Really great links - Fed funds rate - Lehman fraud - Labor hoarding - HAMP - Urban agglomeration and nazis

John Kemp - Market should prepare for autumn rate “exit” - "To bridge the gap, the Committee has agreed its “forward guidance” is no longer conditioned “on the passage of any fixed amount of calendar time.” Extended period could now mean anything from a couple of months to several years; it is no longer meant to indicate about six months. Instead the forward guidance is explicitly conditioned on the evolution of the economy.
     The extended period language has now been emptied of any useful content. It means the Fed is not ready to raise rates immediately, and sees no imminent reason to boost them, but could do so at any time, with only minimal warning."

James Chanos - Lehman fraud - "I think there ought to be a lot of criminal indictments in what we saw, because you have to understand that the -- what John Kenneth Galbraith called the nub of the crime -- was simply taking aggressive marks on illiquid derivatives and hard-to-value securities, calling it profit, and paying yourself 50 cents on the dollar a bonus. You were stealing from your shareholders."

David Henderson - Tyler Cowen's Speech at APEE - "Quoted "the wise Garett Jones": "Labor hoarding is so 20th century." Translation: because of the web, employers can go out and hire workers when they need them, so why keep them on the payroll.
     During this recession, there is easier substitutability from durables into things that are fun and cheap, like gaming and reading blogs, which is why durable sales have fallen off the cliff.
     There is a substantial probability (0.1 < p < 0.5) that in the next 30 to 50 years we will in the stationary state where the extra wealth thrown off by growth will go almost entirely to the elderly and health care costs of those same elderly. Think Japan, except that there are fewer rent-seeking fights among the Japanese special interests. (On this last, I'm reminded of something Bob Crandall of Brookings said at a conference I was at in 1985 when explaining where there are so many fewer lawyers in Japan than in the U.S. Said Crandall, "In Japan, the fix is in.")"

Arnold Kling - HAMP - "Why is the HAMP program working so poorly? My answer was that what Washington was attempting to do was take two complex business processes--loan origination and loan servicing--that have been developed over a period of years, and mash them together, almost reversing the order, into a completely new process, and to do this on the fly, without any allowance for differences in local conditions or individual circumstances. It did not surprise me that this was not working.
     I did not say this at the hearing, but I will write here that this is indicative of what is wrong with the Obama Administration. These folks with no management or business experience think that they can make all sorts of changes happen by just writing regulations or laws and snapping their fingers. They have no concept of what a business process is, much less how to develop one and roll it out. If you think HAMP is a fiasco, just wait and see what happens with their health insurance reform."

Arnold Kling - "In fact, I would be prepared to argue that the economic advantages of urban agglomeration are the biggest obstacle to libertarian reforms of any sort. The advantages of urban agglomeration weaken the "exit" option for citizens, which in turn gives government officals leeway to conduct all sorts of abuses. If Jews in Europe did not want to leave behind what was familiar in the 1930's in the face of Nazism, then most people are going to put up with a lot of government stupidity and over-reach here."