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ETFs are Exchange-Traded Funds.

I think they are often dangerous and misused, but I’ve seen critiques which missed on why.

This one I like and agree with:

The bottom line is that the ETF providers are not your friends. At their core they are asset gatherers and fund marketers. Just because a new ETF is created does not automatically mean it is worthy of your hard-earned investment dollars.

Before we go any farther down the anti-ETF industry path, let’s pause and take note of some of the good things to come from the ETF revolution. We have written previously how it amazing that investors can now create low-cost, globally diversified portfolios using ETFs. In addition, investors can now access innovative investment strategies that were previously only available to institutional and high-net worth investors. Indeed, any number of active investment strategies rely on ETFs for implementation.

Here’s the reason, again, that I don’t think inflation will show up in consumer prices anytime soon:

According to the Federal Reserve’s “Flow of Funds” report, released Thursday, the net worth of households in the United States is $50.4 trillion. That’s $1.3 trillion less than the total at the beginning of 2009, and $14 trillion less than at the beginning of the recession in December 2007.

Numbers that huge are hard to grapple with, so here’s a simple way to think about it. U.S. households are about 25 percent poorer than they were at the end of 2007.

Via Andrew Leonard

This makes sense:

I suspect a lot of people will do the math and decide this is a deal they can’t afford. Here’s why: If your old car or truck gets less than 18 m.p.g., you can qualify for a voucher of $3,500-$4,500 toward a new one, but the old one has to go the shredder. (The idea, after all, is to get ’em off the road.)

So the credit is all you get, no trade-in value. (You might be better off with a conventional trade-in.) Even with the credit, you’re going to spend $10,000-$15,000 or more for new wheels. Now, if you’ve been driving an older vehicle because you can’t afford a new one or aren’t sure you’ll have a job next month, are you really ready to take on a car payment? Can you even get credit?

Should I hope the full set of credits won’t go out?

Or, will it just be a windfall for those few rich folks who have an extra truck or SUV moldering behind the barn?

I really can’t believe they are going to pass this stinker:

A group of senators led by California Democrat Dianne Feinstein were pushing an alternative version that would require consumers to trade up for more fuel-efficient cars and trucks to qualify. They complained that even a 2009 Hummer H3T, which gets 14 mpg in city driving and 18 mpg on the highway, could qualify for the incentives under the House bill.

When we have a budget problem we should not be giving $4500 free money to shoppers. We should be kicking the gas tax up a few cents and let that sink in.

To my little friend

Nice day, a little chilly.

I’m enjoying my iPhone. A smart phone is one of those things you can put off buying, but once you have it, it becomes impossible to give up. Any question you have, you can pull your phone out of your pocket and look it up.

I’m also comfortable enough with Apple’s technology and AT&T’s service. It’s more expensive than a “phone” ever was, but a phone couldn’t hit Wikipedia, IMDB, and stock quotes in quick succession.

All that said, I’m thinking that my 2-year contract is about right for iPhone dominance. I expect Android phones to come in and win the market. It’s “Mac vs PC”‘ all over again. Many voices and many innovators will win the market over from a sole source.

Google: Expect 18 Android Phones by Year’s End

Canonical developers aim to make Android apps run on Ubuntu

The Baseline Scenario goes with the title “I Have 13 Bankers in My Office,” which is pretty good.

But I like Mark Thoma’s summary:

The people in charge of the regulatory agencies were convinced that unregulated markets were self-correcting, and that regulation was not needed and would more likely do harm than good. As this shows, no amount of convincing from people who weren’t as smart as the smartest guys in the room was going to change that. The question for me is whether those in charge now, Summers for example, have learned their lesson and the humility to be derived from it, or whether they will be defensive of their own role to the extent that it affects the type of regulation they can support. I’d very much like to believe they have learned their lesson, though humility seems to be lacking, but watching Summers and others argue that the private sector and the market is preferable to temporary government takeover of banks (i.e. his and the administration’s opposition to temporary nationalization), – the continued faith that the market always knows best – makes me wonder if they have.

That’s an important paragraph, because so many have not learned, and only deal with it through a kind of avoidance. They don’t think about it. They skip forward to where unregulated markets “are” self-correcting again.

One of the arguments I’ve made over the years, one which has annoyed economists no end, has been that catch-to-limit fisheries will always fail. The basic framework of the argument is that while, yes, economists can devise effective rules for fishing given basic knowledge of the fisheries – we don’t actually have that knowledge. We too often fool ourselves into thinking we have the fisheries biology down when there are millions of dollars on the line. Everyone, from the boat captain to the Senator, wants there to be an answer so that someone can get fishing and make some money. On the other hand, there isn’t a real strong constituency for “we don’t really know enough” or “we don’t have the answer.” It’s just a sad flaw in human reasoning that any scientist who says that is shunted off, and a scientist who says “we can catch exactly 1234 tons of cod” is preferred. We foolishly think that a precise answer is an accurate one.

(The second part of the argument is the mathematical intuition that fishing to a limit amplifies errors, and that errors on the “take too many” side are more cumulative than errors on the “take too few” side.)

Anyway, more evidence that not only don’t we know, but that nature can bite us on the butt:

Did the North Atlantic fisheries collapse due to fisheries-induced evolution?

We are becoming more aware that our fishing changes not just the inter-species dynamics, but the species themselves.

[As I wake up a bit, I realize that I should have made clear that by "catch-to-limit" I mean fishing to "maximum sustainable yield." That is sailing too close to the edge. The alternatives are extremely conservative limits, "certain sustainable yield" or going over to rely more on MPAs, Marine Protected Areas. MPAs are better from a black-box perspective. We don't have to know so much about what goes on inside them, just as long as we set them aside and don't mess with them.]

An interesting piece by Joseph Marr Cronin and Howard E. Horton, Will Higher Education Be the Next Bubble to Burst?

The basic premise is that since so much of our spending has been fueled by lending and bubbles, why shouldn’t college costs be the next to pop?

What I found most interesting in the piece were the references to colleges and private firms that are re-factoring college with on-line technology to reduce costs. I’d thought, from the outside and just reading the general press, that those walls had not started to crack.