Looks like me and Greenspan both learned the wrong lessons from previous housing crashes.

The former Fed chairman also acknowledged that the central bank failed to grasp the magnitude of the housing bubble but argued, as he has before, that its policy of low interest rates was not to blame. He stood by his conviction that little could be done to identify a bubble before it burst, much less to pop it.

“We had been lulled into a sense of complacency by the only modestly negative economic aftermaths of the stock market crash of 1987 and the dot-com boom,” Mr. Greenspan wrote. “Given history, we believed that any declines in home prices would be gradual.

I learned a different lesson though.

The housing crash in the UK at the start of the 90s was terrifying.It came after a long, sustained boom where house prices just went up and up.

I know a bunch of people with 120% mortgages that lost over half the value of their houses. Many lost everything. We bought our apartment at half the price that the previous owners had paid three years earlier. We felt very smug timing the market like that. We still lost money because the prices kept falling and falling.

There was a boom in Silicon Valley when we arrived. But I had learned my lesson from the boom/bust in the UK – house prices can’t go up indefinitely! Eventually they are going to come down with a crash. When friends of mine bought a house for about $400k, I thought they were crazy. When they sold it for about a million several years later, I decided that I was the crazy one.

I concluded that my lesson was wrong. Housing prices can go up indefinitely. I bought a house.

But my lesson wasn’t wrong. It just wasn’t right yet.

Thanks Mr Greenspan.

This is awesome in so many ways that I don’t know where to begin.

When a famous tantric guru boasted on television that he could kill another man using only his mystical powers, most viewers either gasped in awe or merely nodded unquestioningly. Sanal Edamaruku’s response was different. “Go on then — kill me,” he said.

From The Times via Secular Right.

When the guru’s initial efforts failed, he accused Mr Edamaruku of praying to gods to protect him. “No, I’m an atheist,” came the response. The holy man then said he needed to conduct a ritual that could only be done at night, outdoors, and after he had slept with a woman, drunk alcohol and rubbed himself in ash.

Bruce Bartlett (advisor on tax issues to Reagan) on liberals.

Back when I used to listen to Rush Limbaugh there was one thing in particular he used to say that I agreed with. Over and over he said that liberals defined themselves largely by the worthiness of their objectives and the sincerity of their motives. The actual results of their policies didn’t matter at all. Thus liberals support the minimum wage because they care about the well being of workers at the bottom of the wage scale. That many of these workers lose their jobs or fail to find jobs because the minimum wage priced them out of the labor market was a matter of no concern to liberals. All that mattered is that they cared.

Bruce Bartlett (Treasury official under Bush I) on conservatives.

One of the reasons I became a conservative way back when is because conservatives lived in a world where one’s actions are defined by their consequences, not one’s motives. Conservatives also prided themselves on being reality-based and fact-based in their analyses, while liberals often seemed to live in a dream world disconnected from history, institutions and ideology, among other things.

Bruce Bartlett (drafter of the bill which became Reagan’s signature tax cutting bill) on the Tea Partiers.

Today, however, conservatives have largely adopted the liberal operating assumption and now also define themselves by the righteousness of their motives. This fact became very obvious to me this week when I examined the knowledge that tea party demonstrators on Capitol Hill had on the subject of taxation. As I recount in my column below, most of those in the crowd grossly overestimated the level and burden of federal taxes, thinking that they are many times higher than they actually are.

Bruce Bartlett (one of the founders of ) supply-side economics on the Tea-Partiers answers to a survey prepared by David Frum (economic speechwriter for Bush II).

Tuesday’s tea party crowd, however, thought that federal taxes were almost three times higher than they actually are. The average response was 42% of GDP and the median was 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.

Bruce Bartlett on taxes under Obama.

According to the JCT, last year’s $787 billion stimulus bill, enacted with no Republican support, reduced federal taxes by almost $100 billion in 2009 and another $222 billion this year. The Tax Policy Center, a private research group, estimates that close to 90% of all taxpayers got a tax cut last year and almost 100% of those in the $50,000 income range. [snip] No taxpayer anywhere in the country had his or her taxes increased as a consequence of Obama’s policies.

Bruce Bartlett on the gap between perception and reality.

Perhaps these people haven’t calculated their tax returns for 2009 yet and simply don’t know what they owe. Or perhaps they just assume that because a Democrat is president that taxes must have gone up, because that’s what Republicans say that Democrats always do. In fact, there hasn’t been a federal tax increase of any significance in this country since 1993.

Bruce Bartlett’s recommendation to Tea-Partiers.

Whatever the future of the tea party movement in American politics, it’s a bad idea for so many participants to operate on the basis of false notions about the burden of federal taxation. It only takes a little bit of time to look at one’s tax return to see what one is actually paying the Treasury, calculate the percentage of one’s income that goes to taxes, and compare it to what was paid last year and the year before. People may then discover that their anger is misplaced and channel it into areas where it is more likely to bring about positive change.

