The Permanent Bailout

Milton Friedman once said that "Nothing is so permanent as a temporary government program." The central banks, as rogue private bodies exercising governmental powers a proving that axiom true yet again. The Federal Reserve claimed yesterday that we are in a recovery but none of their emergency programs can be rolled back.

... the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.

Meanwhile, over in Europe, there is growing recognition that the bailouts have failed and that the money isn't going to be paid back. Instead of actually admitting anything of the sort, the ECB is now talking about effectively making the loans permanent. Sure, they SAY it's going to be a 30 year loan instead of 3 years but if Ireland and Greece can't pay the money back now and continue to run deficits, what makes anyone think they'll be in a better position to pay it back later?

The question sort of answers itself. The bailouts are throwing good money after bad as every one of these banks is so far underwater they can't even see the surface from here. Without honest accounting, we have no idea just how deep that hole is but it certainly looks like a bottomless pit from here. It's been stunningly clear for a while now that so much bad debt needed to be purged from the system but the central and TBTF banks have made every effort to PREVENT such a purge.

(Wall) Street Corner Hustle
The latest brainstorm from the ECB is exactly the same sort of shell game. Greece and Ireland can't pay the money back and they know it. Instead of acknowledging reality, we'll just convert it into a long-term "loan" so they don't have to pay it back within the term and maybe even the lifetime of the people making the decisions. It can't be paid back and it won't be paid back but maybe they can keep up the lies for a little while longer.

This is simply more Extend and Pretend so that they can keep trying to fool people into impoverishing themselves by overspending and taking on too much debt to keep up the illusion. That is the meaning of "prosperity" in a keynesian ponzi economy. You use inflation to convince people to eat their seed corn, making them feel better - for a little while. This is why central bankers place so much emphasis on "confidence" - in practical terms that measures the willingness of the population to deplete their capital and eat their seed corn due to the inflationary deception of the central banks.

The UDB gave us the biggest illusion of false prosperity the world has ever seen. The bankers are now trying to cover their tracks and delay the inevitable hoping you'll forget their complicity. But the best simple summation can be found from the creators of South Park:

The Dismal States

If you're like me and stuck in the latest round of global warming (we're getting 8-10" - as usual, I blame Al Gore), you can use a chuckle. Here it is.

Every state is "special" for one reason or another. So, someone with far too much time on their hands put this together - the United States of Shame. Enjoy.

I will add that the Massachusetts distinction is absolutely correct.

HT: Ace of Spades.
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Dealing With The Truth

Before I start today, I want to repeat something I wrote recently. I have been creating these blog entries now for 54 weeks and, in that time, we have had 28,634 page views. That is fantastic but it is something that could never have happened without your help, without your passing along the URL to other folks who might be interested in teaching. So, once again, thank you for telling your friends about this site as well as you neighbors, relatives, coworkers, enemies, casual strangers, and even aliens from another planet. This blog goes nowhere without your help.
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In the well-known movie “A Few Good Men,” the Tom Cruise character yells “I want the truth!” and the Jack Nicholson character responds “You can't handle the truth!” Great line.

When it comes to teaching, college professors will often assert that they want the truth about what is happening in class but I’m not sure they can handle the truth.

I was reminded of this exchange this morning in the Doonesbury cartoon in my Sunday newspaper. A college math professor (with a bow tie and suspenders, no less) is explaining “a very complicated proof. You can’t possibly track it without fully concentrating.”

Then, beginning to sound much like Tom Cruise, the professor starts getting to the very heart of the problem many of us face in college education today. “And yet it is perfectly obvious to me that most of you are either online or texting right now. Which is puzzling because on a pro-rated basis, the lecture you’re not listening to right now is costing you or your parents $175. So I’d love to know – what’s the thinking here? Why are you so happy to receive nothing for your money?”

Hmm, I wonder if he really could deal with the truth. Easy to ask the question but not so easy to deal with the answers if people start telling you the truth.

