Tuesday, January 31, 2012

Interview with Zack Fertitta (Offthekuff)

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Fama on Finance | EconTalk | Library of Economics and Liberty

Eugene Fama of the University of Chicago talks with EconTalk host Russ Roberts about the evolution of finance, the efficient market hypothesis, the current crisis, the economics of stimulus, and the role of empirical work in finance and economics.

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0:36Intro. [Recording date: January 17, 2012.] Russ: Your impact on the field of finance has been immense--in a whole bunch of areas, but one that stands out is the efficient markets hypothesis (EMH). I'd like you to sketch out the evolution of that idea in the field, how it was understood initially, and how it has changed over time. Guest: How much time do we have? Russ: Well, four or five hours, but let's try to keep it to under 10 minutes for this first question, if you can. Guest: Okay. I'll go back to the beginning. The way Harry Roberts tells it, Holbrook Working in the 1930s started to become interested in whether speculative prices moved randomly. He was mostly an agricultural economist, looking at agricultural commodities, and he took a series of random numbers, simulated them, and brought them to his faculty at Stanford, faculty lounge, I guess; showed them to them and they agreed they were an agricultural series. So he thought from that that maybe a random walk kind of model would work pretty well for agricultural prices, prices of other commodities. But then there was a big gap from there to like the end of the 1950s. And what opened things up was the coming of computers, which made computations much easier. And the most readily available data was stock price data. So, basically, statisticians, econometricians took the data and started doing calculations on it, calculating autocorrelations with their estimates of how predictable returns are based on past returns. And then they stopped. Economists got into the mix and said: Okay, how would we expect prices to behave if they were set based on all available information? Which is basically the EMH, but it wasn't stated in those terms at that time. So, they said: I think they should be a random walk, an hypothesis pulled out of the air. Russ: When you say it's a random walk, explain what that means. Guest: That means that expected changes are successive changes are independent of one another. It also means they have identical distributions, but that part is not important. It's basically the independence part that's important. It basically means that you can't predict future returns based on past returns. Russ: And yesterday doesn't tell you anything about tomorrow. Guest: Right. Returns from day to day are basically independent of past returns. Now that was a very extreme hypothesis. Let me give you an example. You wouldn't say that about tomatoes, for example. Tomatoes are going to be cheaper in August than in January, for the most part, because they are seasonal. It has to do with supply and demand--mostly supply of tomatoes. There's a similar thing operating in prices of stocks, bonds, whatever. Basically, there's an expected return component, what people would require in order to hold those securities; and there's no reason that that has to be independent through time. There's no reason why that's not predictable or why it doesn't go--and there's lots of evidence that it is--higher on stocks during recessions and lower during good times. So there can be predictability in returns that is consistency with efficient markets. What people didn't understand in the beginning was that propositions about how prices should behave had to be joined to a statement about how you think they ought to behave. In other words, what you need is some statement about what we call a market equilibrium. What is the risk-return model you have in mind underlying the behavior of the prices in returns? So, for example, stocks are very risky; they require a higher expected return than bonds; and you have to take that into account in the tests. So there is this, what I call the joint hypothesis problem, which is basically what I added to the mix, but it's kind of an important part of it. It says whenever you are testing market efficiency you are jointly testing efficiency with some story about risk and return. And the two are joined at the hip. You can't separate them. So, people infer from that, it means market efficiency is not testable on its own. And that's true. But the reverse is also true. A risk-return model is untestable without market efficiency. Most risk-return models assume that markets are efficient. With very few exceptions.
6:18Russ: And so when we say markets are efficient, what do you mean by that? Guest: What you mean is that prices at any point in time reflect all available information. Russ: Now that idea--what's the distinction between the weak form and the strong form that people talk about? Guest: Two words that I used in 1970 that I came to regret. Because I was trying to categorize various tests that were done. So, I called weak form tests, tests that only used past prices and returns to predict future prices and returns. And I called semi-strong form tests, tests that used other kinds of public information to predict returns, like an earnings announcement or something like that. And then I called strong form tests, tests that look at all available information; and those are basically tests of if you look at groups of investment managers and you look at returns that they generate, you are basically looking at all the information they had to generate to [?] securities, and what's the evidence that the information they had wasn't in prices. Russ: And empirically, where do we stand today, do you believe and what has been established about those various hypotheses? Guest: Well, believe it or not, the weak form one has been the one that has been subject to the most, what people call anomalies, in finance. Things that are inconsistent with either market efficiency or some model of risk and return. The big one at the moment is what people call momentum--prices seem to move in the same direction for short periods of time. So, the winners of last year tend to be winners for a few more months, and the losers tend to be losers for a few more months. In the strong form tests, Ken French and I just published a paper called "Luck Versus Skill in Mutual Fund Performance," and basically looked at performance of the whole mutual fund industry--in the aggregate, together, and fund by fund, and try to distinguish to what extent returns are due to luck versus skill. And the evidence basically says the tests it's skill in the extreme. But you've got skill in both extremes. That's something people have trouble accepting. But it comes down to a simple proposition, which is that active management in trying to pick stocks has to be a zero sum game, because the winners have to win at the expense of losers. And that's kind of a difficult concept. But it shows up when you look at the cross section of mutual fund returns, in other words the returns for all funds over very long periods of time. What you find is, if you give them back all their costs, there are people in the left tail that look too extreme and there are people in the right tail that look too extreme, and the right tail and left tail basically offset each other. If you look at the industry as a whole; the industry basically holds a market portfolio. That's all before costs. If you look at returns to investors then there is no evidence that anybody surely has information sufficient to cover their costs.
10:11Russ: Which says that for any individual investing, certainly someone like me, that is, who doesn't spend any time or very much time at all looking--in my case no time, but let's suppose even a little time--trying to look at what would be a good investment. The implication is to go with index mutual funds because actively managed funds can't outperform. Guest: Well, no, it's more subtle than that. What's more subtle about it is, even if you spent time, you are unlikely to be able to pick the funds that will be successful because so much of what happens is due to chance. Russ: So, for me the lesson is: buy index mutual funds because the transaction costs of those are the smallest, and since very few actively managed funds can generate returns with any expectation other than chance to overcome those higher costs, I can make more money with an index fund. Guest: Right. Now, it's very counterintuitive, because we look at the whole history of every fund's returns, and sort them, and really the ones in the right tail are really extreme. Russ: Some great ones. Guest: They beat their benchmarks by 3-6% a year. Nevertheless, only 3% of them do about as well as you would expect by chance. Now what's subtle there is that by chance, with 3000-plus funds, you expect lots of them to do extremely well over their whole lifetime. So, these are the people that books get written about. Russ: Because they look smart. Guest: What this basically says is that there is a pretty good chance they are just lucky. And they had sustained periods of luck--which you expect in a big sample of funds. Russ: Of course, they don't see it that way. Guest: No, of course not. Russ: A friend of mine who is a hedge fund manager--before I made this call I asked him what he would ask you, and he said, well, his assessment is that efficient markets explain some tiny proportion of volatility of stock prices but there's still plenty of opportunity for a person to make money before markets adjust. And of course in doing so, make that adjustment actually happen and bring markets to equilibrium. Somebody has to provide the information or act on the information that is at least public and maybe only semi-public. What's your reaction to that comment? Guest: That's the standard comment from an active manager. It's not true. Merton Miller always liked to emphasize that you could have full adjustment to information without trading. If all the information were available at very low cost, prices could adjust without any trading taking place. Just bid-ask prices. So, it's not true that somebody has to do it. But the issue is--this goes back to a famous paper by Grossman and Stiglitz--the issue really is what is the cost of the information? And I have a very simple model in mind. In my mind, information is available, available at very low cost, then the cost function gets very steep. Basically goes off to infinity very quickly. Russ: And therefore? Guest: And therefore prices are very efficient because the information that's available is costless. Russ: But what's the implication of that steep