Your claim that the market is driven by uncertainty instead of risk may explain aggregate market performance (ie, when stocks might outperform bonds). But it isn't directly related to most empirical tests of stock market efficiency (meaning which stocks/industries will outperform others on a relative basis). Asset managers want to beat the market(DJIA), since lucrative pay packages are at stake. It certainly isn't clear whether riskier stocks, characterized by the Knightian uncertainty concept you describe or the classical definition of risk as variance/beta, explains the cross-section of equity performance.

Regarding the "Monday-morning Fed quarterbacking", I've been reading your blog since inception (which is indicative of my expectations of the quality of the B-P posts), and I don't recall either of you making calls for more regulation or imploring the Fed to raise rates in 2006/2007. In fact, recall the mass hysteria around your suggestion that trans-fats should be regulated--imagine the argumentative leap from food products to CDS or MBS!

"Yet I believe that the Federal Reserve should have lanced the housing bubble no later than 2006 by raising short-term interest rates (which would have pushed up long-term rates as well by increasing the borrowing costs of banks and other financial intermediaries and thus the rates they would have to charge for lending their borrowed capital), and if this did not burst the stock market bubble (the bubble that reached its maximum expansion in October 2007) to lance that bubble as well, by increasing margin requirements."

I can't help wondering if the above was even a possibility given the flood of foreign capital that "had" to be recycled, and the antics of the "non-banks" who were buying sub-junk mortgages at Ponzi scheme multiples of leverage?

Politically it would seem even more impossible as many/most? econ watchers could see that housing with its related appliance and furnishing sales was the last leg of a very fragile economy that was falling behind on job creation and yet further behind on wage generation. In fact what else DO we have?

A relatively small tech sector with broadband mostly built out, computers and other electronics becoming low margin commodities? An airline industry that has "matured" and may be up against energy limitations? While the rest of us are "taking in laundry" in one fashion or another ranging from selling each other insurance or other financial services down to a saturated latte market.

Now the question is, where does the "hot money" go? At the first sign of rising oil consumption or hint of a shortage in supply, I'd guess it again pours into the energy futures markets that give the sovereign funds of OPEC a whopping twofer.

"Yet I believe that the Federal Reserve should have lanced the housing bubble no later than 2006 by raising short-term interest rates (which would have pushed up long-term rates as well by increasing the borrowing costs of banks and other financial intermediaries and thus the rates they would have to charge for lending their borrowed capital), and if this did not burst the stock market bubble (the bubble that reached its maximum expansion in October 2007) to lance that bubble as well, by increasing margin requirements."

I can't help wondering if the above was even a possibility given the flood of foreign capital that "had" to be recycled, and the antics of the "non-banks" who were buying sub-junk mortgages at Ponzi scheme multiples of leverage?

Politically it would seem even more impossible as many/most? econ watchers could see that housing with its related appliance and furnishing sales was the last leg of a very fragile economy that was falling behind on job creation and yet further behind on wage generation. In fact what else DO we have?

A relatively small tech sector with broadband mostly built out, computers and other electronics becoming low margin commodities? An airline industry that has "matured" and may be up against energy limitations? While the rest of us are "taking in laundry" in one fashion or another ranging from selling each other insurance or other financial services down to a saturated latte market.

Now the question is, where does the "hot money" go? At the first sign of rising oil consumption or hint of a shortage in supply, I'd guess it again pours into the energy futures markets that give the sovereign funds of OPEC a whopping twofer; making that the next bubble and further crippling the US economy.

First, Knight went under-appreciated for a long time, and his distinction between risk and uncertainty deserves a prominent place in any evolutionary theory of economics.

But second, I want to push back at what I see as a hidden premise in this post, which is that rationality is required for an "equilibrium" in the form of a market price to be achieved. We have known at least since Schelling published The Strategy of Conflict that it is not rationality, but symmetry that accounts for equilibrium outcomes -- symmetries and broken symmetries in expectations of market actors drive transactions in ways that rational expectations alone don't. See more discussion of this point here.

What quantitative hypothesis could be more general than the rational hypothesis and yet as useful in forecasting group behavior? How about a hypothesis as simple as this: Human behavior is periodic because of biological cycles hardwired into our circulatory, respiratory, and nervous systems. We breathe, eat, and sleep in cycles. Rather than postulating rationality, we might simply postulate ergodicity -- i.e., that the same frequency distributions of consumption and production that are observed for a group in one window of time will appear in subsequent time-windows. Letting go of some of the constraints of the rational hypothesis frees economists up to consider evolutionary biological explanations for group behavior outside of the rational hypothesis.

There are some "rational" price bubbles and crashes that are not hard to conceptualize. For example, Bouchaud has argued convincingly (summary here) that prices cannot instaneously equilibrate after new information is discovered by market actors. The time required for equilibration obviously depends on the liquidity in the market.

One could generalize from there to the observation that whenever market production and consumption are characterized by cycles of different lengths in time, transactions will have to be synchronized in time to avoid buildups or shortages of goods. This asynchronicity in supply and demand is not the only form of transaction cost recognized by Coase as solved by the assembly line at Ford, but it sure is an important one in markets where liquidity is highly constrained!

In fact, there is a movement in operational management to induce artificial shortages in inventory in order to reveal asynchronicities in production. This, in a nutshell, is what Toyota perfected, although Toyota's managers will tell you that they learned it from Ford (Henry Ford, that is -- Ford the company is in the process now of relearning it from Toyota).

An analogy from physics is useful here. When energy is transferred through a system that behaves linearly, waves will form but will not interfere with one another. In the deep ocean, although energetic swells are traveling constantly, the surface may remain calm. It is only when the waves approach the shore, where the bottom of the ocean floor provides a mechanism for exchanging energy between otherwise independent waves, that waves break.

Similarly, on the stock market trillions of dollars in goods may be exchanged with little volatility so long as there is plenty of liquidity. But when, for whatever reason, the quantity of goods that market actors want to exchange approaches the order of the total outstanding quantity of those goods, the market prices are going to break just like waves on the shore.

Now putting numbers on all of this is hard. But conceptually, it's quite simple.

Whoops. Second comment was meant for Becker's post.

Ага, теперь понятно...А то я сразу не очень то и не понял где тут связь с самим заголовком...