Daniel Kahneman describes two selves.

Your experiencing self lives in the present. It cares about what is happening right now. Experiencing self is honest, forthright and direct. Ask your experiencing self if you are happy and it’ll give you an honest answer. Go on! Try it! Ask yourself whether you are happy RIGHT NOW.

Your remembering self lives in the past. It cares about what happened before. Your remembering self is a self-deluding, story-telling liar. Ask your remembering self whether you are happy and it will probably just make something up.

Kahneman describes a study where two groups of people were given colonoscopies.

The first group had a short, fairly pleasant experience (as colonoscopies go) but it ended abruptly. Probably, the doctor just wanted to get it over with quickly.

The second group had a long painful experience (as reported by their experiencing selves) where the pain just kind of tailed off at the end.

But – here’s the thing – the second group reported a much happier colonoscopy. Their remembering selves ignored the whole ordeal and focussed on the very last bit.

If you want to be happy, who should you please? Your remembering self or your experiencing self?

His examples are intriguing.

Experiencing self does not care much about the weather but remembering self thinks it is pretty important – bear this in mind if you are deciding which state to live in.

You can make remembering self – the one who reports on the experience – enjoy a colonoscopy much more by making it last longer (as long as the last little bit is not too unpleasant).

Having more money doesn’t really impress your experiencing self very much – as long as you have enough to live on.

I especially liked the questions at the end: public policy is mostly driven by our remembering selves. How would be things be different if out experiencing selves had a say?

Continuing his campaign to be Writer of the Decade (2001 to 2011), Robert Wright takes on the Toyota madness.

My back-of-the-envelope calculations (explained in a footnote below) suggest that if you drive one of the Toyotas recalled for acceleration problems and don’t bother to comply with the recall, your chances of being involved in a fatal accident over the next two years because of the unfixed problem are a bit worse than one in a million — 2.8 in a million, to be more exact. Meanwhile, your chances of being killed in a car accident during the next two years just by virtue of being an American are one in 5,244.

Incidentally, I did an experiment in my Prius the other day to make sure it would go into neutral just in case I am one of the 2.8.

Ever seen the knob of a Prius?

See that circle thingie at the intersection of the lines. The knob just kind of sits at the circle thingie. To shift into neutral, you push the knob to the left and  when you let it go, it springs back to the circle position. Down for engine braking etc.

So, here’s the thing. You can’t you just tap it over to the N. You have to hold it there for like half a second.

I wonder if the out-of-control people did a little tap and panicked when the car kept accelerating?

TAP!  ZOMG! TAP! It won’t go in neutral!! Tap! Tap! Tap! Aaaaaaargh!!!!!

Wright is right though.

But it worries me that this Toyota thing worries us so much. We live in a world where responding irrationally to risk (say, the risk of a terrorist attack) can lead us to make mistakes (say, invading Iraq). So the Toyota story is a kind of test of our terrorism-fighting capacity — our ability to keep our wits about us when things seem spooky.

Passing the test depends on lots of things. It depends on politicians resisting the temptation to score cheap points via the exploitation of irrational fear. It depends on journalists doing the same. And it depends on Americans in general keeping cool, notwithstanding the likely failure of many politicians and journalists to do their part.

So go out today and buy a Toyota. It’s the patriotic thing to do.

He’s wrong about the last bit though. Don’t buy a Prius. Not because they might crash. But because they’re crap.

I experience stabbing pains of guilt when I read about the Iraq Inquiry in Britain. That  horrible story no longer moves me to anger; I just shake my head and keep walking.

I am sincerely grateful, therefore, to Daniel Larison in The American Conservative for still being very angry. I am glad he won’t let it rest.

Of course the new administration will try to make the best of it, claim progress and take credit for anything it can. That is in the political self-interest of this administration. Having inherited a mess that the political class has convinced itself was improving, it would not be advantageous to be the one overseeing the unraveling. The rest of us are not burdened by such considerations.

I don’t think it is particular noble to destroy another people’s country on the basis of unfounded, paranoid fears that its small, economically weak, militarily inferior government posed grave threats to the global superpower. There are many words that come to mind to describe this, but noble is not one of them. It is not especially noble to do this with no meaningful plan for restoring order and governance in the wake of the invasion. There is no nobility to be found in the afterthought of poorly constructing a democratic regime whose elections served as the trigger for massive bloodshed. Likewise, there was not much nobility when our government belatedly recognized its incompetence and failure long after it could do the civilian casualties any good and proposed a plan that would temporarily reduce violence long enough for the previous administration to get out the door.

My anger is still there but is deep below the surface but I am glad that Larison is still able to rouse it back up and remind me. I don’t want to forget.

How To Report The News – Watch more Funny Videos

Next time someone tells you that the republicans are the party of fiscal responsibility and/or growth, show them this (from the economist) and have them annotate the decades with a red or blue marker.