Macroeconomics lesson in two easy rap videos – Hayek v. Keynes – FIGHT!

Yo, son!

Hear the two macro heavyweights John Maynard Keynes (in the stimulus/top down corner) and F.A. Hayek (in the libertarian/bottom up corner) spit some fierce econ battle rhymes.

Professor and economist Russell Roberts is behind this piece of youtube brilliance.  Check out his excellent podcast at econtalk.org.

Round 1

Round 2

Chef vs Meth

For more famous rap battles, two of the Wu Financial‘s finest duke it out here:

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Updates to Words of Ward

Hi all – You may have noticed a few tweaks to my blog.  I’ve added a bunch of social media buttons on the right side of the blog (Facebook ‘Like’, Twitter, sharing on Facebook, bookmarking, etc.)  So, spread my wisdom and use the sharing options!
I’ve also added a quick and simple rating system (thumbs up or down) to each of my posts.  Let me hear the feedback!  This will give me a good idea about which posts people like (or don’t like) and may influence my future writing (or it may not; it’s my blog damn it!)

Thanks, hope the new functionality is useful!

Rant to finance folks everywhere: Please stop talking about ‘basis points!’

This is a nerdy finance rant inspired by my frustration with the stupidest units ever created, with the exception of the English system of measurement, ‘basis points’.  Basis points, as used in financial jargon, simply refer to hundredths of percentage points.  For example, 100 basis points = 1%.  Thus, if some annoying MSNBC commentator says that Wal-mart’s stock went up 10 basis points, they mean it went up 0.1%.

Why, you might ask, wouldn’t they just say ‘Wal-mart went up 0.1%’?  GOOD QUESTION!  The only answer I can come up with is that Wall Street & financial gurus enjoy unnecessarily complex lexicon that confuses lay people and makes themselves sound wise & competent, despite any evidence to the contrary.  Hence the conflagration of obsfucating terms, which I eschew, in financial jargon (see, I can do it myself using non-financial English!)

Introducing extra units that add no value to discussions of finance makes things more difficult.  Good choices of units (which are units of measurement that one groups together, like inches or gallons) should make discussions and math easier, not harder.

Case in point

Here’s  a formula taken from a Harvard Business School article on bond duration (don’t worry about what that is) which uses basis points, which they abbreviate as ‘bps’ (= more useless notation.)

dP/P = -8*dY = -8*10bps = -80bps = -0.08% [sic; the author screwed up the answer, which should be -0.8%.  This is probably a result of using stupid basis points.]

Here’s the exact same equation using percentages, like any rational person would:

dP/P = -8*dY = -8*0.1% = -0.8%

To me, the second equation looks way easier (no weird ‘bps’ units),  is quicker to write out (1 less step), and less error prone since you’re not converting units back and forth.

Bottom line: STOP USING BASIS POINTS AND JUST REFER TO PERCENTAGES OR DECIMAL FRACTIONS YOU OBNOXIOUS FINANCIAL PROFESSIONALS & ACADEMICS!

Thanks, I feel better now.

“Make everything as simple as possible, but not simpler.”
—  Albert Einstein

Protect Ya Check – Method Man vs Tax Man

Disclaimer: I wrote this article solely to make bad puns off the Wu-Tang Clan’s debut album classic “‘Enter the Wu-Tang (36 chambers)“.

The same rapper that cautioned us to safeguard our neck has been neglecting his paycheck, or rather, the state income taxes that didn’t come out of it.  New York state has brought the muthaf’in ruckus as they prepare to “R.E.A.M.” Wu Tang Clan’s Method Man for dolla dolla bills y’all.

Before you start to chastise the hip hop star with cries of “shame on a nigga” for tryin’ to run game on NY state, note that poor Method Man defended himself on the grounds that “I’m a pothead…I go on the road and forget everything else.”

Don’t shed too many tearz for the man, though, he’s probably worth millions, especially considering the wealth management services he has access to as a Wu member.  Just remember, the tax man ain’t nuthing ta f’ wit!

Proof that my personal finance advice is the stuff of dreams

A message from one loyal reader:

“I had a bizarre dream last night in which you opened an office called “village personal finance” and all the decor was sparkly pink hello kitty stuff right down to the mailbox outside…”

Would you take financial advice from a guy with this logo?

If you’re not dreaming about my blog yet, you definitely need to read it more, or at least insert it repeatedly into everyday conversation, just like I do.

Warren Buffett discusses the economic crisis with Charlie Rose

Multi-billionaire investor Warren Buffett, CEO of Berkshire Hathaway, on the Charlie Rose Show in October 2008.  This is a facsinating look back through what was happening during the financial crisis, and Buffett’s insightful and easy-to-understand thoughts on it.

Buffett is a personal hero of mine, both in terms of investing and as a model of integrity & compassion in business and life.  I find he’s a great conversationalist, so I hope you enjoy this interview as much as I did.  Check it out on your lunch break!

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