John McCain is a Decent Man

. . . but many of his supporters are not.

Twix or Spatula

This is funny.

playoff predictions, how'd I do?

Guess: Rays over White Sox in 5.
Result: Rays over White Sox in 4.

Short by one. Don't think I missed anything, really.

Guess: Red Sox over Angels in 5.
Result: Red Sox over Angels in 4.

Short by one again. I underestimated Mike Sciosia's ability to smallball his team right out of the playoffs.

Guess: Cubs over Dodgers in 5.
Result: Dodgers over Cubs in 3.
You don't get much more wrong than that. I'm not sure if I underestimated the Dodgers or overestimated the Cubs. Maybe I underestimated the Dodgers, or overestimated the health of the Cubs starters. Or maybe I'm just stupid.

Onward:
Red Sox over Rays in 7.
The Sox health problems don't matter as much as you would think, thanks to their depth. These teams are both very good at every aspect of the game, but the Sox just hit a little better. Really, it is a toss-up though.

Phillies over Dodgers in 7.
The media is pretty much already giving this one to the Dodgers, but this actually about as dead even a match as you can find. Cole Hamels is the best pitcher on both teams, and while the Dodgers have a much deeper staff, that counts less in the playoffs when teams go to three man rotations. Ryan Howard could inflict some unholy terror onto the Dodger's mainly right-handed starters.

congress does its goddamn job

Well, Congress finally passed a bailout, but not without destroying $1 trillion in wealth. Special awards to those Congressmen who were against the bailout on principle but were for it once it had sufficient pork for their district.

"kind of like being poked in the eye with a sharp stick."

I only occasionally blog on economics because there are a lot of smart people who do a much better job than I do.

Brad Delong is one of those. Read this interview excerpted from the Merc.

playoff predictions

"My #@$% doesn't work in the playoffs." Billy Beane.

Just to keep my mind off the economy, really.

Rays over White Sox in 5
The Rays are a better fielding, better hitting, better pitching team. The White Sox just lost their best position player, Carlos Quentin and are surprisingly mediocre hitting-wise for a team that hits so many home-runs. But the same caveat applies to all of the first round: any team can win a five-game series. This has the most entertaining managerial matchup in the playoffs. The Rays are managed by a guy who's about as intelligible as Alan Greenspan, while the White Sox manager just likes to call everyone a "faggot".

Fun Player to Watch For: Javier Vasquez is an underrated pitcher, and one who's manhood was called into question by his boss last week.


Red Sox over Angels in 5
Two great starting pitching staffs, two great bullpens, two not as good as you think closers. The difference is that the Red Sox just hit way better than the Angels. Also, I believe that the rally monkey will get eaten by a leopard.

Fun Player to Watch For: Good Jonathan Papelbon, as opposed to the guy who showed up in September. Kevin Youkilis, the Greek (Jewish, actually) god of walks had a breakout year, too.


Cubs over Dodgers in 5
Two extraordinary pitching staffs from top to bottom. Dodgers have more depth in the bullpen, but I think the key guys for the Cubs are better. A good pitching staff can more easily shut down the Dodgers as they are a lineup that lacks depth. As with with many Torre teams, the Dodger bench is filled with useless players but also has Jeff Kent's mustache. The Cubs have probably more depth in their lineup than any team in the playoffs. On the Dodger's side, I know Satan is pulling for them, and he could decide to intervene.

Fun Player to Watch For: ManRam is the most interesting guy on either team. Angel Berroa is interesting in that he's bad at just about every aspect of baseball and yet holds a job on a contending team, making Rafeal Furcal's health pivotal.


Phillies over Brewers in 4
I really want the big, fat Milwaukee Brewers to win, but unless C.C. Sabathia is pitching, they really aren't even very good. The hitters don't get on base, the bullpen is awful, and the rest of the rotation is a crap shoot at best. The Phillies, meanwhile have the most underrated starting pitching corps in recent memory. They have the 3rd best Runs allowed in baseball, despite pitching in a yard about the size of Don Zimmer's pants. Jamie Moyer, in particular put a sub 4 ERA at an age when most baseball players are just the best insurance salesmen in Gil's office.

