Showing posts from October, 2010


I regularly get together with a couple of guys from my church. We've been going over a book titled "Twelve Steps for Recovering Pharisees". It's main theme is that we are pretty much all hard-wired to find ways be judgmental twerps who try to make ourselves feel superior to those around us. So this cartoon from XKCD hit the spot.

Inflation? What Inflation?

Buttonwood notes that commodities have been on a tear lately: Higher wheat and metals price have been hitting the headlines, so it is no surprise that the all-items index is up 8.4% on the last month. It is more surprising that it has risen 28.1% over the last year. Furthermore, this is not a boom that is driven by oil. The crude price has only risen 10.2% over the last year. Buttonwood then asks a question: Ben Bernanke warned last week that the level of inflation was too low for comfort. Indeed, the core rate is just 0.8%. Why aren't higher commodity prices showing up in the CPI? Buttonwood answers the question: In part, this is down to lags; in part, it's down to the relatively small weight of commodities within the index. But it may be down to methodology. John Williams at Shadow Government Statistics runs an inflation measure that ignores all the methodological changes that have been made to the CPI since 1980; this has inflation running at 8.5%. A separate measu

Who's Pegged To Whom?

I find it revealing that when China hiked interest rates last week, the USD promptly rallied. Of course the rally was short-lived, but it confirms a suspicion I have long held: it's not the renminbi that is pegged to the dollar, it's the dollar that's pegged to the renminbi. (Aside: treating the US and China as a single economic entity -- albeit one with large internal imbalances and frictions -- is a very useful construct when thinking about global trade flows. Maybe some day I will write a longer post about the implications of such a world-view). (Another aside: quite a few macro traders believe in the DGDF (dollar goes down forever) hypothesis, for very good monetarist / inflationary reasons. But in my opinion the dollar won't really begin to decline until it is delinked from the world's fundamentally strongest currency.)

The Return of the Meta-Finance Blogger

Hello to all my faithful readers, and my apologies for the long hiatus. Apart from the usual excuses (being busy, being lazy, being otherwise inclined), the main reason I've written just 3 blog posts in all of 2010 is that quite frankly, global markets have been pretty boring, year-to-date. But that seems like it's changing; the last couple of months have seen some quite interesting dynamics take root. I plan to address a few of these in coming posts. But with a difference: instead of my old style of writing lengthy disquisitions on particular subjects, I am going to try shorter and snappier posts which will hopefully nonetheless be interesting and insightful. And I am going to write more explicitly about topical issues (aka "market commentary") rather than sticking solely to abstract generalizations. As always, reader feedback (positive or negative, ha ha) is very welcome. Happy reading!

I Don't Seem To Have a Lot of Empathy

I just took an empathy test (the Baron-Cohen Empathy test) - I scored a 23. A high-functioning Autistic or someone with Aspergers typically scores about a 20. Maybe my wife is right, and I am simply not that empathetic. However, she could have been kidding (if so, how would I know?). HT: Vox Popoli


If you have followed this blog for long, you know that my favorite saying about teaching is "Teaching does not come from years of doing it. It actually comes from thinking about it." Unfortunately, it is easy to get trapped into thinking superficially about teaching. “Why are students so lazy?” “Why can’t students read?” “Why do students seem incapable of thinking?” I’m not sure that kind of thinking does anyone much good. A few days ago, a friend and I had a long conversation about teaching, just a general conversation about what works and what doesn’t work for us. We talked about our goals and our frustrations. When is the last time you had such a conversation? Really, a conversation about how teaching is actually done. Find someone in your building or in your school who truly likes to think and talk about teaching and make it a point to have such conversations on a regular basis. As part of my recent conversation, the question was raised (now that we ar

New Video on Time Value

As I mentioned before, I've been doing a bit of work with screen recording software. Previously, I'd done a 4-video series on how to use the BA 2+ calculator . Well, I'm at it again. This semester, I'm teaching the undergraduate core finance. I plan on making a series of videos on the main topics that I can then use in upper-level courses. That way, I can eliminate the need to take valuable class time for going over prior material. Instead, if the students feel the need for a review on (for example) Effective Annual Rates, they can simply watch the video. Eventually, I hope to have a library of videos on many of the major topics we cover in the intro course. Here's the first one - on the basics of Time Value . This one covers problems and concepts related to Present/Future Values of single lump sums. If you find it helpful, let me know. You can see my other videos at the following site - the BUS424 folder contains a number of lectures I made for my Fixed

It Is An Honor

My good friend Paul Clikeman furnished me with these lines from Pat Conroy's book The Prince of Tides . This is the way that we should all feel every day when we have the good fortune of being able to go into a classroom to try to help our students to work and learn and understand. Savannah Wingo: "You sold yourself short. You could’ve been more than a teacher and a coach." Tom Wingo: "Listen to me, Savannah. There’s no word in the language I revere more than teacher . My heart sings when a kid refers to me as his teacher and it always has. I’ve honored myself and the entire family of man by becoming one.