Is the stock market an "Efficient" market?

No.

It doesn't take luck to time the markets consistently well on a relatively short-term (1-5 day) basis. U.S. and European markets are mean-reverting and have been that way for about two decades now, with the reversion only becoming stronger and stronger in recent years. Asian markets (ex-Japan) are trending. They respond both to their own medium-term momentum and to the short-term momentum of the S&P 500.

Markets may best be described as moderately efficient, and usually can only become efficient if trades are made to "arb away" the inefficiencies (i.e., markets tend not to be magically, instantaneously efficient). The fact that any trading is done is because there is disagreement about the future (given its uncertainty). Those with access to better information or better means of transforming public information (to essentially make it private information) can consistently outperform the market. Throw in the repetitive behavior of the retail trader, i.e., the "dumb money" (who buys the high and sells the low) and you have a recipe for continual outperformance for those who take the other side of the trade.

Efficiency generally means input/output. Perfect efficiency is 1. Certainty is a probability of 1 with a standard deviation of 0. I guess that means that the answer to your question is NO. And I suspect that as efficiency goes up, certainty goes down with a standard deviation somewhere around -3. I am not sure about what the curve would look like.

"For example, when stock prices begin to fall, the market value of savings invested in the market falls and this may make cautious investors move their money into safer forms of saving to make sure they have enough protection against a rainy day--a decision that has little or nothing to do with predicting future stock prices"

That has everything to do with predicting future stock prices. The explicit prediction that they make is that those losses will continue in perpetuity...resulting in a "get me out of the market" reaction.

Imposed on banks, the mark-to-market rule is deflationary. Therefore, we experienced deflation. When news leaked that the rule was about to be abolished, the market reflated. No analysis of EMH is complete without taking into account the existence of information about the availability of capital.

"The Dow Jones Industrial Average peaked at 14,200 on October 9, 2007, fell to 9,600 on November 4, 2008 (election day), kept falling, to 6,400 on March 6, 2009, and since then has risen sharply, to 8,100. (I have rounded to the nearest hundred. I use movements in the DJIA rather than in the S&P 500 because the DJIA is composed of heavily traded stocks and thus gives a clearer view of market-price changes.) What explains these gyrations?"

Has anyone ever considered the thought that GOVERNMENT is behind these gyrations...? I know I might be labeled an "extremist" for suggesting this today, but maybe, just maybe the government really is controlling public opinion by using INFLATION and DEFLATION.

Does anyone know who Thomas Jefferson is anymore...?

"If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered."

But here is Posner:

"Protecting the economy is the business of government."

Better rev up that printing press...!

Чёрт возьми! Круто!Вы Сами ответили.Беру в цитник! Смысл жизни и всё остальное. Решено.Без шуток.

Extremist? No. It is perfectly reasonable to consider the possibility that our current government would like to nationalize the banks. The government would then control the entire economy in all of its functions except the black market. Who works, who doesn't, who gets loans, who gets housing who gets health care, who gives health care, etc, etc. Why would anyone consider that extremist with the likes of Harry Reid and Nancy Pelosi at the helm.

All these really intelligent theories on market behavior...

...And all along it is just Uncle Sam manipulating markets. Yup, government sets up ponzi schemes such as subprime lending. Yup, govt. print 10 trillion if they feel the need. Yup, all of a sudden the Federal Reserve is the SEIZER (not lender) of Last Resort. It is government building and popping bubbles, all to steal our property and wealth, all to get the masses 100% dependent.

Blame free markets, why not...? Barrack Obama never misses an opportunity to demonize capitalism and markets, and the masses will just buy whatever the Con Artist is selling.

Who is Thomas Jefferson...? He must be one of those "extremists" Janet Napolitano now says is a terrorist.

Anon? and Jim? Do you two think that what the President, most of Congress, and most of us denounce in "banking" is "capitalism?" or anything akin to a working "market?"

As for the choice of "nationalizing" these "banks" or shoring them up by buying 80% of their pig in a poke "assets" and then trying to coax them into lending to credit worthy borrowers before that lack of liquidity takes down what's left of our economy; does one approach stand out as being more like "capitalism" than the other?

At this point I'd favor a temporary nationalizing; splitting off conflicting functions (like insuring and lending) and reselling them in chunks of a size that would renew competition and NOT be "too big to be allowed to fail". This approach would seem to me to be the closest and most orderly means of approximating the bankruptcy they all deserve without the disruption of a normal bankruptcy we can't afford to have take place.

The option of covering their massive markers for them and trying to refloat their whole corrupt enterprises replete with leaving the cast of bonus entitlement leeches in place to avoid the stigma of nationalization hardly strikes me as anything related to "free market capitalism".

Control of us??? Government? Ha! How about giant corporations as we've just seen? How about concerted piles of capital running the price of oil up from $20 to $140? Kinda controlled most of us quite a bit? How about parasitic medical "insurance" corporations who've prevented Congress from rationalizing health care administration for the last 40 years or more?
Do you see elements of capitalist "markets" at work in H/C that would contain costs or create competition?

Is the Stock Market an "Efficient" Market? It's about as "efficient" as any Roulette table and wheel at any Casino worldwide when it comes to the redistribution of wealth. As long as the wheel isn't "fixed". "You put your monies down, you takes your chances". Such a metaphor goes far in explaining the current Economic Crisis.

Gambler's Fallacy anyone? Unfortunately, it's the only "game" in town.

большое спасибо!Взяла себе тоже-пригодится.

"Control of us??? Government? Ha! How about giant corporations as we've just seen?"

Did you read Jefferson's quote...?

If corporations are too big to fail and government continues mortgaging our future by bailing out their inefficiency... these institutions continue getting bigger and bigger to the point that they are monsters. They control us because GOVERNMENT has prevented free market forces from checking these monsters...

...and now Average Joe cannot say failure must be an option in our society because his 401k and college savings plan would go worthless.

Just let markets work without government interference (inflating and deflating bubbles) and we will be better off. We don't need to be psycho-analyzing market behavior, all we have to do it open our eyes and realize that government is getting in the way of the natural self-corrective forces that make markets efficient.

