2012 January 24 | timiacono.com

Newt Gingrich is to John King as Lions are to..

This is, by far, the funniest take on the South Carolina GOP primary last weekend and a welcomed breath of fresh air after watching some of the more serious coverage in recent days. If you’re in a hurry, skip directly to about the 2:20 mark.

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Colbert wasn’t on the ballot, so he urged voters to choose Herman Cain as a proxy vote for his own candidacy, but it bore little fruit, managing to attract only one percent of the vote.

On Economists and Psychopaths

After reading through some of the recently released transcripts from the 2006 Federal Reserve policy meetings, it occurred to me for about the thousandth time that economists are particularly ill-suited to oversee an economy where the financial system is, from time to time, run by psychopaths each trying to one-up the other.

During normal times, economists’ models of how the world works seem to function reasonably well, but when a multi-decade orgy of money and credit creation came to a head a few years back, they were completely unaware of how badly some people were acting and how contagious this was.

The central bank meets this week and is expected to revamp how they communicate their thinking about monetary policy to the world, but, maybe they should spend more time figuring out how to better observe what’s going on in the world – looking beyond the charts, tables, and models that they had their noses buried in back in 2006, oblivious to the looming crisis in housing and credit markets.

It was all there to see for anyone willing to make a modest effort to get out into the real world and look around.

Wild-eyed buyers lined up for blocks to buy new condos and mortgage brokers with barely a high school education were raking in hundreds of thousands of dollars a year in commissions by peddling all kinds of “exotic” mortgages to borrowers who, in many cases, didn’t really understand what they were signing.

As we’ve come to find out, there was a good deal of fraud involved here by both lenders and borrowers as few seemed to care about how their individual actions might affect others in the fullness of time.

You might say that a good asset bubble brings out the psychopath in many of us.

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“Forcibly Retired”

Of all the new phrases heard in recent months, particularly at year-end when this sort of thing gets talked about a lot, the term “forcibly retired” to describe the plight of many jobless over the age of 50 caught my attention and it was the subject of this Guardian story.

The year 2011 will be remembered as the time when many ever-optimistic Americans began to give up hope. President John F Kennedy once said that a rising tide lifts all boats. But now, in the receding tide, Americans are beginning to see not only that those with taller masts had been lifted far higher, but also that many of the smaller boats had been dashed to pieces in their wake.

In that brief moment when the tide was indeed rising, millions of people believed that they might have a fair chance of realising the “American Dream”.

Now those dreams, too, are receding. By 2011, the savings of those who had lost their jobs in 2008 or 2009 had been spent. Unemployment cheques had run out. Headlines announcing new hiring – still not enough to keep pace with the number of those who would normally have entered the labour force – meant little to the 50-year-olds with little hope of ever holding a job again.

Indeed, middle-aged people who thought that they would be unemployed for a few months have now realised that they were, in fact, forcibly retired. Young people who graduated from college with tens of thousands of dollars of education debt cannot find any jobs at all.

It gets even more depressing the further you read, a point that should have been clear from the title – Many Americans gave up hope last year – 2012 will be worse – but, I couldn’t help think what it’s like for the millions of people my age who took a very different route through life, perhaps worsening their financial situation as a result of the housing bubble.

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Gold: Where it comes from, where it goes

Here’s another one of those infographics, this one on the subject of the shiny yellow metal from the folks at Trustable Gold, and it provides a pretty good summary of where the barbarous relic comes from and the many forms of investment it takes (click to enlarge).

The Gold Tree Infographic

What’s interesting about the bottom half of the chart is that the world’s number one gold producer – China – has a relatively small amount of identified underground gold reserves. If investment demand continues to increase, we might just run out of the stuff.

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