Felix Salmon

Metaphor watch, Buffett edition

Felix Salmon
Aug 19, 2009 17:46 UTC

Warren Buffett sure does love his metaphors. Here he is talking about mistakes being made in economic policy during the crisis:

How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery.

I count seven metaphors in three sentences here: the tumbling-yet-supposedly-indestructible pillars (architecture); the meltdown (nuclear power); the gusher (um, oil drilling?); the playing of a role (theatre); the rescue (although maybe “rescue” is at this point so ubiquitous as to no longer be metaphorical); the emergency-room-and-recovery (healthcare); and the slow path (walking, I guess).

Buffett still can’t lay a finger on Bill Gross, though, who once went so far as to explain how “the pyramid begins to unravel”. Why is it that financial-sector billionaires seem to be unwilling or unable to be edited?


I see a chance, albeit a super slim one it’s a chance nonetheless. Seems that too many congressmen are beholden to all the interests, left and/or right. IE, if memory serves most Wall St firms (IB, hedge funds) on balance contributed more to the Democrat presidential campaigns last year.

Might just live to see Thomas Jefferson’s quotation be tested…about the tree of liberty and what-not

Posted by Griff | Report as abusive

The economics of tattoos

Felix Salmon
Aug 19, 2009 17:29 UTC

Drewbie left me a comment this morning talking about people interviewing for jobs and not getting them, just because they had visible tattoos. I can well believe it. But at the same time, precisely because of this discrimination, I tend to both expect and receive much better service from people with visible tattoos. (Update: Thanks to Sebastian, in the comments, for spelling out the logic here.)

Businesses with tattooed employees are signalling to me that they have better service, and as a result I’m more likely to try them out. Given how well such messages work, how long can it be until the discrimination against the tattoos swings the other way, and it becomes easier to get a public-facing job if you have a tattoo? And if that happens, will the pendulum swing back to where we are right now, or will we just settle on a boring happy middle where no one cares about such things any longer?


while i believe that not all people with visible tattoos are the best choice for any particular job, i still feel that they should have the same chances as anyone else with or without visible tattoos! i have been at the receiving end of this discrimination, i was “hired” at olive garden immediately after my interview, but when i shook the managers hand after he told me i had the job, he saw my tattoos on my wrists and told me if i could cover them with make up then my job was secure. needless to say i went out and bought special (100 dollar) makeup to cover these tattoos. and when i went back to show him they were covered, he told me i couldnt have the job anymore. i understand that some companies have tattoo policies, but they shouldnt give someone a job, tell them what to do to keep it, then take it away. this is why i think everyone should be given the same opportunities when it comes to being hired at a job, because i clearly was what they wanted, but because i have ink it was all taken back. STOP DISCRIMINATING AGAINST PEOPLE WITH TATTOOS! ty :)

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Annals of laundering, Sheryl Weinstein edition

Felix Salmon
Aug 19, 2009 16:52 UTC

This isn’t the first time that Bernie Madoff’s lover has tried to make money by taking dirty laundry and printing it:

After the affair ended, Weinstein rebuilt her emotional life with her husband… She took antidepressants. They began to run a commercial laundry trade publication.

Apparently the two are still together. Commercial laundry trade publications: they’re just like marriage counselors, but cheaper.

The economics of second-hand bikes

Felix Salmon
Aug 19, 2009 16:02 UTC

If Robin Goldstein went to the trouble of collecting 700 datapoints off Craigslist for a single blog entry, I thought the least I could do was turn it into a pretty scatterchart for him:


What we’re looking at here is the average price of a used car in each metro area, on the x-axis, against the average price of a used bike, on the y-axis. As Goldstein says:

Not one city fell out of line in the inverse order. Where cars were selling for the most, bikes were selling for the least; where cars were selling for the least, bikes were selling for the most; and so on, inversely, in between.