Failure has to be part of our economy, if it isn't it is only a matter of time before we are 100% communist. Barrack Obama is doing nothing today to correct anything, he is just re-inflating our artificial economy. It will work in the short run, but wealth depletion, dependency and loss of individual freedom comes with it.

Jack, what do you mean by "rationalizing health care"? Do you mean "rationing" because that is what you are going to get. My friends are always telling me that Europe is so "rational". Yes they are, unless you are a 55 year old person with end stage renal disease and you are told to go home and rest, thank you very much, or unless you are one of the one million patients in the UK on any given day waiting to get admitted to a hospital or unless you are one of the 20% of breast cancer patients in the UK who die of their disease who would not have died had they been screened every year starting at age 40 instaed of every three years starting at age 50. Is that what you mean by rational. I have other suggestions for rationalization: rationalize the tort bar. Rationalize the 80 billion annual medicare expenditure in the last year of life. Rationalize the impending physician and nurse shortage and so on and so forth.

Anon: Not too much disagreement, but let's say "timing is everything". I too wonder where the Anti-Trust Division was (vacationing?) as Citi was allowed to combine with Travelers or where regulators were when AIG and others thought they could write "insurance: at vast multiples of historic asset/debt ratios.

The "short run" is what we have to deal with just now, and you'll note the President having charged Congress with design a new set of rules that will help prevent "our?" corporations from operating like gamblers on a junket to Monte Carlo in the future.

"Just let markets work ...." Indeed, but "markets" are a game and every game requires rules and umpires.

You appear to be a bit soft on allowing powerful rent-seeking corporations to purchase or lease enough Congressmen to deal themselves market distorting favors at the expense of consumers and taxpayers; let's HOPE that this admin and Congress sees the need for balance and proper regulation.

Jim, thanks and happy to clarify:

We too ration health care not only for those lacking "benefits" but for those who, increasingly, can not afford the copays and other limits.

WE spend nearly TWICE what the nations you claim are rationing spend but are not even keeping pace with their outcomes, such as infant mortality, life span and a host of other benchmarks.

While I don't favor copying the programs that the nations offering universal care designed for themselves 50 years ago, even their plans would serve us well with TWICE the amount they allocate.

Assuming your numbers are correct (which seems in doubt these days) a RATIONAL health care system would be delighted to pay the small annual checkup cost instead of bearing the tremendous cost and human suffering of the faulty practice of medicine you mention.

I might go further; since many men and women put off screenings for prostate, breast, prostate and other, I might offer a coupon for lunch or another incentive if two come in at once, the idea being for each to help the other overcome a potentially deadly procrastination.

The "tort reform" mantra is more political than "reform" and the "savings" are VERY difficult to assess, and especially so when we have such a high rate of malpractice and the vast majority of cases are not litigated. Once we DO move forward about three decades in computerized record keeping, I'd much rather focus on the positives of far better outcomes research with that data feeding back to a far more comprehensive "best practices" program and doctor education than we have today.

Yep! The shortages of docs and nurses are and will be a big problem. The nursing shortage is largely one of poor pay and tough working conditions but shares with docs a bottleneck at college level.

Our horse and buggy era "fee for service" from thousands of small medical practices combines the worst of "capitalism" and the worst of "socialism" which is further exacerbated by the overhead costs of squabbling with "insurance" companies. It strikes me that "insurance" companies are well placed with sufficient capital to provide medical services to their subscribers instead of simply being parasites on a system that was never designed to provide efficient service or contain costs.

What would YOU do about the "last year" costs? If it were a family member? How would you know it was the "last year?" Rationing? Will euthanasia? sell well to most of our religions?

I agree with you on some points there. Entire industries were formed around the giant ponzi scheme (AIG clearly). But make absolutely no mistake about it, GOVERNMENT set up the ponzi scheme. Wall St. isn't innocent in this mess, but GOVERNMENT set rules based on fraudulent principles that got in the way with the market's natural corrective process.

SO DON'T CRY WHEN BUBBLES FORM AND BURST. Don't pretend this requires psycho-babblicious theories (like everything Posner just wrote) on the behavior of our "EVIL" MARKETS. All you have to do is examine the core of the problem, and it is GOVERNMENT almost all the time interferring with markets.

For the record, no liberal democrat can ever complain about the cost of energy EVER AGAIN. You lost all credibility on this topic when our OBAMAnation of a president proposed his carbon energy tax in the middle of our economic depression all on the fraudulent theory that is "global warming". Let's let Obama reinflate our artificial bubble before he pops it with $4 gas... again. Of course he'll continue lying and go on blaming republicans and evil markets for the next pop.

Did Bill Clinton ever accept responsibility for the TECH BUBBLE? Oh that is right, it popped the day after he left office so it must have been ENTIRELY BUSH's FAULT.

"The "short run" is what we have to deal with just now"

Sacrificing capitalism for short run stimulation is about as irresponsible as a child eating too many cookies before dinner. We may go hungry for an hour or two, but it is healthier to wait for dinner.

Keyes pretty much tells it how it is here:

http://www.youtube.com/watch?v=lqkMfToY9Pk

Anon? How did "GOVERNMENT" set up the AIG and non-bank Ponzi's?

"it is GOVERNMENT almost all the time interferring with markets."

.......... I often lament the process of corpies buying favors for themselves from a Congress that is far too dependent on the lucre of lobbyists and PACs for re-election.

.......... as for energy, not sure if you count me as a "liberal" but I find myself closely aligned with T. Boone Pickens; a lifelong Republican. The carbon tax? Well, it's a complex subject but we have been flying OURSELVES up a blind canyon with the cheap oil of yesteryear. Now we are flying up a blind canyon with far pricier oil that is bound to become pricier yet.

........ I'm not sure how any President can light off another unregulated oil futures run-up with billions of sovereign, self-serving, funds fueling a runaway "market". IF oil futures are meant to provide stability and hedging for those whose businesses are highly dependent on oil, instead of yet another Las Vegas style lottery for mega-billions of hot money, perhaps the "players" should be limited to those who ARE the consumers of oil and COULD take possession.

