Links for 2009-03-30

  • In Dante’s Footsteps | Barrons.com – «The misleading figures cut across a wide swath of the economy, encompassing housing, manufacturing, employment — you name it. The leading agent of deception, unintentional or otherwise, has been that old sly villain, seasonal adjustment. As it turns out, the seasons don’t need adjustment as much as the adjustors need seasoning»;
  • FT.com | Willem Buiter’s Maverecon | Moral hazard – lite and strong – «It is clear that the vast majority of the large border-crossing banks are continuing to exploit every accounting trick in the book to avoid recognising the marked-to-market losses on their dodgy assets. With most banks cursed with paper-thin equity cushions in relation to their assets, a more intense, let alone a quasi-forensic scrutiny of the balance sheet by a nosy expert paid for and acting on behalf of the government shareholder could easily precipitate a move from partial to full state ownership and thence into insolvency and an orderly restructuring or liquidation»;
  • Strategies – Now the Long Run Looks Riskier, Too, for Investors | NYTimes.com – «Why don’t traditional measures of volatility, such as standard deviation, pick up this phenomenon? Those measures focus only on how much the stock market’s shorter-term returns fluctuate around the long-term average, Professor Stambaugh says. As a result, they ignore uncertainty about what the average return might itself turn out to be. For example, he said, it is possible that the standard deviation of the market’s returns over the next 30 years could end up the same whether its average annual return over that period is 20 percent or zero»;