Fun Player to Watch For: I've always liked Ray Durham. I have a weird feeling that if the Brewers pull this off Ray-ray and young pitcher Yovani Gallardo will be mixed up in it. Also, Scott Eyre may be on the Phillies roster for the sole purpose of getting Prince Fielder out. That at-bat could be pretty fun.

more on Mark-to-Market

Mark Thoma, Andrew Leonard and Calculated Risk weigh in on the part of this debate I understand the least.

In other news, the manufacturing sector was shrinking last month even before the panic.

a smarter take on the crisis, with less swearing too

Tyler Cowen gives the smart, right of center view of the financial crisis.

bailout q & a (best as I can muster)

Q. What's the big deal about the bailout? So what if a bunch banks and Wall-Street types lose some money?
A. Well, it could be a very big deal. There are a lot of banks and financial institutions of many sizes that are on the brink of failure. This will lead to a contraction of the supply of money, the amount of available loans and a big hike in interest rates (which is the price of money). From that, businesses can't get credit, meaning that businesses without cash on hand will go out of business. Furthermore, the increased price of capital makes it so that fewer new businesses start up.

Financial Panic -> Bank Failures -> Contraction of Money Supply -> Business Contractions -> Unemployment

The number of banks and financial institutions at risk make the idea that the damage could be quite extensive.

Q. Isn't this just a bunch of free money for rich people?
A. Well, yes and no. In the sense that the bailout is going to cost the taxpayers something and save a bunch of banks from bankruptcy, yes. But these banks are going to be selling these assets for far less than they bought them for, under most mutations of the plan. But that doesn't make the bailout less expensive to tax-payers. However, the cost of not doing something should be considered too. The U.S. stock market lost $1.3 trillion in the value of it's assets when the bill didn't pass the house. That's only what happened while there is still time to fix this, and not counting lost wages from secondary effects.

And another thing, you know most of these so-called bailouts end up turning a profit for the taxpayer (though I'm not saying this one will). AIG's bailout was a loan with an interest rate something like what I get on my credit card if I miss a payment. Our bailout of Mexico during the so-called Tequila crisis turned into a net gain.

Q. I don't like the idea of saving these silly banks from their own folly.
A. That's not a question, but it is a sentiment that I understand. Very few people shed a tear for a hedge fund manager. The problem is that finance is a load bearing industry. To let the market deal out harsh justice on the deserving few may well screw millions of innocent people.

Q. Shouldn't there be tighter regulation on these guys? Isn't this just a temporary fix?
A. Yes and Yes. I'm pretty far afield from my expertise but it seems like loosening the rules on how long a bank needs to keep a mortgage after it makes a loan was bad idea. But a long term fix won't get us out of a short-term trap. Even if you change the rules, you've still got all these insolvent banks threatening the financial system as a whole.

Q. Isn't this all the fault of "Mark-to-Market" accounting?
A. Uh . . . I don't know about this one. Mark-to-Market accounting has been around for a long time, but post-Enron it's rules were tightened to prevent firms from using mostly imaginary future revenue streams to determine the value of an asset. I suspect that a lot of people are saying that if banks are allowed to value their assets at some imaginary future value, then they won't be insolvent. I'm skeptical of both the first part and the second part of that, but I'll admit that I'm no expert on accounting, so I'll let Jonathan Weil take this one.

Q. Isn't this the fault of the CRA and affirmative-action?
No. This is really the sort of crap that only someone really committed to defending an ideology could believe. The guy who's name is on both my Macroeconomics and Banking and Finance book should put this one to rest. Best quote, "And that is not political correctness. It is correctness."

Q. I'm against the bailout because I think it violates free-market principles.
A. Congratulations. You've put an ideology ahead of the good of your country, and the world.

Seriously. Fuck your stupid principles.

Q. This mess is all the fault of [Democrats/Republicans/Jews/Media Elites].
A. I'm not interested. The only thing to do is save the financial industry, no matter what scapegoat you pick. If your congressman didn't vote for it, call them up and yell at them. Here I'm looking at you, constituents of John Doolittle and Lynn Woolsey.