The "tech bubble?" I don't blame either Clinton or Bush though Greenspan piling on rate increase after rate increase leading up to the election and very rapidly unwinding them once Bush was installed did catch my eye a bit. Puzzling too that the terms: internet, information highway and broadband seemed to go on an eight year vacation from the White House, and that now the need for universal broadband is now a main topic. (After falling half or more of a decade behind Korea, Japan and most of Europe)

Short run fix? I gather from what you say that you've not much of a fix on the magnitude of The Mess. Students of the last Depression will note that FDR and the New Deal very likely saved capitalism in an era tiled toward socialism and even communism. As we can see in nations like Russia and many others, once an economic system is broken and laying in ruins it is VERY difficult to resurrect with strongmen, gangsters and international corporations grabbing much of the spoils.

I don't think the responsible folk of either party favor taking such a chance. I don't recall Keyes having ever displayed much econ savvy. Have you studied econ at all? I find it rare among those of the extreme right.

Jack,
We are getting off subject a bit here but since I started it I should try to complete my thought(s).
Since I have seen the tort problem up close and personal, My estimate is 30% of health care costs are defensive medicine. I come to that from 35 years of practicing radiology in very large private and academic medical centers. In addition, I worked as a "top cop" in a medical center, responsible for all medical quality, with a medical staff of 800 and know that the amount of "malpractice" is related to very few physicians and situations. As you know, 95% of all cases are either dropped or found not guilty. Most cases brought are because of poor communication and PR. I recently wrote a paper which evaluated the cost of finding one positive CT scan of the head in the ER in patiens who had one of 17 symptoms without neurological findings. Using VERY conservative assumptions, it comes to $12,000 all "rationalized" on the basis of defensive medicine. I would be happy to send you a copy if you wish. In addition, at age 72, I just completeed my masters degree in medical informatics at Northwestern University and have been involved in medical IT issues for many years and while there are some aspects of health care that could use some streamlining and record storage and transmission, the entire idea of standardization and decision making is fraught with danger for the patient. The electronic medical record will save nowhere near the 80 billion figure in the Rand report on the subject in 2005. In fact it might even cost more. My last paper was on reforming healtcare in the US. I would also be happy to send you a copy if you wish. You might not agree with all of it but I tried to be complete and even handed.

Obviously, you can tell that I agree with both Anon and with you in that unfettered capitalism is cruel and ruinous but the government, particularly right now, has gotten completely out of hand in its own self perpetuating interest and is on the cusp of making things worse. One has to ask who is pulling the strings. Just as in healthcare, the best solution is a well educated, involved and energetic public. I am not sure that we have a critical mass in that regard even amongst the folks who have completed undergrad degrees and are therefore "educated".

I understand that I sound negative, but I belive that there is adequate evidence to be sincerely worried about the future of our country.

Oh Jack, I forgot to answer your last question on the alst year of life. I would mandate the fiking of an online advance directive at the time of Medicare sign-up. One could say I want everything possible done or one could say I want nothing done or something in between and specific. The mandate is constitutional because medicare is a privelege not a right. Part of the reason for the 80 billion in the last year of life is confusion and uncertainty on the part of the family, hospital, physician without clear guidelines. Might not save 80 billlion but might save some of it.

Those quoting Thomas Jefferson really will be called "extremists". Napolitano's Thought Police will be coming after us because those dumb enough to support our founding principles just cling to guns and religion all the time...!

Well, I'll do this before clinging to GOVERNMENT any day of the week.

Here is a nice article, don't you think?

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html?sec=&spon=&partner=permalink&exprod=permalink

"As we can see in nations like Russia and many others, once an economic system is broken and laying in ruins it is VERY difficult to resurrect with strongmen, gangsters and international corporations grabbing much of the spoils."

Since we are talking about thugs and gangsters, I wonder what Chris Dodd will say when Goldman wants to payback TARP so it can get rid of government. What's in it for Dodd..., another sweetheart deal? Maybe Obama's carbon tax can provide sweet govt. subsidies and financing to wind companies that Nancy Pelosi and Al Gore own...?

FDR saved capitalism...? And government is the only solution today too, right. Well, I guess it takes govt. to fix all the problems govt. created I guess. This is just another way of saying government has to reinflate our artificial economy so we can stimulate each other in the short run. We'll just blame the next republican president for the next bubble that pops.

Jim: Thanks, those are good additions to the discussion. Ha! yes, in discussion of "efficient markets" the healthcare "market" is indeed some distance from home plate!

I have no inside or privileged view of the medical system but that of an interested consumer of some experience including that of being a VA patient. In other business experience I see that the inside view is often at odds with an outside view. It looks as though any commission charged with rationalizing what, I think, most would agree is not a rational system.

Were we to begin with a clean sheet of paper instead of trying to reform what came of a bastardization of WWII price controls it would seem the first decision would be that of deciding whether access to health care was a right to be extended to all......... and whether we could afford such a policy, or on the other hand, is any other policy an acceptable alternative.

As an aside here, I suspect that had we begun and continued with a strictly market based approach as we had pre-WWII with Doc's able to provide little and being paid in cash or chickens, that that approach would have "worked" much as the rest of our economy works, with a few getting the best, others getting some, while others got very little.

Worse, I'd guess that such a system would not have provided the technology we have today as working folk would not be able to pay for major surgeries or exotic cancer treatments. Such a market MIGHT have contained costs in some instances such as high specialist pay etc. but may well have increased costs as many would have foregone preventative care.

In something of a clumsily unstated manner I think our people have decided that health care IS close to a "right" and not to be withheld (in most cases -- especially acute) due to an inability to pay. Still we flap around with this "insurance" mess with many pretending that some form of "market" is at work giving us the most for our H/C dollar and little is to be done about it, despite our spending twice what other nations spend, and going rapidly broke trying to allocate 18% of GDP.

Once we state out loud that H/C is to be made available to all and that we are not going to let folks die in the streets, the problem seems much simpler. For one, we are ALL in the pool w/o the problems of adverse selection, or indenturing folks with "pre-existing conditions" to whatever job they happen to be in when the "condition" arises.

My personal view is that health care subscriptions somewhat like existing HMO's but with a Patient's Bill of Rights that prevents underservice would have market-like benefits of competing for members much as insurance companies (might) compete today. As all are in the main pool I'd guess payment would come via a government voucher.

There are problems with that model but it's perhaps better than the aging Canadian or British system which seems essentially a Medicare fee for procedures deal that does not maximize wholistic care nor do much to limit costs.

