May 2009 Archives

A lesson in moral hazard.

Had there been no FDIC, I would have asked questions, sought answers, and depending on those answers possibly moved my money.

But asking questions, seeking answers, and moving all of your auto debits from one bank to another is costly.  And the fact that there is an FDIC means that the individually rational decision for me is to sit tight, not incur the cost, and trust the FDIC.

Of course, the fact that people don't ask questions is how trouble like this gets started in the first place.

And yet, the notion of deposit insurance has always struck me as a pretty good deal for the banking public.  How much would you be willing to pay to ensure that there is zero probability that you will lose money if your bank fails?

There are those who oppose FDIC on libertarian grounds.  Fine.  I understand the argument that it causes moral hazard and raises costs.  I get that.

I get it, and I accept it.  Always have and always will.

Thanks, FDIC.

On May 22, 2009, Citizens National Bank , Macomb, Illinois was closed by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.  No advance notice is given to the public when a financial institution is closed.

Go ahead, surf on over to Wolfram|Alpha and ask it the answer to "life, the universe and everything."

Ok, but that was easy.  How about doing a search on "1729".  It does come up with the special property of that number, but I am disappointed that it does not specifically point out that it is a "very interesting number."

Try "88mph".  Cool.

It cannot tell you how many Italian restaurants there are in St. Louis, but it can tell you when the next total solar eclipse is visible from your location.  It knows how high the song "Tangled Up in Blue" went in the charts (31).  It estimates that 1.2% of the U.S. population is named "William".  You can ask it "How are you?" and get a nice response.   However its "human discourse" functions are limited (but you can have it e-mail you when that improvement is implemented).  It does not "know the way to San Jose."

All fun aside, it may be useful for a lot of applications requiring a comparison, like say plotting the Dow Jones Industrial Average against the S&P 500.  Nice.  Or when you need a series expansion for the standard normal distribution.  (Though it doesn't understand it when you ask it in English.)  You get the idea.

Worth checking out.  Have fun!

Via the tch-econ discussion list:

There are many clever moments in the thoroughly satisfying new "Star Trek" movie, but the one that has economists chattering is more than just smart: It strikes right to the core of what the Star Trek future is all about.

The scene comes early, when a pre-pubescent Spock is undergoing the formidable educational process inflicted on all Vulcan children. We see and hear him say the words "nonrival" and "nonexcludable" (and we can imagine his computer tutor nodding encouragingly).

And then we move on, without explanation. To my children, and, I imagine, to most Trekkies, the moment was just one more jargonistic outburst in a franchise that has always delighted in excessive indulgence in meaningless techno-gibberish. But the economists in the audience all started high-fiving each other: Whoa, who could have expected a shout-out to economist Paul Romer's breakthrough paper, "Endogenous Technological Change," in a "Star Trek" movie? Awesome!

Read the whole thing in Salon.

Yes, the end of the semester is fast approaching.  Final exam here are the week after next.  Lots of activity in the air as everyone tries to stay ahead of the deluge of exams and papers.

And today I looked at the calendar and noticed that it's the 15th anniversary of my college graduation.  Wow.

So I've been listening to music from the '90s all day in honor of my college (and grad school) days.