The really weird thing is that the cities with the most bikes, like Portland, also have the most expensive bikes:

I know this is sort of quaint, but the last time I bought a bike, I think I spent $35 and it wasn’t hot. It was a road bike; it had 18 speeds, I think; it squeaked; and it served my needs (biking from my house to school every day) perfectly well…

The guy in the store asked me how much I wanted to spend…

He had something super-cheap for me, an old road bike that they’d fixed up. It wasn’t exactly my size, but it would do. It was a 1991 model, a Trek, I think. It was in good working condition, it had some newer components, and it came with a warranty. I could have it, he said, for $475.

I’m with Robin: this makes no sense. You can buy a really nice new bike for less than that — and new bikes cost the same no matter where in the country you buy them. They also have brand-new components, and component technology has been improving a lot of late. The only real problem with a new bike is that it’s a bit more attractive to thieves.

Still, the second-hand bike dealers are clearly on to a good thing, and there does seem to be an implicit understanding among them that they’re not going to compete on price. So this state of affairs might well last indefinitely.


A long time ago, houses and cars define the wealth of a person, but no more; bicycles also demand its share of the rich cake, but truly the price of a second hand bike depends on what’s on it than its age.

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Enough with the ties already

Felix Salmon
Aug 19, 2009 14:52 UTC

I’m with the CEO in this story, and the anonymous female friend: never wear a tie to a job interview at a startup. And in general, don’t wear a tie to a job interview where you won’t be wearing a tie day-to-day.

There’s a syndrome I’ve seen quite often and has never made sense to me: manager A, who rarely wears a suit, interviews candidate B, who would rarely if ever wear a suit on the job. Yet for the interview, and only because it’s a job interview, both of them wear suits and ties. Not exactly Pareto-optimal.

As for me, I haven’t had much experience interviewing job-seekers (thankfully), but I always feel a bit uncomfortable if they’re wearing a suit and tie. Conversely, my best journalistic interviews with CEOs and finance ministers and the like have been when neither of us have been wearing a tie.

My conclusion? Tying yourself up isn’t conducive to unfettered communication. Which is one reason why I haven’t worn a tie in over a decade. That and the fact that I hate how it feels.


I recently recieved an email about a orientation session for a professional degree that specified business casual attire for the most serious part of the orientation (meeting current practitioners in the field) and was very emphatic that business casual meant no jacket, no tie. I suppose that this email is from someone trying to avoid the over-formal discomfort that Felix talks about, but it’s unusual here because people in the field typically do wear jacket and tie to work. I’ve also never before recieved an invitation that specified maximum dress code rather than minimum dress code. Maybe the tides are turning?

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UBS: Where will the other 5,550 names come from?

Felix Salmon
Aug 19, 2009 13:42 UTC

The UBS numbers, as reported by the WSJ, don’t make a lot of sense to me:

UBS AG will hand over some 4,450 names of U.S. account holders as part of a U.S.-Swiss tax-evasion settlement and investigation that could produce in total 10,000 account identities, according to people familiar with the situation…

Aside from the account identities being turned over by UBS, some 5,000 names are expected to be produced through a special IRS amnesty program where UBS clients acknowledge unpaid income tax.

How is this IRS amnesty supposed to work? I was under the impression that they’ve tried this already: “if you fess up now, before we get our list of 4,450 names, and you’re on the list, then we won’t hit you with massive penalties — but if you don’t fess up and you’re on the list, then we’ll be much harsher”.

But 4,450 is a lower number than expected, and I’m pretty sure that substantially all of UBS’s clients will opt to take their chances rather than voluntarily going to the IRS. If they get caught, then so be it. But if they don’t, they’re basically home free: after all this back-and-forth, no one has any appetite to go through the whole thing all over again.

Indeed, there’s a possible upside to this whole affair for UBS: if I were a private-banking client of a major Swiss bank which wasn’t UBS, I’d be inclined to move my funds to UBS right now just on the grounds that lightning is most unlikely to strike twice. Not that UBS has any interest in condoning US tax-evasion any more, of course. Oh no.


Looks like US government is desperately trying to get money anyway they can even if it means asking a foreign bank to break it’s own country’s laws!