incline? That information is not very-- Guest: It doesn't pay to try to take advantage of additional information. Russ: It's not very valuable. Guest: No, it's very valuable. If you were able to perfectly predict the future, of course that would be very valuable. But you can't. It becomes infinitely costly to do that. Russ: So, your assessment, that you just gave me of the state of our knowledge of this area, I would say remains what it's been for some time--that at the individual certainly there is no return to--prices reflect all publicly available information for practical purposes for an individual investor. Guest: For an individual investor? Even for an institutional investor. Russ: Correct. So, what proportion of the economics and finance areas do you think agree with that? Guest: Finance has developed quite a lot in the last 50 years that I've been in it. I would say the people who do asset pricing--portfolio theory, risk and return--those people think markets are pretty efficient. If you go to people in other areas who are not so familiar with the evidence in asset pricing, well, then there is more skepticism. I attribute that to the fact that finance, like other areas of economics, have become more specialized. And people just can't know all the stuff that's available. Russ: Sure. Guest: There's an incredible demand for market inefficiency. The whole investment management business is based on the idea that the market is not efficient. I say to my students when they take my course: If you really believe what I say and go out and recruit and tell people you think markets are efficient, you'll never get a job. Russ: Yes, it's true. And so there's a certain bias, you are saying, to how people assess the evidence. Guest: There's a bias. The bias is based, among professional money managers, the bias comes from the fact that they make more money from portraying themselves as active managers. Russ: That's true in macroeconomics as well. We'll get to that a little later in the conversation.
16:50Russ: I was going to ask you about the current crisis. Guest: I have some unusual views on that, too. Russ: I'd say that the mainstream view--and I recently saw a survey that said--it was an esteemed panel of economists; you weren't on it but it was still esteemed, both in finance and out of finance. And they asked them whether prices reflected information and there was near unanimity. Some strongly agreed; some just agreed. But there was also near unanimity that the housing market had been a bubble. Guest: The nasty b-word. Russ: Yes; and was showing some form of what we might call irrationality. Guest: Okay, so they had strong feelings about that, getting mad about the word bubble. Russ: Why? Guest: Because I think people see bubbles with 20-20 hindsight. The term has lost its meaning. It used to mean something that had a more or less predictable ending. Now people use it to mean a big swing in prices, that after the fact is wrong. But all prices changes after the fact are wrong. Because new information comes out that makes what people thought two minutes ago wrong two minutes later. Housing bubble--if you think there was a housing bubble, there might have been; if you had predicted it, that would be fine; but the reality is, all markets did the same thing at the same time. So you have to really face that fact that if you think it was a housing bubble, it was a stock price bubble, it was a corporate bond bubble, it was a commodities bubble. Are economists really willing to live with a world where there are bubbles in everything at the same time? Russ: And your explanation then of that phenomenon? Guest: My explanation is you had a big recession. I think you can explain almost everything just by saying you had a big recession. A really big recession. Russ: And why do you think we had a really big recession? Guest: I've heard some of your podcasts; I'm with you. I don't think macroeconomists have ever been good at knowing why we have recessions. We still don't understand the Great Depression. Russ: True. Although Ben Bernanke would argue, and Milton Friedman would argue and he did before he passed away, that monetary policy is a huge part of it. Guest: Let me reflect. I had this discussion with Milton, actually; and what I pointed out was from your own data, they show that there were massive free reserves throughout the Great Depression. And my point is: we can't force people to move demand deposits. Or to make love to anyone. Russ: Well, you can but it's not very productive. Guest: It's not very productive. M1 and M2--those things are basically endogenous. Russ: I have the same feeling. Guest: The only thing that's sort of exogenous is the monetary base. Russ: What did Milton say to that? Guest: All I gathered from Milton was: Interesting. Even when you won you thought you lost. Russ: Yes, I know. I had plenty of those. So, are you saying that that's analogous to our current situation? Guest: Oh, no. What I'm saying is that for example people want to blame the recession on the housing sector crashing and subprime mortgages. But if you are an economist and you are thinking about that, you have to be saying that there was some misallocation across markets, that margins weren't being equated across markets. That's pretty hard to accept because people are acting in all markets, working in all markets. That's a pretty tough one to follow. Russ: Well, a lot of people swallow it. Here's their version. They say things like there are these things called animal spirits that you can't measure, but that doesn't mean they are not real; that people get all excited about a particular asset class--in this case it was housing. And as those prices start to rise it becomes rational to speculate that it will continue to rise. And as that happens--as you would admit, people are making money along the way--and then they don't. They stop making money; the prices collapse. And this happens from time to time because of irrational exuberance; and that's just an aspect of capitalism. That's the standard counterpoint. Guest: Okay, but it wasn't just housing. That was my point when we started. The same thing was going on in all asset markets. Russ: Well, the timing isn't quite identical for all asset markets, right? The stock market--the housing market starts to collapse I think around early-mid-2006. Guest: It stops rising, right. Russ: And then begins a steady decline. Guest: That decline was nothing compared to the stock market decline. Russ: But when did that happen? Guest: I don't know the exact timing. Russ: It's not around then. It's later. Guest: The onset of the recession started with the collapse of the stock market. The recession and the collapse of the stock market, the corporate bond market, all of that basically coincides. But that also coincides with the collapse of the securitized bond market. Russ: Mortgage-backed securities. Guest: The subprime mortgages and all of that. Russ: Well, yes; that happens through 2007, 2008. I guess there is some parallel. So, you are going to reverse the causation. Guest: I'm not saying I know. What I'm saying is I can tell the whole story just based on the recession. And I don't think you can come up with evidence that contradicts that. But I'm not saying I know I'm right. I don't know. I'm just saying people read the evidence through a narrow lens. Russ: Yes, they do. Confirmation bias. Guest: And the rhetoric acquires a life of its own; so there are books written that basically all say the same thing about the crisis. Russ: And you are arguing that they have essentially cherry-picked the data. Guest: Well, they just look at pieces of the data and the fact that the housing market collapsed is taken to be the cause; but the housing market could collapse for other reasons. People don't just decide that prices aren't high any more. They have to look at supply and demand somewhere in the background. Russ: We did have people holding second and third homes who didn't have the income and capability of repaying the first one. Guest: Sure. Standards were relaxed. But then you have to look on the supply side, the lending side. The people who were lending to these people had the information. Russ: Yes, they knew it. I don't think that they were fooled. They were not overly optimistic about the value of those loans. They were willing to do that because they could sell them. Guest: The puzzle is why they were able to sell them.
24:17Russ: Correct. Now my claim is the people who bought them did it with largely borrowed money. Guest: No, that's not true. These were bought by people all over the world. Russ: Correct. Guest: No one borrowed money. Remember now: savings has to equal lending. For everyone that's short bonds, somebody is on the other side. The net amount of leverage in the world is always zero. Russ: That's true. Guest: So you can't tell a story based on leverage. Russ: So what's your story? I have to think that through. It's undeniably true, and I'm not going to argue with that point. So, what's your explanation of why people bought these things? Guest: Well, I have no explanation. Again, I'd say the market crashes because of the big recession. Even a minor depression if you like. Remember that all the people buying these subprime mortgages all over the world, they are the ones making the loans in the end, they were sophisticated investors. Institutions, big banks all over the world. They thought these things were appropriately priced. They might have been at that time, but they weren't ex post. Russ: So you are not going to allow me to make the claim that the incentives they faced to worry about how appropriately priced were distorted. Guest: The incentives to make money are always there. The question is whether the market lets you make money. So, these people that wanted to securitize all these mortgages, they could have failed at any time in the process; and they would have failed big time because in order to do these things, you have to initially finance them yourself. So when the investment bankers were bringing out the securitized mortgages and other kinds of securitized assets, they initially held them. And they held them afterwards, too. Russ: They held many of them. Guest: Well, initially they held them all, because they are bundling them together; they have to come up with the capital and then they can sell them. So, they could have failed right at that point because the market says: Forget it. We're not paying you par value for these things. Russ: But when they did fail, which they fundamentally did because, at least for them, even though the world wasn't leveraged, they were leveraged, they should have gone out of business. Guest: Right, exactly. Russ: But they did not. Guest: That's awful. That's