Bank failures on the rise

It appears I may have significantly underestimated the amount of failed bank deposits in 2009 when I projected they would triple the 1931 level:

Missed payments by consumers, builders and small businesses pushed 72 lenders into failure this year, the most since 1992. More collapses may lie ahead as the recession causes increased defaults and swells the confidential U.S. list of “problem banks,” which stood at 305 in the first quarter….

Excluding the stress-test list, banks with nonperformers above 5 percent had combined deposits of $193 billion, according to Bloomberg data. That’s almost 15 times the size of the FDIC’s deposit insurance fund at the end of the first quarter.

$193 billion is 2.56 percent of total US bank deposits. Added to the $37 billion that have already failed this year, that would bring the 2008-2009 total to 6.26 percent, which is triple the 1930-1932 total… in fact, it would be nearly 57 percent more than the total failed bank deposits in the THREE years from 1930-1932.

The danger with the deposit insurance approach is that it keeps the bank panic problem under wraps until the FDIC runs out of money and all of the panic it was designed to prevent is unleashed at once in the ensuing chaos. If this is “recovery”, can you imagine what a “depression” would look like? Oh, and about that “guarantee”:



(a) FINDINGS.–The Congress finds and declares that–

(1) since the 1930’s, the American people have relied upon Federal Deposit insurance to ensure the safety and security of their funds in federally insured depository institutions; and

(2) the safety security [sic] of such funds is an essential element of the American financial system.

(b) SENSE OF CONGRESS.–In view of the findings and declarations contained in subsection (a), it is the sense of the Congress that it should reaffirm that deposits up to the statutorily prescribed amount in federally insured depository institutions are backed by the full faith and credit of the United States.

I can’t help but notice that “it is the sense of the Congress that it should reaffirm” != “it is the case that”. Especially when the original affirmation was a non-binding joint resolution. (H.R. Con. Res. 290) It’s a statement of intent, not a legal guarantee.

Why smart people can’t take criticism

A PhD concocts a theory:

My theory—call it the “Oakley effect”—is that really smart people often don’t know how to accept and react constructively to criticism. (A neuroscientist might say they “have underdeveloped neurocircuitry for integrating negatively valenced stimuli.”) This is because smart people are whizzes at problems that only need one person to figure out. Indeed, people are evaluated from kindergarten through college prep SATs on the basis of such “single solver” problems. If you are often or nearly always right with these kinds of problems, your increased confidence in your own abilities would be accompanied by an inadvertent decrease in your capacity to deal with criticism. After all, your experience would have shown that your critics were usually wrong.

I think this is largely true, especially for those educated in a scholastic environment where self-esteem was given precedence over actually being correct. It also explains the rapid retreat to “consensus” on the part of those who subscribe to mainstream ideas since they have no capacity for accepting or even understanding criticism of that which they have never bothered to question themselves. Of course, the “Oakley effect” doesn’t apply to me and other contrarians in various fields because we not only expect criticism, we know that it is an inherent part of taking a position that is outside or contrary to the current groupthink.

Personally, I very much like substantial criticism, even though it really annoys me when I get something wrong because I failed to take an obvious variable into account. I only get annoyed with critics when they bring up ludicrously obvious objections that were either taken into account or have nothing to do with what I’m saying. One of the great pleasures of my discourse on TENS with Scott Hatfield was the fact that even if he didn’t always understand the specifics of certain criticisms of the theory, he fully grasped that they were not only of a different nature than the norm, but the difference between a skeptic and an opponent as well.

“So, your argument basically amounts to something like this: “Evolution, meh. It’s the best thing we’ve got, right now. I hope something better comes along, someday. I just can’t imagine partisans on either side of this debate getting that worked up over that argument.”

I would have used the word “expect” rather than hope, and said it’s “all” we’ve got rather than “the best thing” but that summary is essentially correct. After all, there’s no question that the predictive uselessness of TENS is less materially harmful to me and everyone who reads this blog than the predictive uselessness of the General Theory and its practical Neo-Keynesian offshoots.

On a tangential note, I suspect it’s probably easier for anyone who has ever had any success trading in the financial markets to be comfortable with contrarian positions for the obvious reason that taking a contrarian position at the right time is very definition of “buy low, sell high”, which is one of the most effective ways to make money short of convincing the government to give you billions of tax dollars in order to prevent the sky from fallingeconomy from collapsing. In the equity and commodity markets, uniform consensus is usually a reliable indicator that everyone is about to get seriously scalped. So, not only is “scientific consensus” not science, it tends to be inherently dubious from the perspective of those see the regular shortcomings of consensus.

The amusing thing about those who tell me that I should harbor more respect for Darwin and TENS due to its long decades of mass acceptance by the scientific community is that I am presently at work in helping overturn an errant theory or two that are older, more materially significant, and more broadly accepted than anything Darwin ever wrote about natural selection or common descent. So, I’m probably among the very last individuals to whom an Appeal to Ancient and Accepted Authority should be made. And yes, I expect truckloads of criticism, both substantive and shallow.

Judging P1: A Defense of YEC

This is an opportunity to weigh in on how you thought Bethyada did in presenting his defense of YEC.

I’ll post an update with my own thoughts on Bethyada’s post later. And if you’re voting, be sure to explain your rationale for your rating.

The Old Negro Space Program

How did Ken Burns come to bypass this inspiring tale of intrepid African-American courage in favor of national parks?

And do you know who else liked national parks? That’s right. Hitler.