John At The Center

It isn't that Fannie and Freddie “can’t sell to an end buyer”, it is that the GSEs will be selling for a lower price (higher yield) when the Fed completes the MBS purchase program. At that time mortgage rates will probably rise by about 35 bps to 50 bps (relative to the Ten Year) in order to attract other buyers. Alone that isn't all that “scary”.

via Calculated Risk: The Fed and Mortgage Rates.

I feel you Thoma.

I find that I have a knee-jerk, negative reaction to explanations based upon mass psychology, sentiment, story-telling, and the like. I have to consciously force myself not to dismiss them. I'm not sure why that is, though it probably has something to do with a feeling that such explanations aren't scientific, and hence have no place in serious academic investigations. That is, prior to the crisis I thought that the real economy drove sentiment, and not the other way around. Sentiment could definitely provide a feedback loop that strengthens negative or positive economic shocks, but psychology was not the prime mover. Thus, sentiment changes that did not have evidence to support them would quickly die out before having much, if any effect.

But this crisis has caused me to reevaluate. I still find the Shiller-type animal spirits, psychology based explanations hard to swallow, but when the foundation supporting your beliefs is called into question (in this case modern macroeconomic models), it's important to open your mind and at least give alternative explanations a chance. That's particularly true when the person pushing the stories has a pretty darn good record of using them to warn of bubbles, as Shiller does. So I'm trying.

via Economist’s View: “What if a Recovery Is All in Your Head?”.

With the future looking like it’s taking a GPU route, a hybrid technology is the direction IBM will developing.

via IBM cancels Cell Processor development | Wasted Gamer.

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

via Push to Add to Stimulus Package Draws Debate – NYTimes.com.

via Understand How Products Impact Stock Prices — Trefis.

Bear in mind that the whole problem right now is that the private sector is hurting, it’s spooked, and it’s looking for safety. So it’s piling into “cash”, which really means short-term debt. (Treasury bill rates briefly went negative yesterday). Meanwhile, the public sector is sustaining demand with deficit spending, financed by long-term debt. So someone has to be bridging the gap between the short-term assets the public wants to hold and the long-term debt the government wants to issue; call it a carry trade if you like, but it’s a normal and necessary thing.

via Interest rates: the phantom menace – Paul Krugman Blog – NYTimes.com.

Nvidia’s data center push began two years ago with the introduction of a computer server called Tesla and a software platform called Cuda. When combined, the technology let people move certain software jobs that usually run on Intel and Advanced Micro Devices chips onto graphics chips.

Nvidia’s rivals, including Intel and A.M.D., have interest in similar technology, although they’re playing catch-up for the moment. You’d be hard pressed to find A.M.D.’s competing technology at any of the booths here, and Intel has yet to release a graphics chip that fits into this market.

via Nvidia’s Gamers Helped It Win Big Business – Bits Blog – NYTimes.com.

“Lifecycle of high frequency stratgies are decreasig geometrically” – HF spread capture capacity is decreasing in US

via Twitter / carl carrie: Mankoff #HFT – “Lifecycle ….

“GLD now rivals many of the world’s central banks, among the biggest holders of bullion. If GLD were a central bank, it would rank fifth – just below France and above China.”

via Thursday links: costless capital Abnormal Returns.

Despite the rebound this year in Citadel's hedge-fund performance, they still must earn back far more to recover last year's losses. Mr. Griffin acknowledges that process could take another year or even two. Until then, Citadel isn't eligible for lucrative 20% fees on the funds' profits.

This is one reason why the new hedge funds are so important: They have no ground to make up, so they can earn fees immediately.

via A Hedge-Fund King Comes Under Siege – WSJ.com.