the worst consequence of this whole episode. Russ: So, my narrative is the anticipation of that distorted their decision-making. Guest: Sure, but that doesn't satisfy what address what goes on on the demand side. Russ: Why? Guest: Because people on the demand side have to buy these things. Russ: Well, the people who were buying them, and selling them, were fundamentally the same people, right? Guest: Okay, so if greed causes me to put out securities that I know are no good, why would I hold them? Russ: Because I can hold them at a very low cost. I have uncertainty; I don't know what's going to happen. There's an upside; there's a downside. Guest: It's really a low cost if you know you are going to get bailed out. Russ: Right. My argument is it dulls your senses. Guest: It does; I agree with you there. Any probability that you are going to be bailed out is going to distort your decision. Russ: So, is your argument then that that was relatively unimportant? Guest: No, no. My argument is it can't explain why people who weren't generating these things and weren't going to be bailed out by us, investors in Norway, whatever--why were they buying? Russ: Well, I'm happy to admit that some people just made a mistake. After the fact. Ex ante they certainly didn't think they were throwing away their money. And a lot of those people making those investments around the world, we bailed them out, too. The European banks got some of the benefits. Guest: Yes, because they were mixed into the same piles that involved our own investment banks. And so they got bailed out in the process. If they were holding credit default swaps (CDSs) that were sold by AIG, they got bailed out. Russ: Although I think Goldman was the number 2 holder of those. The first was--I can't remember; it was a foreign bank, either French or German.
29:19Russ: So, you have publicly said that that was a mistake, those bailouts; we should have let them fail. Guest: It's irrelevant because there is no political regime that will let that happen. Russ: Correct. But let's suppose, let's live in a fantasy world for forty seconds. Suppose on March of 2008, Ben Bernanke and Hank Paulson and the others who got together to talk about the impending bankruptcy of Bear Stearns had just let them go. They would have opened for business Monday morning without enough cash to cover their positions; they would have had to tell their creditors: Sorry; I can't honor the promise I made to you the other day or the other money; and you won't be getting the payment you anticipated. The justification for the intervention was that if we had let that happen there would have been an enormous crisis: credit markets would have frozen up and we would have had a worldwide depression. Guest: I don't know about that last part. That's what we'll never know. The issue is: How long would it take to straighten things out? And I think it's really overrated that it would have taken a large amount of time. So, banks fail all the time, and the FDIC goes in and draws a line in the sand about who is going to get paid and who isn't; stuff is put up for sale and everything goes on. I don't know how long it would take to solve a multiple failure problem. We'll never know. Russ: Well, the Lehman Brother's bankruptcy is still in process. Which is now three years old. This was the argument made at the time--like you, I'm skeptical about it but it has some legitimacy--it's that bankruptcy is complicated enough as it is; when it's a large investment bank with international creditors like Bear, Lehman, it would take a long time. In the meanwhile everybody would be thrown into turmoil. Blah, blah, blah. Do you think there's anything to that? Guest: It's possible. What happened in the Lehman case is it's held up by multiple jurisdictions. So, you have to settle with the British shareholders. Russ: The Japanese, Korean. Guest: Who all have their own set of laws about what happens in a bankruptcy. And that's what I think they've been fighting over for three years. It's pretty clear what assets [?]. Russ: But isn't that an argument for justifying what Bernanke and Paulson did? Guest: I don't know. Because who knows what would have been done if all of them went down. The problem really is that the investment banks weren't subject to the same disposition rules that would face an ordinary commercial bank. They are not subject to the FDIC. And the FDIC can come in and arbitrarily do it. That's what you buy into when you sign up for it. Whereas for the investment banks, they are not really banks; and they are not subject to those rules. The ongoing problem is that you haven't killed their incentive to finance things the way they always have. Russ: Well, I guess my claim is that part of the problem is that we gave a regulatory advantage to triple-A rated stuff, which allowed very large and different amounts of leverage compared to other stuff. That gave an incentive to these folks to find more triple-A. The amount of triple-A is essentially, until recently, there's just not enough of it to go around, if that's the most profitable thing you can do, because that's the thing you can leverage; so they found a way to invent more of it. And that included not just the things we are talking about, but European sovereign debt. Hey, that's safe; let's leverage that, too. Guest: Right. Russ: So, once we said: this is the stuff that you can make scads of money on because you can leverage it and use other people's money. Guest: You are slipping back again, though. Russ: Because? Guest: You are saying that people will buy this stuff even though it isn't triple-A. Russ: Correct. Guest: Why? Russ: Well, that's the puzzle. Is it because they were stupid, ex ante? Guest: We are talking about the world's most sophisticated people who invest. Russ: So is the alternative argument that people just made a mistake? Guest: After the fact, definitely. Whether it was a mistake before the fact, that involves estimating the probabilities of extreme tail events, which, as you know, are very difficult. Russ: So, where does that leave us? Story-telling, of course. Guest: Which is very entertaining but it's not convincing. I don't find it convincing.
34:45Russ: Before I forget, I was going to ask you--I don't want to miss this chance to ask you this: Does your research inform your own personal portfolio decisions? And has it over time? Guest: Oh, sure, always. Russ: Has it changed over time? Guest: Well, I'm not as young as I used to be. Russ: That's part of the theory, too. Guest: Right. So, my portfolio has become somewhat more conservative. I'm also a stockholder in an investment management company, so that part of it is very unconservative. Russ: That's true. Recently--a related question to what we were just talking about before that--the government published the transcripts of the Federal Reserve deliberations in 2006. I don't know if you've looked at that. Guest: No. Russ: Well, one of the most obvious things you learn from reading those transcripts--well, first of all, this is 15 really smart people, very savvy. Their job is to try to figure out what could happen next that could be dangerous. And in 2006, we were on the edge of a collapse in the housing market. And as you argue, maybe just a general problem coming that would be unforeseeable. But what was interesting was that they made the same mistake that I made at the time; and I heard lots of other people much smarter than I am made the same mistake. They said: Well, it's true that there could be a housing price fall; it's been going up for a long time, but the subprimes are essentially only a small part of the whole housing market; housing is only a small part of the overall investment market. So, if this does occur, there's not going to be much of a consequence and we don't have to worry about it. Now, one of the things I think was mistaken, certainly for me as someone not very well versed in finance, and I think most economists are not very well versed in finance, is that we did not understand the role that leverage would play if asset prices fell by a relatively small amount. Do you think that has been a lesson that some people have learned from this crisis? And should we learn that lesson? Guest: Well, leverage will put some people out of business. Russ: Correct. Guest: So, what's the problem? Russ: Well, the problem is that if lots of people go out of business at the same time it allegedly has a multiplier effect--I hate to use that phrase--but that there is some credit market contagion, systemic risk, etc. Guest: That's a word I don't think existed 20 years ago. Russ: Which one? Guest: Systemic. Russ: But let's go back to our mutual friend, Milton. Certainly Milton would argue that the contraction of the money supply at the onset of the Great Depression precipitated by bank failures was something that the Federal Reserve should have paid attention to. Guest: What could they do? Russ: They should have injected liquidity into the system. Guest: Well, but if you have massive free reserves, what is that going to do? Russ: Well, that's a problem. Again, I wish Milton were here. I'm mystified by monetary policy generally, as anyone who has listened to these podcasts knows. Guest: Well, I am too. In the podcasts of this program that I've listened to, I've heard everybody talk about the Fed controlling the interest rates. That's always escaped me how they can do that. Russ: Yes, I'm mystified by it myself. Guest: But I'm in finance, so you've got an excuse. Russ: When I interviewed Milton in 2006 and I asked him why there had been a change in public discussion at least of what the Fed does from changing the money supply to instead manipulating interest rates, his answer was: Well, that's what they say but that's not what they do. They like to say they manipulate interest rates because it makes them feel powerful. All they really do is change the monetary base. And in fact he said, if you look at M2, that's the thing to look at. Guest: That's the thing to look at if you want to know what's happening to business activity. But it's not something you can do anything about.
