An accomplishment of sorts

I don’t buy it either:

Bernanke denied threatening to oust Bank of America’s CEO Kenneth Lewis or the bank’s board members if they abandoned the takeover after discovering spiraling losses at Merrill.

“I never said that I would replace the board and management” if Lewis decided to invoke a clause in the acquisition contract to try to stop the deal, Bernanke told the committee….

Throughout the day, Bernanke faced often hostile questioning — unusual for a Fed chairman, who typically commands deference in public settings. Of Bernanke’s denial that he threatened Lewis’ job, Rep. Jason Chaffetz, R-Utah, said: “With all due respect, I’m just not buying that.”

The Merrill deal made no sense for BofA and they had a perfect out. What reason does Lewis have to lie about it? This is hardly the first time there’s been talk about Paulson and Bernanke putting the squeeze on the banking executives to do as they’re told. It’s really a tremendous accomplishment, when you think about it, that Bernanke can actually make the CEO of a monster bank look sympathetic, and in the present environment, no less! All we need now is the dreaded vote of confidence from Obama and we’ll know that Summers is the chairman-in-waiting.

Some interesting documents regarding the Fed’s discussion of the merger. Page 18 in the PDF document is of particular interest.

GDP Watch Q1 Final

Despite the rising unemployment claims, the size of the first quarter contraction continues to drop. So, apparently it wasn’t quite as bad as initially reported, at least, if you actually take the GDP numbers without a grain of salt.

Quarter Adv Pre Final Rev Annual
2009 Q1 -6.1 -5.7 -5.5
2008 Q4 -3.8 -6.2 -6.2 -6.3 1.1 (1.3)
2008 Q3 -0.3 -0.5 -0.3 -0.5
2008 Q2 1.9 3.3 2.8 2.8
2008 Q1 0.6 0.9 1.0 0.9
2007 Q4 0.6 0.6 0.6 -0.2 2.0
2007 Q3 3.9 4.9 3.9 4.8
2007 Q2 3.4 4.0 3.8 4.8
2007 Q1 1.2 0.5 0.6 0.1
2006 Q4 3.5 2.2 2.5 1.5 2.8
2005 Q4 1.1 1.6 1.7 1.3 2.9
2004 Q4 3.1 3.8 3.8 2.4 3.6

Reading List

1. The Dosadi Experiment by Frank Herbert

2. Manias, Panics and Crashes: A History of Financial Crises by Charles Kindleberger

3. Loads of Milton Friedman and a bit of Rothbard.


Ghosts of Columbia by L.E. Modesitt, Jr.: 8/10. I really enjoyed this pair of alternate history novels published together in one volume. Intriguing world-building, excellent characterizations, and a thoroughly entertaining take on a Godfatheresque theme of a retired spy who wants to get out but keeps getting pulled back in. I never liked Modesitt’s Recluce novels, but the Columbia ones are quite good.

The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession by Richard Koo: 7/10. While I was impressed with Koo’s balance sheet recession theory and his accessible writing style, a few historical errors of fact were surprising and I don’t buy into his policy recommendations that ultimately amount to a circuitous entrance of neo-Keynesianism by the back door. It’s great that he recognizes when monetary policy simply isn’t working, but the answer is not a perfectly timed injection of expansionary fiscal policy. I don’t know how much Austrian theory Koo knows, but it strikes me that aspects of his theory are perfectly compatible with it.

Rethinking natural selection

Once more, the evolutionary model is shown to be an inaccurate one. And, as I have predicted, it is genetic science that is increasingly punching holes in the theory of evolution by natural selection:

Recent research has produced a surprise, however. Population geneticists expected to find dramatic differences as they got a look at the full genomes — about 25,000 genes — of people of widely varying ethnic and geographic backgrounds. Specifically, they expected to find that many ethnic groups would have derived alleles that their members shared but that were uncommon or nonexistent in other groups. Each regional, ethnic group or latitude was thought to have a genomic “signature” — the record of its recent evolution through natural selection. But as analyses of genomes from dozens of distinct populations have rolled in — French, Bantu, Palestinian, Yakut, Japanese — that’s not what scientists have found. Dramatic genome variation among populations turns out to be extremely rare….

“Adaptations to the environment absolutely do occur,” said Joseph K. Pickrell, a graduate student at the University of Chicago who, with Graham Coop of the University of California at Davis, co-authored the recent study. “But they don’t occur according to this simple model that we and others have been looking for.”

Given the lack of required change, it will be interesting to see how the true believers deal with this latest blow to their conceptual model. No doubt they’ll quickly draw some cycles and epicycles to attempt accounting for the vast holes in the temporal schedule this creates. Regardless of whether natural selection is, as biological philosopher Richard Dawkins declares, the exact opposite of random, it’s interesting to see that the real scientists are beginning to conclude that it is the random element that is the more important one.