The Tao of Mutual Fund Timing

In mutual funds, one could win
By reversing the yang and the yin;
To cast aside doubt
When investment flows out,
And to sell when investors want in.  

Brett Arends of The Wall Street Journal's ROI column has a fascinating study of the thesis that investors can optimize returns simply by observing the weekly flows in and out of mutual funds, and then doing the opposite.

Pooled Wisdom

The Harvardian Nobel Prize Pool
Lets you bet which economists rule;
So the ken of the crowd
Will predict the endowed
Of which think tank or graduate school.

Smukke Digte om Økonomi

Translated: "Beautiful poems on the economy."  So says Denmark's leading broadsheet, Politiken, regarding our humble contributions in verse to the cause of economic awareness.  Economics columnist Niels Lunde continues: "If you, dear reader, believe that economists are cold people with a penchant for spreadsheets, you are wrong. Economists are vulnerable and seeking souls who yearn for tranquility and fulfillment in arts and culture. Check the site Limerick Économique, where you can find beautiful poems about the economy."

Bank Failure Analysis

The credit crunch left deadly traces
On banks found in high and low places;
The research clearly shows,
As many suppose,
Loans on homes were to blame in most cases.

Her Special Assessment

Said Ms. Matz, of the NCUA,
"Credit unions are destined to stay;
When a few of them failed 
We stepped in and bailed,
And the healthy survivors must pay."   

Under Chairman Debbie Matz, the National Credit Union Administration has rescued three wholesale credit unions with a $30 billion bailout, the cost of which will be borne by the credit union industry through a "special assessment."

Not Enough Firepower

Said Bernanke, "I wish there were eight of me
To confront unemployment creatively;
In our current position,
We lack ammunition
To ease into growth quantitatively."   

"Economists React: Fed Prepares for 'Gnarly Ride'," by Phil Izzo of the Wall Street Journal's Real Time Economics, surveys a broad swath of economists' opinions as to the Fed's ability and willingness to stimulate GDP with quantitative easing (the purchase of Treasury bonds).

One Against the 13 Bankers

Said Johnson, "In my recollection,
Consumer Financial Protection
Was largely conceived,
And should run, I believe,
By Elizabeth Warren's direction."

Thanks to MIT economist Simon Johnson for his clear defense of The Right Appointment at the Right Time.

Deleveraging or Defaulting?

US consumer debts' lightening
Has been thought to result from belts' tightening,
But those falling exposures
Have tracked loan foreclosures,
Which leads to conclusions more frightening. 


Thanks to Mark Whitehouse of the Wall Street Journal's Real Time Economics for his timely analysis of an uncomfortable truth.

Yuanna Make Somethin' Of It?

Said Senator Dodd, "It's quite funny
How Beijing manipulates money;
The pace that it grew,
Though quickened by two,
Is too slow by a factor of twunny."

Dr. Goose on the Air

Dr. Goose reading and discussing his limerick "The New American Dream," on public radio's The Takeaway with John Hockenberry and Celeste Headlee.

Bankers' Remuneration

Said a pundit, "Where's the validity
That the bankers are paid so unfittingly?
Does the world so demand
The result of their hand,
Or it's just their control of liquidity?"

From the Eerie Similarities Dept:

From public radio's "The Takeaway" with John Hockenberry and Celeste Headlee, here is novelist Jess Walter discussing his book “The Financial Lives of the Poets," a novel that centers on a journalist who gives up newspaper work to offer online financial advice in free verse. Hmmm...

The Utility of Wall Street

A pundit who pondered intently
That bankers abound evidently,
Found it hard to discern
What they all did to earn
The Beemer, the Benz or the Bentley.

Note to English speakers: click here for the Google translation of the Financial Times Deutschland column "Das Kapital."

More Stimulus, Please

Said Tim Geithner, voicing complaint, 
"A premature fiscal restraint, 
While seemingly prudent,
As a Keynsian student
Can testify, certainly ain't." 

III for Basel III

The Basel III Capital Directive,
A liquidity crisis corrective,
Gives eight years for compliance
To banks and their clients
'Til new rules are fully effective.  

The Directive has caused a commotion
'mongst the banks on both sides of the ocean;
In percentage it leavens
From four up to seven
The equity capital quotient.  

The minimum equity score,
Now seven percent 'stead of four,
Will, the bankers all fear,
Make interest rates dear
When comparing with rates heretofore.

Econ 101

A shift in demand quite suffices,
With a given supply, to raise prices;
This idea, though descriptive,
May not be prescriptive,
To guide one to virtues from vices.   


Thanks to James Kwak for provoking a passionate debate on the ethics and economics of scarce resources in his blog, The Baseline Scenario.

Mr. Hoenig's FOMC Dissent

"I've said at each meeting I've been to,
We should hike rates to one point and then two;
If recession resumes
Now there's no wiggle room
In this corner you've painted us into."

Presidential Labor Day Address

"Jobs and growth I propose to instill
With a new infrastructural bill,
So that those who've not found work
Can lay all the groundwork
For Democrats' ride to the Hill."

Harvard, Econ 10, Opening Day

To his freshmen said Gregory Mankiw,
"For your curious minds I should thankiw,
But take care when you speak
Not to give any cheek,
And never forget I outrankiw."

Metamorphosis

Stanford Business School Dean Garth Saloner
Says "we don't lack for bucks, quid or kroner;
We transform for the better
Today's student debtor
To tomorrow's munificent donor."   


Congratulations to Stanford GSB Dean Garth Saloner on the start of his second successful year of leadership.

Keynsian Lament

Said Krugman, full of reproach,
"The White House must change its approach.
If the engine needs gas
We should do it first class,
But they leave us to languish in coach."

President Salutes US Forces

"With your steadfast defense and protection,  
We can move on and alter direction:
With this troop redeployment,
A surge in employment
Would help in the midterm election."