39:28Russ: I'm with you there. While we're on that subject, do you have any thoughts on why the Fed is paying interest on reserves? Guest: Oh, absolutely. Because they know that if there is an opportunity cost from these massive reserves they've injected into the system, we are going to have a hyperinflation. Russ: So what's the point of injecting the reserves if you are going to keep them in the system? Guest: Exactly. Russ: So what's the answer? Guest: The answer is: this is just posturing. What's actually happened? That debt is now almost fully interest-bearing, all the liquidity that they've injected. So, they've actually made the problem of controlling inflation more difficult. Controlling inflation when they didn't pay any interest focused on the base: cash plus reserves. But now the reserves are interest-bearing, so they play no role in inflation. It all comes to cash, to currency. How do you know? Currency and reserves were completely interchangeable; that's what the Federal Reserve is all about. So I think they've lost it. Now what happened, they went and bought bonds, long-maturing bonds, and issued short-maturing bonds. It's nothing. They didn't do anything. Russ: But they are smart people. Guest: Right. Russ: Ben Bernanke is not a fool. If you could get him alone in a quiet place with nobody else listening and say: Ben, what were you thinking? What do you think he'd say? Guest: I don't know, but I wouldn't believe it. In the sense that at most he could have thought he could twist the yield curve. Lower the long-term bond rate. Now I'm looking at the long-term bond market--it's wide open. Even though they are doing big things, they are not that big relative to the size of the market. Russ: Yes, I am mystified by that as well. I don't have an explanation. Guest: Let me put it differently. So, if I look at the evolution of interest rates, is it credible that in the early 1980s the Fed wanted the short term interest rate to be 13-14%? Russ: No. You are making the argument that it's endogenous; that they can't control it. Guest: Maybe they can tweak it a bit; they can do a lot with inflationary expectations. That will affect interest rates. Turn it around--all international banks think they can control interest rates; and at the same time they agree that international bond markets are open. Inconsistent. Russ: Correct. It reminds of this CNN reporter, credible insight into economic policy. He said: Macroeconomics generally--and fiscal policy, but he could equally as well be talking about Central Bank policy--he said: Politicians who think they can control the economy are like a little kid who is playing a video game; he hasn't put the money in yet and he is watching the arcade game do all its bangs and bells and whistles and noises. Which is an advertisement for the game. And he's pushing the buttons, and he's attributing all the successes on the screen to himself even though he hasn't put the money in yet because he misunderstands the underlying process that generates what he is seeing on the screen. There is some truth to that. Guest: There's a lot of truth to it.
42:51Let's turn to fiscal policy, which you've written some interesting things on lately. You have been very skeptical, as have a few others. And by the way, I should add, before we get into this I should just mention: your view that it's an open question about whether the crisis was averted by these rather remarkable open interventions by the Fed and the Treasury Department in the last few years--it's not a mainstream view. Certainly most economists believe--and I'm with you--but most economists believe that the Fed and the Treasury and the policy makers did a good thing. Guest: That's not taking into account the long term costs. Russ: For sure. And that would be true of most of these interventions. I always find it remarkable that the auto bailout was a success, quote, "because very few people lost their jobs." As if that's the only effect we would ever want to look at. Guest: The long term effects of that are horrendous. Russ: And it's not clear that they saved very many jobs, either. Clearly they changed the incentives. Guest: Not just changed the incentives--they changed the ordering of precedence in contracts. That's something that's really dangerous. Russ: Yes, they abrogated the rule of law. It's very depressing. But on this issue of fiscal stimulus, most economists believe it's a good thing, it works. We are in the minority who suggest that maybe it isn't effective. And recently you wrote a piece suggesting, I would argue, that it's never effective--unless it's well-spent. And I would contrast it with the Keynesian view, which I heard come out of Joe Stiglitz's mouth personally--people can't be what they actually believe--I heard him actually say: It doesn't matter what you spend the money on; it's all stimulus. You are very much on the other side. So, explain why. Guest: When he says it doesn't matter what you spend the money on, I think he thinks there are multiple choices that would all be good. He doesn't think that if you just wash it down the sink, that's good. Russ: Oh, no; he said, when pressed and he was asked: If you ask people to dig ditches and fill them back in, would that stimulate the economy? And he said: Yes; but it's not as good as doing something productive. I can't explain it. It's a mystery to me. Guest: It's a mystery to me, too. Russ: But he's not on the show right now; I wish he were; I'll try to get him down the road. But in your view, talk about what you think the effect of stimulus is and why you are skeptical. Guest: This is a case where you can't be sure. If you look at the empirical evidence, it basically allows you to say anything you want, because the estimates of the effects of stimulus are subject to so much uncertainty. So, I think, though, if I interpreted Christina Romer's stuff properly, or she and her husband's stuff, what it says is that the only thing that clearly gets a pretty good statistical support is permanent [?]intervention [?]. And the other stuff is just [?]. I think that's probably--I'm an empiricist in the end, so that's probably, I don't know. I have my position that I think it's a waste of money, because it will all be wasted. Eventually, you have to finance it. You have to finance it now, which means eventually you have to pay back, future generations have to pay back, for things that are then mostly useless maybe. But the evidence doesn't, like you say. So it's possible for Stiglitz to say one thing; it's possible for you and I to say something entirely different. And neither one can point to the evidence. Russ: I don't view it as a very scientific enterprise. I view it as essentially ideology being wrapped up in scientism, scientific looking, statistical estimation. It seems to me there is too much noise. Guest: I don't agree with what you said when you started; I don't think most economists do think it works. Maybe I'm in the wrong cocoon. Russ: Yes, you need to get out more, Gene, I think. Although I'm in a different cocoon over here on the East Coast; I'm in the only cocoon, I'm at George Mason University and occasionally I'm at Stanford; so we just happen to talk about the three places where there is an overwhelming majority that is skeptical; but outside of those three, I think it's pretty much the other way. Guest: Well, Bob Barro.Russ: Lonely voice, in that enclave. Guest: I think with Barro, famous macroeconomist at Harvard, there's a younger guy. Russ: Alesina. Guest: Council of Economic Advisers. Russ: Oh, Mankiw. Guest: He's skeptical, but what he says is: Once you get into politics, you become a Keynesian. The political pressures are enormous. I think that's right. Russ: It's a terrible view of our intellectual opponents, though. It's not very nice. We don't like it when they attribute our views to being friends of business, which I find repugnant. So, it seems embarrassing to suggest that they hold their views because they like being powerful. I think there's some truth to it, but it's not very nice. You want to hold that view? Guest: Hold which view? I don't know. I don't think economists are different from other people. They all like, have their views, excepted [accepted?] by everybody else, no matter what their views are. Russ: We're prone to incentives; there's no doubt about that. Guest: I've had a tough time for a long time because I believe in efficient markets. Russ: Get a lot of flack.
49:13Russ: Let's go back to finance for a minute. I will put a link up to your recent article on stimulus where you make a theoretical argument against stimulus. Guest: There's no data, right. Russ: And I think basically--it's interesting how the Chicago school has been pushing this--you are using what I would call accounting identities. The money has got to come from somewhere. I expressed it as the resources have to come from somewhere. Guest: That's the right way to say it, actually. Russ: And so I don't understand where the free lunch comes from. Guest: There is no free lunch. Russ: But the counterpoint is that there is a free lunch because there are all these resources laying around. And then it's a question--Milton said this also--how much of the stimulus goes towards the unused, so-called-- Guest: But that's the problem of implementation, which is horrendous. The same problem in regulation: implementation, which is always the killer. Russ: But let's go back to finance. There's been a big trend in recent years towards what's called behavioral finance. What's your assessment of that? Guest: I think the behavioral people are very good at describing microeconomic behavior--the behavior of individuals--that doesn't seem quite rational. I think they are very good at that. The jump from there to markets is much more shaky. Russ: Explain. Guest: There are two types of behavioral economists. There are guys like my friend and colleague Richard Thaler, who are solidly based in psychology, reasoned economics but he's become a psychologist, basically, and he is coming from the research in psychology. Now there are other finance people who are basically what I call anomaly chasers. What they are doing is scouring the data for things that look like market inefficiency, and they classify that as behavioral finance. But to me it's just data judging [?]. Russ: They don't tell you about the times they can't find the anomaly. Guest: Exactly. In all economics research, there is a multiple comparisons problem that never gets stated. Russ: A multiple what? Guest: The fact that the data have been used by so many other people and the people using it now use it in so many different ways that they don't report, that you have no real statistical basis to evaluate and come to a conclusion. Russ: My view is you should video your keyboard so we can see your keystrokes and then we can see what didn't come out. The dishes that didn't come out of the kitchen because you didn't like the way they tasted. Guest: Right. I've had people say to me that the people who do this anomaly stuff, when they come and give a paper and I'll say, when you do this, that, or the other thing, and they'll say Yes. And I'll say, why don't you report it? And they'll say it wasn't interesting. Russ: Not publishable, either. Guest: Well, that's the problem, that there's a counting process [?] and a publication process as well. [More to come, 52:31]

