So here is the illustration for this week's Bloomberg Businessweek cover story about how hedge funds are underperforming and going all limp and stuff. It appears that Businessweek wants some attention, class, so let's all give Businessweek our undivided attention. Are you happy now,
"The efficient market" = the bajillion-trade-a-second automated operations of preferred big players with preferential access to the exchange. Call it the "Goldman Sachs Tax" if you like.
Good piece, although it misses some important Econ 101 myths out, and being a physicist by training I bristle at the first half of the conclusion:
<blockquote>When the U.S. economy faced little competition and was largely based on industrial mass production industries, it was perhaps not so bad that policymakers relied on Econ 101 as their guide to economic policy. But in a complex, global, technologically driven economy in which nation-states compete to capture markets and key links in global supply chains, relying on Econ 101 is like a physicist today relying on Newton.</blockquote>
Phsyicists today will still sometimes rely on Newton for certain problems, because his laws of motion hold good enough for almost all everyday situations - they&#039;re still fine for, say, predicting tides or eclipses. Econ 101 has always been inapplicable, though, because the assumptions underlying it do not even vaguely approximate any situation ever found anywhere at any time. When the US economy was completely dominant, economics was irrelevant, because we were completely dominant. It simply didn&#039;t matter how wrong the theory was, there was no competition. The analogy could be repaired by more specificity, I guess: using Econ 101 today is like using Newton to predict the results of a Large Hadron Collider experiment.
Now I&#039;ve got that off my chest, the myths Mojo missed, miffing me mildly:
11. Deficits don&#039;t matter. Also known as &quot;Ricardian equivalence&quot;, an outcome that assumes that (a) all economic actors will understand the effect of deficits and adjust their spending appropriately, and that (b) &quot;appropriately&quot; means based on an infinite timescale, meaning either the actors are immortal or they assume their bloodline will continue for ever and value it exactly as significantly as they value their own self. This is obviously untrue, and sure enough econometric data shows that pure transfer payments do make a difference to economies, so Ricardian equivalence is false.
12. Tax cuts are always good. This kind of distills various of the earlier myths, (#s 2, 3, 4, 5, 7, 8, 9 and 11), into some kind of superstrength bullshit. Most importantly it hinges on the same underlying assumption as myths 8 and 9, namely that the choices made by private actors are always better for the economy than those made by governments. GARGH!
<i>hedge funds actually have been lagging the S&amp;P 500 stock index</i>
That&#039;s really sad. My S&amp;P indexed mutual funds are usually in the crapper with no outside help what-so-ever, so how badly are the hedge fund managers fucking up?
Now everyone should watch the comedy <a href="http:\/\/www.imdb.com\/title\/tt2368553\/\?ref_=sr_1" target="_blank">&quot;Assault on Wall Street&quot;</a>
And deep.
Moar SECs!!
In the meantime... If it&#039;s soft you can&#039;t beat it. If it&#039;s hard...
&quot;I don&#039;t think that we&#039;re gonna be able to get all of that onto the album cover.&quot;
The boners of all men, almost. <a href="http://www.youtube.com/watc..." target="_blank">" rel="nofollow noopener" title="http://www.youtube.com/watch?v=b7Z-MxnlxuI">http://www.youtube.com/watc...
&quot;The efficient market&quot; = the bajillion-trade-a-second automated operations of preferred big players with preferential access to the exchange. Call it the &quot;Goldman Sachs Tax&quot; if you like.
<i>hedge funds had gained just 1.4 percent for 2013</i>
They would have made more money if they put their money in a really shitty bank account.
The &quot;Immortal&quot; ones with &quot;Perfect Access to All Capital Markets&quot;, you mean?
Good piece, although it misses some important Econ 101 myths out, and being a physicist by training I bristle at the first half of the conclusion:
<blockquote>When the U.S. economy faced little competition and was largely based on industrial mass production industries, it was perhaps not so bad that policymakers relied on Econ 101 as their guide to economic policy. But in a complex, global, technologically driven economy in which nation-states compete to capture markets and key links in global supply chains, relying on Econ 101 is like a physicist today relying on Newton.</blockquote>
Phsyicists today will still sometimes rely on Newton for certain problems, because his laws of motion hold good enough for almost all everyday situations - they&#039;re still fine for, say, predicting tides or eclipses. Econ 101 has always been inapplicable, though, because the assumptions underlying it do not even vaguely approximate any situation ever found anywhere at any time. When the US economy was completely dominant, economics was irrelevant, because we were completely dominant. It simply didn&#039;t matter how wrong the theory was, there was no competition. The analogy could be repaired by more specificity, I guess: using Econ 101 today is like using Newton to predict the results of a Large Hadron Collider experiment.
Now I&#039;ve got that off my chest, the myths Mojo missed, miffing me mildly:
11. Deficits don&#039;t matter. Also known as &quot;Ricardian equivalence&quot;, an outcome that assumes that (a) all economic actors will understand the effect of deficits and adjust their spending appropriately, and that (b) &quot;appropriately&quot; means based on an infinite timescale, meaning either the actors are immortal or they assume their bloodline will continue for ever and value it exactly as significantly as they value their own self. This is obviously untrue, and sure enough econometric data shows that pure transfer payments do make a difference to economies, so Ricardian equivalence is false.
12. Tax cuts are always good. This kind of distills various of the earlier myths, (#s 2, 3, 4, 5, 7, 8, 9 and 11), into some kind of superstrength bullshit. Most importantly it hinges on the same underlying assumption as myths 8 and 9, namely that the choices made by private actors are always better for the economy than those made by governments. GARGH!
I once Sheetah Kolhatkar and a couple of marbles that I swallowed as a child.
<i>hedge funds actually have been lagging the S&amp;P 500 stock index</i>
That&#039;s really sad. My S&amp;P indexed mutual funds are usually in the crapper with no outside help what-so-ever, so how badly are the hedge fund managers fucking up?
Who&#039;d have thought hedge funds had a low p-ness
Now everyone should watch the comedy <a href="http:\/\/www.imdb.com\/title\/tt2368553\/\?ref_=sr_1" target="_blank">&quot;Assault on Wall Street&quot;</a>
The green arrow is how they perceive themselves, the red is how their wives/SOs see them. (This is true of all men.)