A bit of feedback from one who is fairly satisfied with today's VA (but not that of a decade ago)

"My estimate is 30% of health care costs are defensive medicine. I come to that from 35 years of practicing radiology in very large private and academic medical centers.

........... It seems a tough estimate to make as one guy's "defensive" is another guy's thorough work up. Also imaging costs are ALL over the map with some costing 3 or more times what the same costs in other areas. I'd bet the VA is a low cost provider and they ARE available at VA's throughout the nation and I believe military hospitals in other nations.

.......... You may have a better handle on potential savings of EIT, but there seems a "resistance" too in the med field. What I see in the VA pharmacy, as one example, the Doc clicking on a medication. The prescription is checked by the software to avoid decimal errors and other criteria. It appears immediately in the Pharma and is ready to P/U within a few minutes. Meds for chronic diseases are mailed to the Vet's home from an efficient fullfillment center.

Compare that to driving to a Walgreen's with all the commercial costs of a business, one, or several $125k pharmacists where in the case of Medicare the meds have been price-fixed at over double what the VA pays?

"Just as in healthcare, the best solution is a well educated, involved and energetic public. I am not sure that we have a critical mass in that regard even amongst the folks who have completed undergrad degrees and are therefore "educated".

........... Well we KNOW who is pulling the strings and it's a host of highly skilled lobbyists and former "representatives of the people turned pro" and pulling the freight for every vested interest in the status quo....... or worse. And yes the alternative would be an energized public which I too doubt is there. But there are some, say 10% or more? of Cspan's audience? those such as yourself who'd rather leave a legacy than seek benefits for yourself or your firm?

Your advance directive seems "the way it should be". I'd agree it's tough for a sibling to be the first to say......."It's time....."

To counter your negativity about the fate of the country, some of which I share! I think what we need is a political force to insist "WE" go into a room and clobber each other until we come out with an improvement over what we're doing today and a path toward the best we can manage. I believe that political force is not just Obama but those who put him in office. We'll soon see!

"Horse and Buggy Days"? What we're experiencng now is nothing more than a good old fashioned "Bank Panic" helped along by some rather old fashioned "pig in a poke" business practices. We haven't had one (bank panic)in such a long time, everyone seems to have forgotten. Oh well, maybe people will begin to understand why all the Regulations were set up in the first place, before we deregulated just about everything.

When it comes to Econ. Policy, old T.J., would have us still shucking corn and slopping the hogs. It's a good thing Hamilton had control of the Treasury and Congress's ear, that is until Burr blew him away in duel over power politic squables. Too bad Dueling has been outlawed, we could get rid of some real hacks in Government and get this Country back on track.

Jack,

You and I are not very far apart in our views.I greatlty appreciate your intelligence and civility.

Классно всё: и картинка ,и информация

Yeah, Thomas Jefferson was an idiot. He actually thought our Constitution as written actually meant something.

This govt. has added (by printing or spending what it doesn't have) $12.8 trillion into the economy. It is showing up in the banks now. It will show up all over soon enough. It is all artificial wealth creation, just like maintaining artificially low interest rates is.

It worked this time, we fooled the world. Our BS economy is not going to work much longer though. The world consumes too, and we won't be able to control the world economy forever just because we are fat consumers.

I wonder what happens when Obama takes away that $8000 rebate for first time home buyers? I guess we'll have to make up more psychobabble when then next bubble pops. We'll just demonize capitalism and markets then and we'll ignore the fact that government set rules based on fraudulent principles to prop up asset values.

Интересно и позновательно, а будет еще что-то по этой теме?

You write "there is some inertia in trading". I don't know if this is true, but if it is, that is an inefficiency you need to explain, not a fact that can explain inefficiencies. Efficient markets based on underlying fundamentals are not supposed to have any inertia according to prevailing theories.

Anon. Now, I never said T.J. was an Idiot. I did imply that he was less than astute when it came to Econ. Policy and Household Budgeting. You do know he died a bankrupt. And the only reason Monticello wasn't sold off to cover his debts was because of the esteem his Creditors.

You'll be rather surprised when the U.S. Economy emerges from the current Crisis in better shape than before the Free-Traders/Free-Marketers tried to torpedo it. Perhpas we've discovered a new category of Treason, "Economic Treason".

Jim: Thanks! I'm much more interested in good debate that seeks the truth than "winning" a point.

Anon: Much of that money is being loaned to "our" rascally lending institutions. I'm not sure they are creditworthy and we KNOW that foreclosure and loan losses are going to be the highest in history........ but those will be a minor fraction of the trillions.

How have you determined that we've maintained an "artificially low interest rate?" Seems to me that China and others with whom we've run huge trade deficits have been throwing money over the transom in order to "repatriate" our dollars and keep the game going. With far more dollars than investment opps we're bound to see low interest rates. Neither myself nor Grnspan saw this game as being sustainable but, I guess, they're hoping that A the yuan will rise B The Chinese, Indians and others will become less savers and more consumers C That something will happen in the US to make US consumers save more of their earnings. Looks like all three of those are taking place now.

I'm close to the housing industry and the $8,000 first timer credit is LESS than a box office hit. A market watcher could predict what appears to be the case:

A. There are only so many first time buyers ready to buy within any 10 month period regardless of incentives. (In areas where prices are still dropping or thought to be dropping, the credit is not much of an offset.)

B. MOST first timers are looking for payments not much higher than their apartment rent...... $1,000 or so which points to homes under $150,000. (Perhaps higher in LA-NY etc)

C. There is very little new product in that price range, and the inventory of Mcmansions haven't and most likely have not fallen far enough or are not in the right areas.

D. The nation is and has been, suffering from a lack of demand (ie far too little discretionary income available to purchase "wants") and with 10% unemployment, the unemployment for young, would-be first time buyers is yet higher and instead of getting a "bump" from those coming out of college and HS this year, many of them will simply add to the unemployment roles. (If wise -- they may as well go back for more schooling IF they or their families can afford to do so)

BTW I'll predict something like the $8,000 credit will be extended as housing is one of the biggest of Keynesian spurrings for the taxpayer's buck, and that those who "scored" the cost of the program will find it having cost less than half what they projected, and! that the economy will still be waaay IN the tank come Dec 1st.