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Source: http://www.econtalk.org/archives/2012/01/fama_on_finance.html

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Microsoft begins Office 15 technical preview, fills up before you knew it existed

Microsoft OfficeEverybody calm... we know, we're excited too. We're just dying to see the latest in spreadsheet and presentation technology. But, for now, you'll just have to wait as the technical preview for Microsoft's next version of Office is all filled up. What exactly Redmond has in store for us it wont say but, it's not shying away from hyperbole, declaring it "the most ambitious undertaking yet for the Office Division." Primarily we assume that's because every arrow in the Office quiver is being updated simultaneously, including desktop, mobile and web apps, Visio, Lync and its countless other peripheral programs. Don't draw a warm bath and grab a straight razor, though -- you'll get a chance to play with all the updated products when they enter public beta this summer.

Microsoft begins Office 15 technical preview, fills up before you knew it existed originally appeared on Engadget on Mon, 30 Jan 2012 18:26:00 EDT. Please see our terms for use of feeds.

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Source: http://www.engadget.com/2012/01/30/microsoft-begins-office-15-technical-preview/

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Wendy's CEO: Our wounds were 'self-inflicted'

This Jan. 29, 2012 photo, shows a Wendy's restaurant in Culver City, Calif. Wendy?s Co.?s adjusted net income fell to $4.3 million in the fourth quarter, a 29 percent drop from $6.1 million a year ago. (AP Photo/Reed Saxon)

This Jan. 29, 2012 photo, shows a Wendy's restaurant in Culver City, Calif. Wendy?s Co.?s adjusted net income fell to $4.3 million in the fourth quarter, a 29 percent drop from $6.1 million a year ago. (AP Photo/Reed Saxon)

In this Jan. 29, 2012 photo, a customer leaves a Wendy's restaurant in Los Angeles. Wendy?s Co.?s adjusted net income fell to $4.3 million in the fourth quarter, a 29 percent drop from $6.1 million a year ago. (AP Photo/Reed Saxon)

NEW YORK (AP) ? Wendy's new CEO on Monday called the dour results of the past few years "self-inflicted wounds" and vowed to do better, laying out plans that included hiring top-tier workers and reclaiming market share from higher-end competitors like Five Guys and Smashburger.

Emil Brolick, the CEO since September, told investors on Monday that he was intent on winning back customers, jaded by a stale menu and inconsistent service, as well as investors, who have grown weary of "a little bit of overpromising and under-delivering."

And rather than blaming the struggling economy for the revenue declines and quarterly losses of the past few years, Brolick said that the company's problems were its own fault. Though Wendy's Co. had carved out a niche in the restaurant business as fast food for grownups, it had lost its way in recent years.

"These are not DNA issues," said Brolick, who also worked at Wendy's during more halcyon days of the late '80s and early '90s. "These are issues we caused, and any time you have self-inflicted wounds, you can correct self-inflicted wounds."

Brolick said he was intent on taking back lost market share from the likes of fast-casual competitors like Panera and Chipotle, by offering food that was just as good but at a lower price. The company has revamped its menu and is remodeling stores. It sold Arby's, which had been a drag on earnings, over the summer. And it's now intent on hiring "five star" employees in line with those at the fast-casual chains, Brolick said.

"Those folks at the bottom corner, there's a job waiting for them at our competitors," said Brolick, who has also hired a new general counsel at the Ohio headquarters and is adding a chief marketing officer and chief people officer.

Brolick, who was most recently a top executive at Yum Brands Inc., said he's bringing all Wendy's locations up to consistent standards for friendliness and cleanliness, rather than the current, unpredictable state of "one there is really, really good but this one over here isn't quite what it needs to be."

"We've made great progress in getting rid of those F restaurants and getting more A's and B's, but we're still in that territory," Brolick said.

Like many fast-food chains, Wendy's is taking some of its turnaround plans from McDonald's book. The much-larger burger chain has done well throughout the recession and its aftermath by trying to reinvent itself as a hip, healthy place. New offerings like fancy coffee drinks and smoothies, and remodeled restaurants with wireless access, have brought in customers who previously might have shunned it. At the same time, McDonald's has kept prices at fast-food levels so that its reliable base of cash-strapped customers doesn't flee for cheaper hamburgers at the gas stations.

McDonald's has run into some resistance from franchisees who sometimes have to foot the bill for the changes. Brolick said Wendy's franchisees were "very, very supportive "of the plans. He acknowledged that "we are going to spend a lot of their money," then added later: "The economics have to work. They do work."

Brolick's message to investors, who gathered at the Nasdaq building in New York, came a few hours after the company reported mixed results for the fourth quarter.

Wendy's income from continuing operations fell 30 percent to $4.3 million in the last three months of the year, down from $6.1 million in the fourth quarter of 2010. That year-ago number strips out the effect of Arby's, which Wendy's sold this summer to a private-equity firm.

Wendy's marriage with Arby's was short-lived. It began in the depths of the financial crisis in fall 2008, and ended when managers said they wanted to focus on the Wendy's brand alone. Wendy's said Monday it spent nearly $46 million over 2011 to break up with Arby's, including severance costs for some employees and retention bonuses for others.