Isn’t it fascinating that a Sunday morning cartoon could cut so close to the heart of college education these days? But, does this guy really want the truth? Could he handle the truth if the students began to stand up and tell him the truth? Now, wouldn’t that be a fascinating cartoon. One by one, the students stand up and say “Sir, I’m not paying any attention to your lecture because . . .” and they give him the truth. (As an aside, if you have never watched the video made by the Kansas State students about education, you really owe it to yourself to watch it

http://www.youtube.com/watch?v=dGCJ46vyR9o

it’s at that point that you begin to hear the truth from students.)

When it comes to education and our classes, how many of us really want the truth that much? The problem for our all of us is that if we are given the truth, then we feel some moral obligation to take action. It’s easier (as the cartoon professor does) to just imply that the students are to blame. I hear that all of the time when I am out and about giving teaching presentations.

What do I think the truth is? Here’s my guess at the truth. I believe that students underperform in classes for one or more of three basic reasons.

(1) – they feel no sense of urgency (“I’ll defer thinking about this stuff until I have to”)
(2) – they are bored
(3) – they are lost and have a sense of hopelessness

If you can solve all three of these issues, your school will build a statue of you and put it in the quad.

For better or worse, these are issues that a teacher can address. You are not a helpless victim. But you have to want to improve before you are willing to take real action. And, you must realize that these are complicated issues that can only be addressed over a period of time by some careful thought and planning.

I’ll talk about urgency today and defer student boredom and being lost to some later time. If you can add a tiny bit of urgency to any class, I think you will see immediate improvement.

When I chat with people about any goal they are trying to achieve in life, I often hear lines like “I have trouble getting started” or “before I know it, I’ve wasted an amazing amount of time.” If you can add in a bit of urgency, most people begin to get up off the couch and get moving. A bit of urgency goes a long way in getting people to work. Without a sense of urgency, there are just so many more interesting things in life to do.

Okay, most of you who read this blog will be teaching a class in the next couple of days. How have you inserted urgency into the equation so that your students are more likely to prepare for class and then pay close attention during class? If your answer is that “I expect my students to prepare and pay attention in class,” then I have a bridge from Brooklyn to Manhattan that I want to sell you.

I can give you two quick ways: one that I use in my classes and one that I don’t use. However, think of ways that your own teachers added urgency.

(1) – I teach by means of the Socratic method so each day I give my students 3-10 questions they should be able to discuss at the next class. Then, as soon as they walk in for the next session, I start peppering them with questions based on those original “conversation starters.” If students are absolutely sure they will be called on, it creates a sense of real urgency – they are more likely to prepare and pay attention. It really does work. It removes the general student feeling that they are just there to take notes. They know that they will be put on the spot.

(2) – If I had a class that was too large for the Socratic Method, I would change my strategy. At the end of each and every class (the last five minutes), I would ask the students to write out answers to one or two questions that were covered in the preparation work or within the class discussion. Those answers would count X percent of their overall grade. You will be surprised by how carefully students pay attention if there is a grade effect added at the end of the class. Suddenly, this material has an urgency to it – some question is coming up in just a few minutes that has to be answered.

A related issue to urgency is grading. If all of your students know they are going to get either an A or a B, why should they ever feel a sense of urgency? I truly believe there has to be some possibility of making below a B in a class or students will have no reason to be concerned at all. I usually give 50 percent A’s and B’s in my classes but I also give 50 percent of the grades that less than that. The fact that a student is not going to get an automatic A or B in a class does, I believe, push them to feel a bit of urgency about the material.

What’s the truth? In your case, I don’t know what the truth is. But if you feel that your students are underperforming, one issue to address is “urgency.” Students are human beings; without a sense of urgency, there is just not much reason to get up and do those things that need to be done.

Englisizing The Paper

I'm in editing mode. Lately, I've been working with a couple of coauthors who are very, very good theorists. Their game theory/math chops are so much better than mine that I try not to discuss it. In addition, one of them is very connected with the top people in the accounting area (he was the other's chair, which is how we met).

They just dropped about a 40 page current version of a paper we've been working on for quite a while. The logic of the paper flows soundly, and the empirics are solid.

Unfortunately, neither of my coauthors has English as a mother tongue. So, I'm in charge of "Englishizing" the paper.