Asher: Please sigh me up for the inertia side. The Bay of Fundy and Cook Inlet in Alaska have tremendous, 30 foot tides though the open oceans nearby have tides of 5-7 feet. Like water sloshing in a bath tub the small tidal effect goes rushing up the Bay and just as the top of the huge tide hits the upper end of the Bay, the tide at the entrance is falling and no longer feeding water into the Bay. There is nothing to support the 30 feet of tide at the top of the Bay so it rushes out, often to a "negative" tide, but just in time to meet the new incoming tide.

Isn't that a lot like what's happened in recent tech, housing and oil run-ups? Money flowed into tech long after the solid companies had been pushed too high to be called an efficient valuation. Soon far too little money was being bet to push or even maintain prices. Looking back many good companies plunged lower than would seem "the right price". Likewise, I'd predict that in many areas housing prices will overshoot to the low side before rebounding as "the market" waits for a clear signal of THE bottom. Housing has to its advantage its inherent utility as a home which may mean "a buy" if it fills one's needs and is priced "OK" or "affordable".

But I dunno...... these terms? perhaps "efficient markets" include these "overruns?" As at that moment that is all the stock or home would bring? And those buying are "speculating" as they too do not have perfect knowledge of "the right price".

Нормально.О таком правда не первый раз уже слыхал, но все же.Говнокомментов было бы поменьше, было бы вообще отлично.

股票是否是个金融衍生品的基础平台?是否你们的购买欲望才是推动经济的根本动力?是否该建立个人们所想的到物品信息的平台,以最简易迅速地提供物品,带动市场?
股市是个促进企业融资发展的平台,应以企业的稳步发展为保障,以投机为目的的行为只会加大风险,加大市场中的更多不稳定的因素爆裂股市泡沫就会是迟早的事.对股市根据投入资金比重的大小,控制在股市中最少时间,扩大公民所能持股的利益及其所能介入的范围,使其成为一个更具联系的整体.

Огромное вам пасибо! а еще посты на эту тему будут в будущем? Очень жду!

А Вы не задумывались о том, чтобы параллельно завести еще один блог, на смежную тему? У Вас неплохо получается

Thought about it:

http://seekingalpha.com/article/116493-u-s-economic-policies-engender-rationality-in-the-face-of-uncertainty

-N.B. Shepard

очень занимательно было почитать

Ваш пост навел меня на думки *ушел много думать* ...

The definition of Efficiency is not wasting resources; not wasting time, energy, effort, money, material goods, morale, etc. It is also defined on the other end by what product it delivers; in this instance I believe un-coerced happiness and contentment are what an economy is to deliver.



Bubbles are a sign of inefficiency; at their best they allocate too many resources to one sector of the market and result in a recession, at their worst you end up with a market being played like a ponzi scheme. Predatory behavior and fraudulence is, by definition, inefficient. A city of thieves produces no bread.



All bubbles, recessions, depressions, and bull markets are the result of excess credit created by fractional reserve lending. You do not have bubbles when you use hard currency; this is proven historical fact. The only problem with a single hard currency is tenancy for exceptional players to monopolize a market and destroy it for personal gain. Free markets are by definition the most efficient, effective markets but they do not stand the test of time. Neither does Totalitarianism or Fascism for that matter; technological revolution or a predatory society outgrowing its prey invariably infighting over the scraps of civilization overcomes those two states and leads to bloody revolution, anarchy, then order from the ground up.



Fractional reserve lending addresses the monopolization of markets when practiced in a decentralized fashion; when currency becomes too liquid you end up a bubble and a recession or depression, when currency becomes to illiquid you end up with excesses of debt and bankruptcy. The competition of fiat currencies vs hard currencies vs protectionist currencies (such as English Wooden Sticks) is the solution to boom bust cycles; it eliminates the size of bubbles and keeps any one player from monopolizing the market through the production of excess currency for any length of time. Suffice to say if any printer of fiat currency were to begin printing notes at a hyper inflationary pace, people would retreat to other currencies en masse. Even in systems where one currency is backed or owned by another, hard currencies and protectionist fiats would counteract that behavior. In markets where people ran to hard currencies or protectionist fiats, they would invariably wish to acquire debt to fund ventures, new fiats would be backed by those currencies and fiats, and inevitably reward those willing to take the risks of investment.



Some might say markets do not stomach competing currencies due to convenience or trends. Barter is a market of competing currencies and worked for thousands of years. Convenience has a cost; For the people of the Weimar republic that barter was superior to the costs of convenience. For Americans who choose to store their live savings in a safe, they see their money devaluing at the same rate at which they save. For gold hounds, they see trends of excesses and scarcities affecting the value of their commodity.



Without competition a market of monopoly is invariably subdued by predatory personalities.



It would be a fantastic idea to add to our constitution that the government has the right to coin and print currency, but no right to pass a law of legal tender; they can create currency but can't force us to use it.



We are already seeing emerging competing currencies to the dollar, and the banking infrastructure of the world responding violently to small innovators. The Liberty Dollar, Iraqi war, and the way Banks are being bailed out right now are good examples.

очень занимательно было почитать

Ценные рекомендации, беру на заметку

Great post!

Would you like a Link Exchange with COMMON CENTS?? Check us out here...
http://www.commoncts.blogspot.com

Great post!

Would you like a Link Exchange with COMMON CENTS?? Check us out here...
http://www.commoncts.blogspot.com

"You'll be rather surprised when the U.S. Economy emerges from the current Crisis in better shape than before the Free-Traders/Free-Marketers tried to torpedo it. Perhpas we've discovered a new category of Treason, "Economic Treason"."

On one hand you blame Greenspan for the tech wreck, and on the next hand you say free markets are evil and govt. is the perfect solution for getting out of bed in the morning.

This makes a ton of sense. No hypocrisy here...! Govt. caused the tech wreck but only the evil free market greedy guys on Wall St. caused the mess we are now in.

We might emerge out of this mess but if we are sacrificing capitalism in the process our economic pain has not even started yet. Your continuous short term stimulation (and psychobabblicious theories on why the free market is evil) only takes us further down the road to absolute communism. Each time we artificially inflate, it comes at a cost to our principles. Eventually we will have no principle left and our entire system will be a total fraud.

