Relevant and even prescient commentary on news, politics and the economy.

Benford’s Law and the Decreasing Reliability of Accounting Data"

H/t Mike Kimel Via Economist’s View This is from Jialan Wang: Benford’s Law and the Decreasing Reliability of Accounting Data for US Firms, by Jialan Wang: …[T]here are more numbers in the universe that begin with the digit 1 than 2, or 3, or 4, or 5, or 6, or 7, or 8, or 9. […]

Random Notes 3 June 2011

Buce has been on fire recently, so I’ll probably have to do a post about why this post is so off-target, though his conclusion is correct (short version: he’s been misled). If I’m reading this morning’s SIFMA Brief correctly, Moody’s—whose rating skills Robert has discussed at length—(1) may downgrade US debt if we spend too […]

Liquidity, Markets, and Pricing: A Contemporary Example

A lot of trading in the Fixed Income (and especially FX) market is done for “liquidity” purposes. There is often an underlying goal involved (e.g., push prices higher with small lots, sell large ones at the elevated prices) and frequently such strategies are discussed as “algorithmic trading.” (Example: the algorithm estimates that you will need […]

Economics and Bosses

Peter Dorman at Econospeak, who is smarter and nicer than I am,* boils down the question: [D]o you believe that managers normally make the right decisions over how to run organizations? If you believe that premise, please explain: Why all those great managers of the late 1940s through the mid-1970s ran defined benefit contribution plans, […]

Let’s Play a Game: Connect the Dots

Let us assume: That there is an equity premium ([PDF] UPDATE: Link modified to Brad De Long posting in which the PDF is embedded. Hat tip: Don Lloyd in comments.) That the equity premium can be derived from a linear relationship (y = ax(1) + bx(2) + ….) of the most significant variables. That equity […]