Oh my!

Update: I may have given the wrong impression (at least, based on a comment by Bob Jensen). My colleague and I have been working on this paper for quite some time, and we've all been involved with most parts of the paper (with the exception of the game-theoretic part, which is admittedly not my strength). My contributions have been primarily in the designing of the tests (my colleague is a game theorist, not an empiricist) and in the final editing of the paper.
Since I did my early education at Our Lady of the Bleeding Knuckles Elementary School (and yes, they did use the curtain rod), I received pretty good training in the fundamentals of what I call the "micro" part of writing.

I Don't Work Well Under Deadlines

"I don't work well under deadlines. But without them, I don't work at all."

I heard that line about 15 years ago from my dissertation chair, and it's stuck with me.

In the last three weeks, I've sent off three papers to conferences.

• For one, I had to edit abut 40 pages or so. My coauthor (who is a theorist and non0native speaker) wrote the first draft. It's a good idea, but the writing needed a lot of work. We sent it off to the American Accounting Association Meeting. We also sent it off to a regional conference, because the school whee one of my coauthors works at counts these things.
  
• A second is a paper that's been floating around for a while. It needed one final going over before submitting to a journal. We realized a week ago that the initial version had been submitted to the Financial Management Association (FMA) conference and rejected a year ago. This version has a lot more stuff in it and is much more polished. However, I hadn't gotten around to making the last few changes to it. So, I finished them and sent it off to the FMA conference. Now it just needs a little more work and we can submit it to a journal.
  
• A third piece involved a paper we'd talked about with a graduate student. It involves a cross-breeding of his dissertation data and a previous paper done by the coauthor from the paper above. We got the dataset from the student with ten days to go before the deadline, and I started writing things up while my other coauthor started the data analysis. Somehow, we produced a 30 page paper with decent results in that time. It also got submitted to FMA. It still needs work, but I think we can have a journal-submittable version in a month or so.
  

Final tally - three papers submitted to 4 conferences in a span of about 2 weeks, followed by 12 hours of solid sleep.

Now I need to finish edits on a short piece that has a conditional acceptance. There's no deadline looming, but I'm in the groove from the last couple of weeks, so I'm here at the College on MLK day.

The $10 Million Question

There is an old question that teachers sometimes ask their students. In fact, I have asked it of my students on occasion. A student will come in and say “I just cannot seem to do well in your course. No matter what I try, nothing seems to work. I’ve tried everything and I keep getting bad grades. I just cannot do it.”

The teacher’s response is straight-forward “If I offered you $10 million, could you make an A in my class? You make an A and you will get a check for $10 million.”

If the student is honest, they usually respond “Well, yes, for $10 million, I would do absolutely nothing but studying night and day for your course and I imagine that I could make an A. I am not sure that I could make 100 but I could get an A. I would become obsessed for $10 million.”

The response from the teacher is obvious: “So, your problem in my class is not ability. It is only a question of motivation. If you could become motivated enough, you could make an A.”

It is a great story because so much of it is true. In the initial discussion with the student, there is the implication that the student cannot do well WITHIN THE CONFINES OF WHAT THE STUDENT IS WILLING TO DO. The student is not willing to say it but he (or she) is willing to study X hours or put in Y effort and when that doesn’t get the desired grade, the student becomes frustrated. Students are usually willing to put in a little more time but what they are looking for are tricks that will get them a better grade with about the same amount of energy or effort. And, when things don’t work, it is always relatively easy to simply fall back on “I just cannot do this stuff.” It is always easy to give up.

Okay, let’s turn the tables. I often give teaching presentations and a few (actually, quite often, many) of the participants will complain that the students simply won’t learn regardless of what they do. No matter what they do, they are disappointed in the results and often get student evaluations that seem too low.

I’ve never done the following at a presentation but at some point I’m going to try it. “Let’s assume that some rich graduate of your school walks in one day and offers to establish a $10 million teaching prize. At the end of the coming school year, every student will be asked the following question ‘rate each of your professors on the quality of what you learned in each of your classes this semester.’ The professor with the highest rating will be given the $10 million prize.” (Let’s assume that no one cheats and bribes the students.)