Revenue rose 5.6 percent to $615 million, narrowly beating the $613 million predicted by analysts. The chain credited more customers visiting and spending more when they did, including on the revamped Dave's Hot 'N Juicy cheeseburger. Higher prices also helped.

Revenue at restaurants open at least a year climbed 4.4 percent in North America, the highest number in nearly 8 years, according to the company. That's a key measure of a company's health because it strips out the effect of newly opened or closed stores.

On a per-share basis, adjusted earnings were 4 cents, in line with the expectations of analysts polled by FactSet. That number excluded one-time charges like the costs for selling Arby's and writing down the value of some of its assets. With those charges, per-share earnings would have been 1 cent per share.

Last week, Barclays Capital analyst Jeffrey Bernstein spoke favorably of the changes at Wendy's, saying the company has greater potential for long-term earnings growth than competitors but is trading at a comparative discount. Sanford C. Bernstein analyst Sara Senatore said Monday that though revenue numbers beat her expectations, some of the earnings predictions that the company made for 2012 were below Wall Street's expectations.

Wendy's shares fell 20 cents, or 3.8 percent, to close at $5.01.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-01-30-Earns-Wendy's/id-3a66321e3f5b4244ba0ab0eeaa4884a6

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Monday, January 30, 2012

House transportation bill would spend about $260B (AP)

WASHINGTON ? House Republicans are proposing to spend about $260 billion over the next 4 1/2 years on transportation programs as a way to preserve jobs, according to a draft bill being introduced this week.

Rep. John Mica, R-Fla., who is chairman of the House Transportation and Infrastructure Committee, and other GOP leaders are expected to introduce the bill on Tuesday. Mica's committee is poised to approve the measure on Thursday.

The bill would maintain current spending on transportation despite declining gasoline and diesel fuel taxes, which historically have paid for highway and transit programs.

A separate committee will decide how to cover the gap between gas-tax revenues and the spending levels proposed in the bill. GOP leaders have said they plan to use revenue from expanded oil and natural gas drilling, but haven't provided details. However, congressional aides knowledgeable about the proposal said it would include drilling off the Virginia coast and in federal leases in the Arctic National Wildlife Refuge. The aides weren't authorized to speak publicly and asked not to be named.

The bill provides enough money to prevent the nation's roads, bridges and transit systems from falling further into disrepair, but not enough to significantly reduce the backlog of needed work on transportation infrastructure, transportation experts said. A congressionally mandated commission estimated in 2009 that it would require $200 billion a year to reduce the backlog while maintaining the current transportation system.

"Clearly this level of funding is inadequate to support our needs as a nation," said Joshua Schank, president of the Eno Center for Transportation, a Washington think tank that supports greater transportation investment.

But the bill is expected to save jobs in construction, bus manufacturing and other transportation-related industries in part because it allows state transportation departments to make long-term commitments of funds. Those kinds of commitments are usually necessary before companies can go forward with major new transportation projects.

Each $1 billion in transportation construction spending supports about 30,000 jobs, said Andy Herrmann, president of the American Society of Civil Engineers.

The GOP bill is "holding along the lines of what we've been doing in the past," he said.

But that may be enough to propel the bill through the House in an election year where voter regard for Congress is at rock bottom and lawmakers are eager to show off an accomplishment.

The last long-term transportation bill expired in 2009. Congress has kept transportation aid flowing to states through a series of short-term extensions. The current extension expires on March 31.

The Senate is working on its own bill, which would spend $109 billion over two years. Sen. Barbara Boxer, D-Calif., a co-author of the bill, says the bill's sponsors have a plan to pay for the measure, but hasn't detailed how that would happen.

Source: http://us.rd.yahoo.com/dailynews/rss/uscongress/*http%3A//news.yahoo.com/s/ap/20120130/ap_on_go_co/us_transportation_bill

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Egyptians move to reclaim streets through graffiti

In this Monday, Jan. 23, 2012 photo, Egyptian women walk past graffiti depicting a military tank on a wall under a bridge in Cairo, Egypt. In May, Mohamed Fahmy, known in the graffiti world as Gazneer, made one of Cairo's largest and longest surviving pieces of street art under a bridge used by taxi drivers to urinate. It was an image of a military tank pointed toward a boy on a bike who, rather than carrying a traditional bread delivery, was carrying the city on his head. It was a symbolic reference to youth who care for the nation and are heading toward a collision with Egypt's military rulers. On his blog, Ganzeer wrote: "Our only hope right now is to destroy the military council using the weapon of art." (AP Photo/Nariman El-Mofty)

In this Monday, Jan. 23, 2012 photo, Egyptian women walk past graffiti depicting a military tank on a wall under a bridge in Cairo, Egypt. In May, Mohamed Fahmy, known in the graffiti world as Gazneer, made one of Cairo's largest and longest surviving pieces of street art under a bridge used by taxi drivers to urinate. It was an image of a military tank pointed toward a boy on a bike who, rather than carrying a traditional bread delivery, was carrying the city on his head. It was a symbolic reference to youth who care for the nation and are heading toward a collision with Egypt's military rulers. On his blog, Ganzeer wrote: "Our only hope right now is to destroy the military council using the weapon of art." (AP Photo/Nariman El-Mofty)

In this Thursday, Jan. 19, 2012 an Egyptian girl, left, posts an art piece made by Sad Panda, unseen, on a wall as flower vendors prepare a bouquet outside their shop in Cairo, Egypt. Taking control of the streets was critical for the thousands of Egyptians who eventually overthrew their authoritarian leader nearly one year ago, but the battle for freedom of expression continues to be fought by graffiti artists who support the country's military rulers and those who want them to relinquish power. (AP Photo/Nariman El-Mofty)

In this Sunday, Jan. 15, 2012 photo, a man walks past graffiti depicting the Egyptian military in Cairo, Egypt. Taking control of the streets was critical for the thousands of Egyptians who eventually overthrew their authoritarian leader nearly one year ago, but the battle for freedom of expression continues to be fought by graffiti artists who support the country's military rulers and those who want them to relinquish power. (AP Photo/Nariman El-Mofty)

In this Sunday, Jan. 15, 2012 photo, a man cleans a side walk as graffiti is shown on the wall with Arabic writing from top left to top right that reads, "the answer and the other answer, we will not forget these dates, the people will still revolt, raise the revolutionary flag, hit Tantawy, the revolution will bring justice, we are for Tahrir, " in Cairo, Egypt. Taking control of the streets was critical for the thousands of Egyptians who eventually overthrew their authoritarian leader nearly one year ago, but the battle for freedom of expression continues to be fought by graffiti artists who support the country's military rulers and those who want them to relinquish power. (AP Photo/Nariman El-Mofty)

In this Saturday, Dec. 24, 2011 photo, two boys look through concrete blocks built by Egyptian military with Arabic writing that reads, "freedom," near Tahrir Square in Cairo, Egypt. Taking control of the streets was critical for the thousands of Egyptians who eventually overthrew their authoritarian leader nearly one year ago, but the battle for freedom of expression continues to be fought by graffiti artists who support the country's military rulers and those who want them to relinquish power. (AP Photo/Nariman El-Mofty)

(AP) ? The conflict between Egypt's ruling military and pro-democracy protesters isn't just on the streets of Cairo, it's on the walls as well, as graffiti artists from each side duel it out with spray paint and stencils.

Earlier this month, two young supporters of the ruling generals wearing Guy Fawkes masks ? the grinning face made famous by the movie "V for Vendetta" ? painted over part of the largest and most famous anti-military graffiti pieces in the capital.

The two made a 15-minute video of themselves stenciling slogans declaring, "The police, military and people are one hand," and, "The military is a red line." They posted the video online, calling themselves the "Badr Battalion" and describing themselves as "distinguished Egyptian youth who are against the spies and traitors that burn Egypt."

It was an ironic turnabout, with backers of the authorities picking up the renegade street art medium of revolutionary youth ? and even adopting masks that have become an international symbol of rebellion against authority.

During the regime of Hosni Mubarak, Egypt had almost no graffiti on the walls of its cities. But when the uprising against Mubarak's rule erupted a year ago, there was an explosion of the art.

Taking control of the streets was critical for the thousands of Egyptians who eventually overthrew the country's authoritarian leader. The battle continues to be fought by graffiti artists who support the country's military rulers and those who want them to relinquish power.

Since Mubarak's fall on Feb. 11, graffiti is everywhere in Cairo and other cities, proclaiming the goals of the revolution and mocking the regime. Graffiti artists have continued to work, using walls, buildings, bridges and sidewalks as a canvas to denounce the generals who took power after Mubarak as new dictators and to press the revolution's demands.

Usually anti-military graffiti has a short lifetime before it is quickly painted over or defaced with black spray paint. And just as quickly the artists put up more.

The graffito that the "Badr Battalion" painted over had survived remarkably long. Mohamed Fahmy, known by his pseudonym Ganzeer, put it up in May under a bridge. It depicts a military tank with its turret aimed at a boy on his bike who balances on his head one of the wooden racks that are traditionally used to deliver bread ? though instead of bread, he's carrying a city. It was a symbolic reference to revolutionary youth who care for the nation, heading into a collision with the generals.

Quickly after it was partially stenciled over, a new graffiti was up, depicting the country's military leader as a large snake with a bloody corpse coming out of his mouth.

Graffiti has turned into perhaps the most fertile artistic expression of Egypt's uprising, shifting rapidly to keep up with events. Faces of protesters killed or arrested in crackdowns are common subjects ? and as soon as a new one falls, his face is ubiquitous nearly the next day.

The face of Khaled Said, a young man whose beating death at the hands of police officers in 2010 helped fuel the anti-Mubarak uprising, even appeared briefly on the walls of the Interior Ministry, the daunting security headquarters that few would dare even approach in the past.

Other pieces mock members of the Supreme Council of the Armed Forces, the council of generals that is now in power, or figures from Mubarak's regime.

When a police officer was captured on an Internet video shooting at the eyes of protesters during clashes, his image immediately dotted walls, urging people to find the "Eye-Sniper."

State television is another frequent target because it has become the mouthpiece for the military's proclamations that protesters are vandals, thugs and part of a plot to throw Egypt into chaos. One graffito shows the word "Occupy" written in the shape of the State TV building. Stickers plastered on walls show the words "Go down to the street" emerging from a television set, a message to the so-called "Couch Party," people who sit and watch the protests on TV.

"It's about a message in the street. It reaches the poor, the rich, the trash collector, the taxi driver," graffiti artist Karim Gouda said. "Most of these people are away from the Internet and the social networking world so it's a way to reach them."

Not everyone is receptive. Gouda said he was accosted by residents as he put up posters depicting a rotting face with the words "open your eyes before it's too late" in the impoverished Cairo district of Sayeda Zeinab. They accused him of trying to create civil strife and of trying to encourage Egypt's Christian minority to take over from the Muslim majority. Such accusations about activists were rife at the time after an October protest by Christians in Cairo, which was crushed by soldiers, killing more than 20.

The residents tore down Gouda's posters and chased him out of the neighborhood.

Under Mubarak's nearly 30-year rule, political expression on the streets was repressed by his powerful police forces. Once every five years, parliamentary elections would see the country littered with posters for elections that always favored the ruling party. Billboards advertising a lifestyle that only a privileged few could afford for companies whose owners were often closely affiliated with the regime towered over the sprawling slums of Cairo, a bustling city of some 18 million people.

"It's liberating to see," blogger Soraya Morayef said of the proliferation of street art.

Morayef, who has dedicated her blog Suzeeinthecity to documenting graffiti artists' work, said the street art reflects what happened in the whole country.

"The fear barrier was broken," she said.

___

Soraya Morayef's blog on graffiti: http://suzeeinthecity.wordpress.com/

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2012-01-29-ML-Egypt-Graffiti/id-082f5bcb48dc4aaea9dfb2d030d5bc28

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Economy more worrying than Mideast for Florida Jews (Reuters)

AVENTURA, Florida (Reuters) ? Newt Gingrich describes the Palestinians as an invented people and seeks covert action against Iran, while Mitt Romney accuses President Barack Obama of throwing Israel under a bus.

But the Republican presidential candidates' tough talk on the Middle East in Florida before Tuesday's primary is doing little to sway the state's large Jewish population from its longstanding support for the Democrats.

If anything, it's Republican arguments on the U.S. economy - not Israel - that might win more favor with Jewish voters here come the general election in November.

"There has been, particularly among younger voters, a small shift toward the Republican Party in general," said Terri Susan Fine, a political scientist at the University of Central Florida in Orlando.

She said there was some concern about Israel, but the larger reason was because some Jews see the Republican Party as more friendly to business.

"Economic conservativism is what is shifting their focus toward the Republican Party," she said. "Younger Jewish voters are very secure in Israel's stability."

Rabbi David Kaye of Congregation Ohev Shalom, a conservative temple north of Orlando, said members of his congregation were more concerned with economic issues in a state hard-hit by the housing crisis and one of the nation's highest unemployment rates.

"We still see that there's a lot of folks hurting," he said.

Jewish voters are also generally more liberal on social issues than the Republican candidates.

President Barack Obama received almost eight out of every 10 votes cast by Jewish voters in 2008. That overwhelming support among Florida's 640,000-member Jewish community, half of whom are over 65, was a key component in his narrow 3 percentage point victory in the swing state.

Jewish voters historically have been concerned with social justice and older voters especially have deep ties to the Democratic Party and labor movement going back to Franklin Delano Roosevelt's presidency during the 1930s and earlier.

"It's part of our being - we are our brother's keeper," said Sydelle Sher, 79, of Delray Beach, a retired schoolteacher.

IRAN TENSIONS

But Sher, who attended a Gingrich rally last week, described herself as a fiscal conservative worried about the direction the country is going in under Obama.

"I fear the European-style socialism trend," she said, although she added that Israel policy is very important in her decision.

With tensions in the Middle East rising over Iran's nuclear ambitions, some Jewish Republicans wonder if the United States will stick by Israel.

Gloria Winton, 75, had harsh words for Obama on Israel as she headed into Mo's Bagels and Deli, near her home in Aventura, Florida. "I never thought before that Israel couldn't trust the United States. Now, I don't think that they can trust us," she said.

But she said she was leaning toward Romney, not Gingrich, because of Romney's more moderate tone. "I think (Gingrich is) very smart but I don't know if the independent voter would accept him," she said.

As they fight for their party's nomination, Romney and Gingrich have often seemed to compete over who can take the strongest pro-Israel line.

Gingrich, a former speaker of the U.S. House of Representatives, drew 700 people to a rally on Friday sponsored by a Jewish Republican group, and both he and Romney count pro-Israel businessmen among their financial supporters.

Gingrich dismisses the Palestinians as an "invented people," and promises he would move the U.S. Embassy in Israel to Jerusalem from Tel Aviv as soon as he takes office.

Despite years of U.S.-led negotiations toward a two-state solution to the Israeli-Palestinian conflict, Romney insists the Palestinians are not interested in living in their own nation alongside Israel, saying they want to destroy the Jewish state.

The former Massachusetts governor says Obama "threw Israel under the bus" for suggesting negotiations start with borders as they were before the 1967 Middle East war.

Democrats insist that Obama is not hostile to Israel, and call the Republicans' campaign a misleading and desperate attempt to make headway with an overwhelmingly Democratic voter bloc.

"Our ironclad commitment - and I meant ironclad - to Israel's security has meant the closest military cooperation between our two countries in history," Obama said in his State of the Union address on Tuesday.

Jewish voters typically account for 6-8 percent of turnout in Florida elections, and a lower percentage in Republican-only contests like Tuesday's primary, but they can make a difference if the vote is close.

Ira Sheskin, who runs the University of Miami's Jewish Demography Project, said statements like Gingrich's denial of the Palestinians' national identity could alienate the many Jewish voters whose main goal is Middle East peace.

"It was really not good for Gingrich to say that," Sheskin said. "Because if he becomes president, you want him to act as an honest broker in the Middle East. You don't do that if you've told one of the sides that they are an invented people."

"You won't advance the cause of peace."

(Additional reporting by Ros Krasny in Delray Beach; Editing by Alistair Bell and Doina Chiacu)

Source: http://us.rd.yahoo.com/dailynews/rss/obama/*http%3A//news.yahoo.com/s/nm/20120129/us_nm/us_usa_campaign_jews

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Sunday, January 29, 2012

Apple?s Off-The-Charts iPhone And iPad Sales

Apple Quarter AsymcoSometimes you have to see things to truly appreciate their magnitude. Apple's latest quarter was so massive that MG had to write two posts about it: $46 billion in revenues, 37 million iPhones sold, 15 million iPads. The chart above, which comes from Francesco Schwartz, using data from Apple and Asymco (see a fully interactive version here), shows how unusual this quarter was for Apple.

Source: http://feedproxy.google.com/~r/Techcrunch/~3/_BqaTKfcgyg/

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S. Sudan holds firm on oil production stoppage

(AP) ? South Sudan's minister of petroleum and mining says the nation will not restart oil production unless Sudan accepts a list of demands.

Stephen Dhieu Dau said Sunday that South Sudan was "committed to negotiations" but that Khartoum would have to accept their offer of paying $1 per barrel for using Sudan's pipelines for export and $2.4 billion dollar financial assistance package before South Sudan turns on production again.

He also says Sudan must withdraw troops from the disputed border region of Abyei and stop funding rebel groups in South Sudan. He says South Sudan wants an international treaty guaranteed by "international superpowers" to guarantee the agreement.

South Sudan shut down oil production Saturday after it accused Sudan of stealing hundreds of millions of dollars worth of oil.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-01-29-AF-South-Sudan-Oil/id-7ac55ea4150442c7a1b569bc1576eeed

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Pro Bowl to feature plenty of offense, new faces

Ray Lewis, Elvis Dumervil, James Harrison

By JAYMES SONG

updated 8:45 p.m. ET Jan. 28, 2012

HONOLULU - Tony Gonzalez, Ray Lewis and Champ Bailey know what to expect. The new faces at the Pro Bowl aren't so sure, and are curious how intense they should play in Sunday's all-star game.

"I've never been in a Pro Bowl before, so I don't know what the tempo is going to be like," San Diego Chargers running back Ryan Mathews said. "So it's going to be fun to get out there and see how it goes."

Six rookies are among the 36 first-timers, including quarterbacks Cam Newton of the Carolina Panthers and Andy Dalton of the Cincinnati Bengals, who are replacing Super Bowl quarterbacks Eli Manning and Tom Brady.

Their selection makes this Pro Bowl the first that will feature two rookie quarterbacks.

"This is like the height of being an NFL player ? being an all-star and having the opportunity to wear the red, white and blue ? just having that jersey," said Newton, the No. 1 overall pick in last year's draft. "Only a few people can say, 'I've made it to the NFL,' but fewer number can say they've made it here."

In a game known to highlight offense, the NFC will feature two of the game's most prolific quarterbacks.

Green Bay quarterback Aaron Rodgers will start for the NFC and will be backed up by New Orleans quarterback Drew Brees. Rodgers passed for 4,463 yards with 45 touchdowns and just six interceptions. His quarterback rating of 122.5 set an NFL record. Brees, meanwhile, threw for 5,476 yards, breaking Dan Marino's single-season record.

The NFC also features Philadelphia running back LeSean McCoy and receivers Larry Fitzgerald (Arizona), Steve Smith (Carolina) and Greg Jennings (Green Bay).

Houston defensive end Antonio Smith acknowledges the NFC has a lot of great players on offense, but isn't too worried.

"We got so many weapons. We got so many Super Bowls. We got Hall of Fame players on our team. So I think we'll be all right," Smith said.

Pittsburgh quarterback Ben Roethlisberger will start for the AFC, with San Diego's Philip Rivers and Dalton backing him up.

"I think any quarterback will tell you that we wish we were getting ready to play in a game a week from now, but it's always an honor to come," said Rivers, who this season joined Brees and Peyton Manning as the only quarterbacks to pass for 4,000 yards in four consecutive seasons.

The players wrapped up a week of "workouts" on Saturday.

"The practices have been great," Cardinals rookie cornerback Patrick Peterson said. "It's definitely the most laid-back practices I've ever been involved in."

The brief practices have been as grueling and intense as a poolside, Hawaiian lomilomi massage. The players, some wearing sunglasses, often sweat more after practice ? signing autographs for the fans.

"If you break a sweat during practice in Hawaii, there's a rule you've got to be sent home by the NFL," said Packers cornerback Charles Woodson, who is making his eighth Pro Bowl in his 14th season.

After practice, the players usually spend their days golfing, fishing, shopping or lounging on the beach with their families. In a season that began with a bitter labor dispute is ending in paradise for these players.

"It's more than what I thought it would be. It's amazing. It's truly amazing," said Smith, making his first trip.

The players are hoping this won't be the final game in Hawaii. NFL and state officials are negotiating a deal to keep the game in the islands. Many said they wouldn't play if it were elsewhere.

Bengals rookie receiver A.J. Green said he spent time learning from the players he grew up admiring. He doesn't know what to expect Sunday.

"A lot of guys aren't trying to get hurt. I think it's going to be up tempo, but not too crazy," he said.

Packers coach Mike McCarthy, who is leading the NFC, said his game plan was simple with such a loaded team. "Our goal is to have 11 on the field," he said.

McCarthy said the game is all about the players, who earned this trip with their work during the season.

"I don't think anybody's too worried about how many touches they get or where the ball is going to go," he said.

Maybe with the exception of Jennings, who believes he has the inside track on the throws with his coaches calling plays and Rodgers as the signal caller.

"The other (receivers) already know, when I'm in the game, 85 is going to get the ball," Jennings said.

This year's winners will receive a record $50,000 each, up $5,000 from last year, with the losing players earning $25,000.

"When that fourth quarter rolls around and there's a little bit of money on the line, I think you'll see the tempo step up. We'll all be ready for it," Packers linebacker Clay Matthews said.

Chargers tight end Antonio Gates said he expects to play hard.

"I only know one way to prepare for a game. I don't know how to go half-speed," he said. "This is still a game. Guys still got on pads and coming out to compete."

Besides the money, conference bragging rights are on the line.

"It's still a pride thing ? AFC vs. NFC," Gates said. "We feel like we are the tougher division and they feel the same."

Rivers said the money is important, but isn't the main motivator for these competitors.

"Even if we were playing for nothing, when it comes down to it, they're still keeping score," he said.

___

Follow Jaymes Song at http://twitter.com/JaymesSong

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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