A-lot of people who will “outed” by this audit will be small, local business owners who employ locals. This will have a huge, negative impact on those small, local biz owners forcing some of them out of retirement, into bankruptcy, working for someone for minimum wage instead of being a biz owner.

I wish the US government would “go after” the BIG criminals like Wall Street, financial firms, banks but this would bring down the US economy.

Posted by nom | Report as abusive

Tuesday links aim high

Felix Salmon
Aug 19, 2009 03:43 UTC

Ed Fay, smug-faced and self-defeating Daily News exec, and his idiotic driving habits

The Highest P/E Ever!

The danger of a microfinance bubble

Michael Govan says he “couldn’t have” taken his LACMA job for less than $1m per year

It’s the random squirrel!

The official rules for the Duke Riley craziness in Queens. Needless to say, things didn’t really go according to plan.

The Fed goes multimedia

How huge is insurance companies’ ROI on their lobbying activities?

Household debt to net worth ratio spiking


Riley should insert his event into the Green Day tour, it would fit right in, in a fun kind of way. This guy (wait for it) here in Philadelphia tried to get something similar started it seems but he didn’t know how to play well or calmly with others

http://www.youtube.com/watch?v=56lefMaBG ik

Posted by bdbd | Report as abusive

Do TIPS ETFs make sense?

Felix Salmon
Aug 18, 2009 22:30 UTC

It’s quite clear that Pimco is talking its book when it says that active management makes more sense than indexing if you’re buying TIPS. On the other hand, Pimco’s arguments are quite compelling — more compelling, indeed, than counterarguments which don’t really address what Pimco says and instead fall back to the standard passive-investing-is-always-better approach.

The WSJ came to exactly the right conclusion, I think, after looking at the numbers:

Over the past five years iShares Barclays TIPS Bond posted an average annual return of 4.28%, according to Morningstar. That is slightly better than the 4.14% return on the Pimco Real Return fund’s “D” shares, which investors can purchase through a discount brokerage account.

But as always with mutual funds, costs are key. Investors with access to the Pimco funds’ “institutional” shares through a large company retirement plan would have outperformed the ETF, while those in one of the load-paying broker-sold shares classes would have done significantly worse.

I’d only add that it’s crucial, whenever you’re dealing with TIPS, to understand the tax consequences of investing in them — that can make a huge amount of difference, and it’s not uncommon for investors to avoid TIPS entirely just because they can’t deal with the concomitant tax hassle.

As for bond investing, there’s an extra layer of complication here in that it’s very hard to come up with a good index: you can’t just buy-and-hold bonds, as you can with stocks, because that way your duration is constantly declining. As a result, it’s far from clear what constitutes outperforming or underperforming — everything just becomes relative to other investors’ performance.

Still, I’ll stick to the ETFs, just because they’re easier to understand and it’s less likely I’ll be ripped off or subject to some managerial blow-up. My gut feeling is that individual investors are generally foolish to seek outperformance — which is ultimately what Pimco is selling here. And that anybody who can outperform a little can underperform a lot.


1) Owning a fund would not seem to solve that problem

2) I mentioned inflation expectations above. The result really should not be surprising (assuming you have the cash available to pay tax on the phantom income). The problem with the article is that it ignores other alternatives.

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Foreclosure datapoint of the day

Felix Salmon
Aug 18, 2009 21:21 UTC

We knew that medical costs can lead to foreclosure. But it turns out it works the other way round too:

Nearly half of people studied while undergoing foreclosure reported depressive symptoms, and 37 percent met screening criteria for major depression, according to new University of Pennsylvania School of Medicine research published online this week in the American Journal of Public Health.

This is surely one reason why loan modification is hard and time-consuming: you’re dealing with people who are, in many cases, clinically depressed. But it’s also a reason why there’s a strong public interest in minimizing foreclosures and making sure those loan mods happen.

(Via Marr)


Budgeting for health care costs is impossible as long as health insurance is tied to your job. This is one more example of why we need better social safety nets in the US. Sure, there are some people who bought houses well beyond their means, but if you lose your health insurance and have even a moderately major issue then you are hosed.

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