Would you want to win that prize? Oh, of course, unless your school pays better than mine, $10 million would be an incredible amount of money—much more than most of us make in two lifetimes.

Key question 1 – could you win that prize in your school? What I hope your answer would be is “for a chance at $10 million, I would certainly give it a try. For one year, I would do whatever it takes to get my students to learn and learn deeply. I would become obsessed with student learning.”

Key question 2 – what would you actually do in hopes of winning that $10 million teaching prize?

Once again, I don’t think this is a question of ability. I think all teachers can be great. I want to repeat that thought: I believe all teachers can be great. I think it is a question of motivation. For a shot at $10 million, I think every teacher would do things a lot differently than they do today. (For example, I bet class preparation time would go up significantly. I think a lot more time would be spent on writing and grading tests.)

I think one of the real weaknesses in college teaching today is that there is no real motivation for trying to be great. Yes, we all have personal pride and we all understand the importance of what we do. But, it is tough to rely totally on internal motivation.

But $10 million would be a whole lot of external motivation. So, here is the question that I want you to ponder—if there were a $10 million teaching prize offered at your school, what would you do differently in hopes of winning that award? Make a list of everything that you would do differently.

That list provides you with an automatic roadmap for becoming a great teacher, for becoming the kind of teacher that students talk about 20 years after graduation. That list tells you how you can become the best teacher in your building. There are no secrets to being a great teacher—look at your own list.

Then, try a few of those things starting today. You don’t need to start with all of them. Be satisfied with a few changes. See if they actually do work to make you a better teacher. You have to become a better teacher first before you can become a great teacher.

It is not a question of ability. People give me scores of excuses for not being the best teacher in their building. Forget those excuses. You’ve got to get over that. If someone offered you $10 million to become the best, what would you do?

Then, decide what part of that list you are willing to do first and get started.

Toilet Training the Unknown Baby Boy

This post is further proof that child rearing rots your brain. I'm actually posting on a finance blog about toilet training my kid. Ah well, it give me a break from madly working on the paper I'm trying to finish for the FMA deadline - I already sent one, but this one is insurance.

The Unknown Baby Boy (a.k.a. "Knucklehead") isn't toilet trained yet. He turns 2 in late March, so we're in no rush - if we make it to the warm weather, we'll probably use the time-honored approach of letting him run around outside with no pants on (yes, trees will be involved, and let the neighbors beware).

It's a time-honored tradition for guys to make a game out of their "liquidity management" (hey - it's a finance blog, so I have to at least make a pun in that direction. Some people advocate using little targets for the little guy when training (he can;t write cursive yet, so that's out...). But Sega has taken it to a whole other level. They've come out with game (called "Toylets") that's currently in selected locations in Tokyo where you can play video games by peeing in a urinal. Here's a short article:

In the early ’90s, Sega held 65% of the US video game console market, had millions of fans, and was considered one of the premier creators of modern gaming entertainment. Today, they are helping you play with your pee. The Japan branch of the multinational company recently announced that they are testing their Toylets male urinal video game at select locations around Tokyo. Toylets uses a pressure sensor located on the back of the urinal to measure the strength and location of your urine stream. A small LCD screen above the urinal allows you to play several simple video games including a simulator for erasing graffiti and a variation on a sumo wrestling match. At the end of a game, the screen displays advertisements.

... the four types of video games on the Toylets include:

“Mannekin Pis”: a simple measurement of the urine produced.
“Graffiti Eraser”: where you move your urine back and forth to remove paint
“The North Wind and Her”: a game where you play the wind, trying to blow a girl’s skirt up. The stronger you pee, the stronger the wind blows.
“Milk from Nose”: A variation on sumo wrestling, where you try to knock the other player out of the ring using the strength of your urine flow (shown as milk spraying from your nose). The record of your pee is saved and used as the opponent for the next player. So the game is sort of multiplayer. Toylets even lets you save information onto a USB drive! I fear the MMORPG that will arise from this.

Read the whole thing here.

To quote George Takei, Oh my!

I need some metal floss. Now back to work.