Dollar Diplomacy: How much did the Marshall Plan really matter?

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Berlin Airlift Memorial at Tempelhof Airport U-Bahn Platz der Luftbrucke 52.484141 13.387412

Niall Ferguson:

t was “the most generous act of any people, anytime, anywhere, to another people,” its chief administrator declared. It was “among the most noble experiences in human affairs,” its representative in Europe said. It was “the most staggering and portentous experiment in the entire history of our foreign policy,” the young Arthur Schlesinger, Jr., who served on its staff, wrote. Foreigners concurred. It was “like a lifeline to sinking men,” according to the British Foreign Secretary Ernest Bevin. It “saved us from catastrophe,” a manager at Europe’s largest tire factory declared. Sixty years after Secretary of State George C. Marshall outlined the need for economic aid to stimulate European recovery, in a speech at Harvard University’s commencement on June 5, 1947, the plan named after him continues to be fondly remembered in donor and recipient countries alike. In our own time, liberal internationalists have periodically called for new Marshall Plans. After the collapse of Communism, some economists maintained that the former Soviet Union was in need of one. More recently, there has been desultory talk of Marshall Plans for Afghanistan, Iraq, and even the West Bank and Gaza. When critics lament the allegedly modest sums currently spent by the American government on foreign aid, they often draw an unfavorable contrast with the late nineteen-forties. Yet some people, at the time of its inception and since, have questioned both the Marshall Plan’s motivation and its efficacy. Was it really so altruistic? And did it really avert a calamity

The Quants Explain Disaster

Joe Nocera (Subscription):

Back in 1998, that now infamous quant fund really did melt down, not only liquidating, but shaking the entire global financial system. Long-Term used complex computer models that failed to anticipate some severe once-in-a-lifetime market events, and it was shockingly leveraged — it was using $100 of borrowed money for every dollar of its own capital — which magnified its losses. It was also run by some of the smartest people on Wall Street. “When Geniuses Fail” was the apt title to Roger Lowenstein’s fine book about that fiasco.


Ever since, whenever quant funds stumble, it’s “When Geniuses Fail Redux.” Wall Street wags begin to wonder if those losses will lead to something truly cataclysmic, while newspaper reporters take a certain undisguised glee in reporting on really smart people losing money. Even now, there’s enough Luddite schadenfreude in the air that rumors continue to circulate that AQR is continuing to absorb substantial losses — which is the exact opposite of the truth, Mr. Asness says.

Ritholtz has more here and here.

“The Stock Market is Still Extremely Expensive”

Henry Blodget:

don’t know whether this is a “correction in a bull market” or the “start of a bear market,” but I am far more persuaded by the latter case. After ten years on Wall Street, however, I can promise you this: No one else knows either. Go ahead and listen to the parade of smart guests on Bubblevision–their reasoning ranges from impeccable to hilarious–but just don’t let yourself get seduced into betting big one way or the other. Because no one knows. (We have 50/50 odds, though, so half of us will be “right”).
One thing we do know: Based on correctly calculated long-term valuation trends (cyclically adjusted P/E), the stock market is still extremely expensive (close to the peak levels of 1929, 1966, and 1987, and only below the all-time peak of 2000). I expect that this will eventually revert to the mean, and that one of these days we will see the “start of a bear market” that could take us below the 7700 trough on the DOW in 2002. This could be it (and if it is, this is just what it will look like). And given the housing market, credit crunch, oil prices, etc., it’s not hard to see how we would get there. But anything is possible, and long-term valuation trends are nearly useless for near-term timing calls.

Google News Hypocrisy: Walled Off Content

Mike Arrington:

TechMeme founder Gabe Rivera makes an interesting observation on the Google News story all over the blogosphere today.

One thing that bugs me: they’re now hosting original news content, yet they prohibit other aggregators from crawling it (per robots.txt restrictions and TOS). Of course Google News relies on the openness of other organizations with original news content.

Q & A With William Gibson

Steve Ranger:

Science fiction novelist William Gibson has been exploring the relationship between technology and society ever since he burst on to the literary scene with his cyberpunk classic Neuromancer in 1984. He invented the word ‘cyberspace’ and his influential works predicted many of the changes technology has brought about. silicon.com’s Steve Ranger caught up with him in the run up to the launch of his latest novel, Spook Country.
silicon.com: You’ve written much about the way people react to technology. What’s your own attitude towards technology?
Gibson: I’m not an early adopter at all. I’m always quite behind the curve but I think that’s actually necessary – by not taking that role as a consumer I can be a little more dispassionate about it.
Most societal change now is technologically driven, so there’s no way to look at where the human universe is going without looking at the effect of emergent technology. There’s not really anything else driving change in the world, I believe.

Waiting for My Air Taxi

Jon Udell:

One powerful force that’s dispersing economic opportunity is of course the Interent. A decade ago there were a few lucky souls who could pull an income through a modem. Today there are lots more, and we’ve yet to see what may happen once high-bandwidth telepresence finally gets going.
But a second force for dispersion has yet to kick in at all. It is the Internetization of transportation — and specifically, of air travel. That’s where Esther Dyson comes in. She’s investing in several of the companies that are aiming to reinvent air travel in the ways described by James Fallows in his seminal book on this topic, Free Flight. In that vision of a possible future, a fleet of air taxis takes small groups of passengers directly from point to point, bypassing the dozen or so congested hubs and reactivating the thousands of small airports — some near big cities, many elsewhere.
There are two key technological enablers. First a new fleet of small planes that are lighter, faster, smarter, safer, and more fuel-efficient than the current fleet of general aviation craft with their decades-old designs.
The second enabler is the Internet’s ability to make demand visible, and to aggregate that demand. So, for example, I’m traveling today from Keene, NH to Aspen, CO. If there are a handful of fellow travelers wanting to go between those two endpoints — or between, say, 40-mile-radius circles surrounding them, which circles might contain several small airports — we’d use the Internet to rendezvous with one another and with an air taxi.