played jazz piano, painted, took photographs, knew everyone in the arts in New York and San Francisco, and totally "made the scene," as they say. Anthony Lane wrote a great piece about him in The New Yorker a few years back:

No comments: