Mohnish Pabrai on The Fiscal Cliff and the demand for autos

Found via the Corner of Berkshire & Fairfax.


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Jeff Gundlach's latest presentation

Found via Zero Hedge. Mebane Faber also commented on the presentation (HERE), and posted a very good chart showing the Japan, US, Poland and Indonesia CAPEs from 10 years ago, and how the markets have performed since then.

Link to: “To Catch A Thief” – by Jeffrey Gundlach

How to Control an Army of Zombies – by Carl Zimmer

Found via The Big Picture.

In the rain forests of Costa Rica lives Anelosimus octavius, a species of spider that sometimes displays a strange and ghoulish habit.

From time to time these spiders abandon their own webs and build radically different ones, a home not for the spider but for a parasitic wasp that has been living inside it. Then the spider dies — a zombie architect, its brain hijacked by its parasitic invader — and out of its body crawls the wasp’s larva, which has been growing inside it all this time.

The current issue of the prestigious Journal of Experimental Biology is entirely dedicated to such examples of zombies in nature. They are far from rare. Viruses, fungi, protozoans, wasps, tapeworms and a vast number of other parasites can control the brains of their hosts and get them to do their bidding. But only recently have scientists started to work out the sophisticated biochemistry that the parasites use.

“The knowledge that parasites can manipulate their hosts is old. The new part is how they do it,” said Shelley Adamo of Dalhousie University in Nova Scotia, a co-editor of the new issue. “The last 5 to 10 years have really been exciting.”

John Mauldin: Peak Oil or Peak Energy? – A Happy Solution

A consistent theme in this letter has been the connections between items that may seem to be far removed from each other but are actually linked at the very core. If you push on one end you get a reaction in what would seem to be the most unlikely spots. Today we explore the connection between the fiscal deficit and energy policy. Everyone in Washington is starting to “get religion” about wanting to fix the deficit, with serious thinkers on all sides acknowledging that there must be reform and a path to a balanced budget. Burgeoning healthcare and Social Security costs are rightly pointed to as the problem, and entitlement reform will soon be front and center.

But the fiscal (government) deficit in the US cannot go away unless we also deal with the trade deficit. As we will see, it is a simple accounting issue, and one based on 400 years of accepted accounting principles. And dealing with the trade deficit in the US means working with our energy policy.

Bruce Greenwald and Richard Koo: The Great Recession: Structural and Cyclical Causes

Found via csinvesting.


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Genetics for Fun and Profit: Andrew Hessel at TEDxVilnius

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HOW TO WIN AT FORECASTING: A Conversation with Philip Tetlock

There's a question that I've been asking myself for nearly three decades now and trying to get a research handle on, and that is why is the quality of public debate so low and why is it that the quality often seems to deteriorate the more important the stakes get?

About 30 years ago I started my work on expert political judgment. It was the height of the Cold War. There was a ferocious debate about how to deal with the Soviet Union. There was a liberal view; there was a conservative view. Each position led to certain predictions about how the Soviets would be likely to react to various policy initiatives.

One thing that became very clear, especially after Gorbachev came to power and confounded the predictions of both liberals and conservatives, was that even though nobody predicted the direction that Gorbachev was taking the Soviet Union, virtually everybody after the fact had a compelling explanation for it. We seemed to be working in what one psychologist called an "outcome irrelevant learning situation." People drew whatever lessons they wanted from history.

Jeremy Grantham, Starving for Facts – By Vaclav Smil

A big thanks to Kent for passing this along. Two guys I really respect, with two very opposing views. Grantham’s article that Smil is referencing is available HERE.

Link to: Jeremy Grantham, Starving for Facts – By Vaclav Smil

Chris Anderson on EconTalk

Chris Anderson, author of Makers: The New Industrial Revolution, talks with EconTalk host Russ Roberts about his new book--the story of how technology is transforming the manufacturing business. Anderson argues that the plummeting prices of 3D printers and other tabletop design and manufacturing tools allows for individuals to enter manufacturing and for manufacturing to become customized in a way that was unimaginable until recently. Anderson explores how social networking interacts with this technology to create a new world of crowd-sourced design and production.

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Related book: Makers: The New Industrial Revolution

Related previous post: Chris Anderson on Why He's Leaving Digital for DIY

The Fed Chairman Is Not Always the Key Speaker at Jackson Hole - By Frank Martin

Found via Santangel’s Review.

If you hung on the words of Ben Bernanke at the August 31, 2012 Jackson Hole Symposium, you may have listened to the wrong speaker – or perhaps chosen the wrong time – if you were looking for clues about whether the markets for risk assets are trading at more or less than what they are intrinsically worth.

Two years earlier, Jackson Hole, Wyoming, nestled in Wyoming’s Grand Tetons, was just another cozy mountain resort and conference center.  The annual gathering of central bankers and academics had drifted from place to place until the promoters discovered that a crowd-drawing luminary like Paul Volcker could be induced to participate because of his recreational passion for, of all things… trout fishing.  But in 2010, Jackson Hole was the location chosen by Fed Chairman Bernanke to famously promise, in so many words, that he would induce another rally in the markets in risk assets through a second round of quantitative easing.  And in truth, QE2 was spectacularly successful if measured by the 28% advance in the S&P 500 (an index of 500 stocks weighted by market value, considered widely held, and therefore thought to be representative of the stock market as a whole).

However, the most prophetic and yet simultaneously reviled (or simply ignored) speech at Jackson Hole came five years earlier, on August 27, 2005.  That was two years before the global financial system began the meltdown that is to some extent contained today only because of ongoing massive infusions of liquidity. The speaker during the otherwise upbeat celebration of Alan Greenspan’s larger-than-life career was a then obscure University of Chicago professor and former director of the IMF’s research department.  Raghuram G. Rajan’s  words were considered apostasy by many attendees, leaving Larry Summers livid.  Rajan had dared pose the question, “Has Financial Development Made the World a Riskier Place?”

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Fast-forward to August 31, 2012.  On that day when Ben Bernanke delivered his Jackson Hole assurances to a world of investors hanging on his every word, another speaker from a different central bank delivered a message that nearly slipped through the cracks.  Were it not for the keen eye of one reporter, Jason Zweig of the Wall Street Journal, about whose thoughtful work on behavioral economics I’ve written frequently, the speech may never have seen the light of day.  Even though he did not arrive at the podium accompanied by drum rolls, Andy Haldane, Executive Director for financial stability at the Bank of England, is not a man who should be taken lightly.  Unfortunately, even the intriguing title, “The Dog and the Frisbee,” was not bait enough to hold the attention of an audience for which a presentation on the application of complexity theory to regulatory oversight was simply … too complex.