This Day in Game Show History

Yesterday, on the set of the Price is Right, someone named the exact price in the Showcase Showdown.  Amazing.  A feat that has not been done in over 30 years.  Sounds almost unreal doesn’t it.  Well, actually, the same contestant also named the exact price in the One Bid to get into the game in the first place.  Surely this is a sign of  the apocalypse or something?

Video at TMZ.

The Dollar

This could change everything.  From Bloomberg, Dollar No Longer Haven After Fed Moves Rate Near Zero.

“Prospects ahead appear particularly ominous for the world’s reserve currency once global economic stability starts to build up.”

This could seriously hamper US Government borrowing, especially if foreign entities no are no longer parking reserves in US Government debt.  This would then short circuit the Virtuous Cycle that the US has been enjoying.  See Calculated Risk (Housing and Trade: Virtuous Cycle about to Become Vicious?) for more on that.

So Will This Be An Up Week?

One things that always surprises me is how much of the movement of the stock market is structural.  From this piece, Does Options Expiration Week Equal Stock Market Strength?.

For the last 21 years, the week leading up to options expiration has been consistently bullish and the weeks before and after bearish in terms of both returns and percentage positive.

Actually, that doesn’t surprise me.  What does is how few people, outside of many trading professionals, know about those structural issues.  Then again, how many people outside of trading professionals even know how options work?

They Stole The Pens!

The NY Times has another piece on Wall Street bonuses (On Wall Street, Bonuses, Not Profits, Were Real) which is commented on at Dealbreaker (Opening Bell: 12.18.08).  Supposedly bonuses induce risky behavior, or something like that.

My favorite study on this phenomenon is presented here (Year-End Bonus Is An Incentive To Cheat).  In summary, some researchers at the Washington University in St. Louis performed a test in which the participants were paid to solve anagrams.  Some students received a “flat salary”, some received a “performance based bonus”, and a third group was “penalized based on low performance”.  In all compensation schemes the expected value of the compensation was equal.  After completing these puzzles, the students then graded their own work and the researchers measured the level of dishonesty among the participants.

As you expect, participants who received a flat salary were the most honest and participants who received a performance bonus cheated when reporting the results.

The unexpected results however:

Participants who were penalized based on low performance not only cheated but also stole the nice pens that were to be returned at the end of the study!

Hilarious.

“Ponzi Crawl”

From the Urban Dictionary.  Presented without comment.

A pub crawl that adds a new person to buy a round at each location.  Each new person is promised that they will get free drinks at all the future bars if they buy this round.  Obviously, whoever joins the ponzi crawl last gets screwed!

Bailouts

From the Washington Post’s story “HUD Chief Calls Aid on Mortgages A Failure“, FHA Commissioner Brian Montgomery was quoted:

“There were two philosophies on the Hill: Let’s throw the barn door open and help as many people as we can regardless of the reasons. Or we need to make them pay because they should have known what they were doing,” Montgomery said. “They found some middle philosophical ground, but that philosophical middle ground made [the program] unworkable.”

Earlier in the same article Steve Preston, Secretary of Housing and Urban Development, is attributed with saying that the program is “too expensive and onerous for lenders and borrowers alike”.

From that indication, it sounds to me like the problem with the program is not that it is stuck in some “philisophical middle ground” but, rather, that people need/expect/are waiting for/are hoping for the government to “throw the barn door open” and start putting real money to the residential housing sector before they take advantage of these programs, for better or worse.

Hat tip to Calculated Risk.

New York City

Is this the begining of the end?

There are more than 20 empty storefronts along Avenue B.

Today’s Fed Meeting

Of note, from the press release from today’s Federal Open Market Committee:

In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

Interesting times these is.