The simple fact is this govt. is completely out of control. It has gone so far beyond its proper role, scope, and size, it is train wreck waiting to happen. Psychobabblicious people actually think it is the FED's role to be the SEIZER of LAST RESORT. Indentured servitude to the State, HERE WE COME...!

I'm sure Obama will be "fair" in how he distributes our grandchildren's money. We wouldn't want any "White Construction Workers" getting any of that Keynesian stimulus, now would we...? Does anyone see another wave of slavery in our future...? Keynesianism combined with special treatment for a select few equals abuse in an indenture servitude system.

I am going to re-post my comment. I think it is important considering the most recent blog topic.

How long until you PSYCHOBABBLICIOUS experts realize GOVERNMENT IS THE PROBLEM...?

Each day we go down this path is another step towards absolute communism. We are almost there...! Who thinks OBAMA is giving anything back?

----

"As we can see in nations like Russia and many others, once an economic system is broken and laying in ruins it is VERY difficult to resurrect with strongmen, gangsters and international corporations grabbing much of the spoils."

Since we are talking about thugs and gangsters, I wonder what Chris Dodd will say when Goldman wants to payback TARP so it can get rid of government. What's in it for Dodd..., another sweetheart deal? Maybe Obama's carbon tax can provide sweet govt. subsidies and financing to wind companies that Nancy Pelosi and Al Gore own...?

Anon, "Psychobabblicius"? Is this a Neologism from the "Encyclopedia of Economics". BTW, did I spell it right?

As for myself and the rest of the Nation, including the Obama Administration, we'll continue to steer a clear course within the "American School of Economics" whose main tenets are:

1. Create Financial Infrastructure
2. Create Physical Infrastructure
3. Support Universal Public Education at all levels
4. Support Research and Development
5. Support Agriculture and Industry

All of these fall under the Preamble to the U.S. Constitution which states:

"We the People of the United States, in order to form a more perfect Union; establish Justice, ensure Domestic tranquility, provide for the common Defense and promote the General Welfare; do hereby establish and ordain this Constitution."

Take close notice of the General Welfare Clause. It becomes much more fully developed under the Commerce Clauses".

If it's not to your liking, you're always Free to leave the country.

Instituting communism under the guise of "promoting welfare" contradicts our constitution, encroaches on our liberties, and overall reduces our quality and standard of living.

Love it or leave it...! Nice, you and Dick Cheney use the same tactics.

Here is Obama's economic plan for this country:

1. Abolition of property in land and application of all rents of land to public purposes. (See Kelo vs. New London - who needs property rights anyway...?)

2. A heavy progressive or graduated income tax. (California is bankrupt and they have a 10% state income tax, Obama raising federal taxes, NYC raising its City income tax while obama demonizes Wall St.)

3. Abolition of all right of inheritance.
Confiscation of the property of all emigrants and rebels. (Death tax)

4. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly. (Our wonderfully independent Federal Reserve using inflation and deflation)

5. Centralisation of the means of communication and transport in the hands of the State. (National Public Radio and our mainstream media. Throw in the fairness doctrine to eliminate alternatives)

6. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan. (A bit of enviroMENTALISM here. Also nationalization of industry)

7. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture. (Union labor and bailing out companies that fail with tax dollars all because they use union labor. Also union labor for government jobs when govt. employs over 50% of our population before Barrack's keynesianism)

8. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equal distribution of the population over the country. (State's right is a slogan only when it fits the leftist agenda - such as State Courts implementing gay marriage by judicial activism)

9. Free education for all children in public schools. Abolition of children's factory labour in its present form. Combination of education with industrial production, &c., &c. (our public school system is a thriving example of how great nationalization works, so let's nationalize healthcare now!!!)

In case you leftists didn't recognize it, above is the Communist Manifesto. Sounds a lot like your ideology, doesn't it...?

For Obama, you forgot to mention:

-Nationalize Healthcare
-Nationalize Energy
-Nationalize Banks
-Nationalize Insurance
-Prop up failed companies that use union labor, attack those that don't

Seriously, which part of the Communist Manifesto does Barrack Obama disagree with...?

Anon, And you wonder why the Country has turned it's back on you and your corrupt/bankrupt ideology.

The tide is turning back to capitalism, and it is turning sharply. Clearly, angst is building up against the communists running the show right now. It is so obvious, so get all your infanticide judges onto the bench while you can because the clock is ticking. It is going to strike first on Harry Reid and Nancy Pelosi, and it is going to strike very hard on these fools. Chris Dodd is a short-timer.

Obama campaigned as a deficit hawk. Clearly he lied because now deficits are economic stimulus.

Obama campaigned as an anti-lobby machine. Clearly he lied, all he did was move Detroit's unions to the top of the priority list.

Obama said he was going to wage smarter war with his superior judgement, but he didn't say anything about waging HIS VIETNAM quagmire in afghanistan.

When you get right down to it, Barrack Obama is the biggest liar to ever step foot in Washington. It is amazing that our stupid masses bought that BS CHANGE campaign. He is going out the way Jimmy Carter did.

If, as you claim the Fed should have burst the housing ( and stock) bubble, then why should the informed investor not have been afraid of such a scenario and stayed away from such stocks.

If, as you claim the Fed should have burst the housing ( and stock) bubble, then why should the informed investor not have been afraid of such a scenario and stayed away from such stocks.

Anon, "Tail-Gunner" Joe died of alcoholism at Bethesda years ago, and with him the specter of the Communist Threat. Ever since then, that tired old "Battle Cry" has fallen on deaf ears. Get with it.

While Posner and Company discuss why our banks were forced to take TARP money and now can't repay it (vivid illustration of thuggish government), I asked you a simple question: Which part of the Communist Manifesto does Barrack Obama disagree with...?

It is backdoor Nationalization..., a classic tactic of the egregious Communist.

Where does infanticide fit into the Constitution...? Do you leftists squeeze that into promoting general welfare too? Why not, you've managed to squeeze the Communist Manifesto in there.

Where does stealing private property fit into our Constitution? I guess it didn't, so Ginsburg and the leftists had to change it.

