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Social Friction
One of the general trends in financial systems these days is the removal of friction. It wasn’t all that long ago that stocks were traded by waving pieces of papers in the faces of market makers (does anybody else remember the game Pit?). In fact, some futures markets still work that way. The action could…
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Urban Wildlife
I think of myself as living in a city. It’s an easy walk to two supermarkets, a dozen restaurants, four movie theaters, four bookstores, public transportation. I commute to work on a combination of bicycle and bus. I don’t live in a dense part of the city, to be sure; I live in a neighborhood…
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Failout
The bailout has failed for now. Of course they will try again after Rosh Hashanah, so this is by no means over. But let’s think about what will happen if nothing gets passed. Not that I know what I’m talking about. What pushed Paulson and Bernanke to seek the bailout was the freezing up of…
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Complexity
Is there such a thing as irreducible complexity? Our current society is some orders of magnitude more complex than a hunter-gatherer society. What I mean is that the basic requirements of life: food, water, shelter; are provided by organized systems which require the labor of thousands of people and which no single person fully understands.…
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Home Bailout
The root cause of the troubles in the financial system is the severe decline in housing prices. Financial companies bet that this would not happen. So how about, instead of bailing out the financial companies by buying their bad mortgages, we bail out the homeowners by buying their houses? The government would buy houses for…