Better get as much communism in while you can..., because the public is going to bring out the whipsaw on your ideology. They know what you are about now...!

http://www.youtube.com/watch?v=3DlTgrMCxPg

http://news.yahoo.com/s/ap/us_freddie_mac_official_dead

This poor guy supposedly killed himself in the basement of his $900k home for his wife and kids to find.

Seriously, who believes that story...? I know of zero government employees who take home enough stress to kill themselves. Most are clock-punchers who sleep too well at night. A bureacracy like this is too big for any one man to go home with such guilt. Call me a skeptic...!

I think it is much more believable that this man refused an offer that was an offer that he couldn't refuse. Obama just put the order in to take him out. Rather than let this guy tell the truth about Chris Dodd and Barrack Obama, it was much easier to just kill him.

"Federal prosecutors in Virginia have been investigating Freddie Mac's business practices. But two U.S. law enforcement officials, who spoke on condition of anonymity because they were not authorized to discuss the Freddie Mac investigation, said Kellermann was neither a target nor a subject of the investigation and had not been under law enforcement scrutiny."

http://www.youtube.com/watch?v=pBj9JwfuZcY

I mean who really believes this was a suicide? There is absolutely no way this poor guy decided to kill himself so his wife and child could find his dead body in the basement of his $900k home. This just isn't a believable story. He got only a $170k bonus, nothing to harbor guilt over considering guys elsewhere in the industry were taking home multi-million dollar bonuses. He was recently promoted to CFO upon the government takeover. This to me says it is not possible this guy harbored guilt for the ponzi scheme because one govt. employee down the ranks cannot possible assume responsibility for the entire mess in a bureaucracy like this. If anything, his recent promotion to fix the mess would harbor feelings of pride - he's part of the team fixing the disaster.

This guy had been with Freddie for 16 years, even before the Clinton Administration got the ball rolling on subprime lending and the expansion of the "implicit" guarantees. This guy knew something or had something, and somebody in Government whacked him.

It just isn't believable that this was a suicide. Sorry...! The leftists in our media will have to come up with a better excuse to cover up what really happened. Considering how corrupt everything is right now, I'm almost certain this story is a bogus tragedy. It smells terrible.

I wonder if Ken Lewis is next to commit suicide...?

We have entered former USSR territory. Our government is that corrupt. You guys can psychobabble about market behavior from the classroom all you want, most realistic people know what is going on in the real world. It ain't evil markets, it is the black hand.

It would be too obvious if Ken Lewis also committed suicide. I'm sure his story will be a tragic scuba diving accident or something, perhaps down in Cuba since we are such great friends with Castro now...?

SAN FRANCISCO, April 21 /PRNewswire-FirstCall/ - Today at RSA(R) Conference 2009, Absolute(R) Software Corporation ("Absolute" or the "Company") (TSX:ABT), the leading provider of firmware-based, patented, computer theft recovery, data protection and secure IT asset management solutions announced that it has launched Computrace(R) for Netbooks. The new solution for netbooks delivers IT asset management and theft recovery to commercial customers, such as school districts, healthcare organizations and corporations who have been first to make widespread use of ultra-mobile computers.

http://www.stocknod.com/ABT-Abbott-Laboratories-stock-news.aspx

Blog on Indian Share markets with NSE BSE News Financial SENSEX MutualFund Trading Business Stock Tips Equity Daily Share Market Information

Gordon Ghecko was not right. Greed is not always good. This recession was caused by individual greed.

RE: "A FAILURE OF CAPITALISM" I DID NOT GO TO COLLEGE. I QUIT HIGH SCHOOL IN THE SIXTIES BECAUSE I GOT REALLY REALLY TIRED OF IT. I READ A LOT BUT NOT SO MUCH LATELY BECAUSE I SEE PATTERNS. SAME OLD SAME OLD YOU KNOW?
POSNER I SAW AN AD FOR YOUR BOOK IN THE ATLANTIC. I AM TEMPTED TO READ IT. BUT NO, IT'S MORE OF THE SAME DREARY S**T.
YOU KNOW AND I KNOW THAT WHEN A BIG WAD OF WEALTH IS "INVESTED" SOME ONE SOME HOW WILL STEAL IT. IT HAPPENS OVER AND OVER.
IT'S SO MUCH BETTER TO "DROP OUT" AND LIVE A LIFE THAT'S "CLOSELY HELD". BE LITTLE. HAVE LITTLE. MATTER LITTLE. OH, AND DO THIS IN FLORIDA. IT'S WARM THERE.
WHEN YOU ARE PLEASANTLY DRUNK AND WARM YOU DON'T CARE AT ALL ABOUT "CAPITALISM" AND AMERICAN "CULTURE".
SIMPLY SIXTY TWO AND LOVING IT...

One thing about intellectuals is that they possess high self esteems. They esteem themselves over all others and in all ways.

The deep and diversified social thought that comes from a small group of intellectuals talking amongst themselves is something to be admired. They all think alike, because they are all so independent of thought and open minded. If only we could all be so gifted, there would be no need for any political parties for we would all agree with our intellectual superiors and utopia would finally arrive on earth. No more arguments, no more thought, no more preferences, everyone would be raised to the level of glorious sameness like our good professors.

Take global warming, for example. If we are all as smart as our intellectuals, we would know that not only are Al Gore's global warming proclaimations real, but that if we would just shut up and fork over our money to the government, the intellectuals would be able to reset the climate and fix the whole mess for us. Lord only know the globe suffered and managed to survive the many periods of global warming and cooling that occured on earth before our intellectual saviours, or any of the lessor humans arrived on earth.

Well all I can say is thank goodness we have professors on the case of saving the Republican Party through ecouraging the sameness with the intellectuals in the Democrat Paty. I don't know how they find the time while working so hard to control the climate of the globe. Come to think of it, America's intellectuals bring up sweet memories of old Europe's priesthood and royalty. Those were the days, by God.

What quantitative hypothesis could be more general than the rational hypothesis and yet as useful in forecasting group behavior?

What quantitative hypothesis could be more general than the rational hypothesis and yet as useful in forecasting group behavior?

Hi, I am newbie here, This is a nice website Welcome to my website:
http://www.mp4-converter.net
Thank you very much.

This is support idea, that people "irrational" and our decisions usually driven by our emotions.