Howard Gossage:

It is so strange that billboards exist at all that the current controversy about whether outdoor advertising should be allowed along federal highways achieves the unreality of a debate on whether witch burning should be permitted in critical fire areas. Apparently no one has thought to wonder just what in the hell billboards are doing anywhere.

The automobile: the very thing that made possible outdoor advertising’s greatest prosperity also contained the germ of its certain doom. The billboard, you might say, is dying of success. If only the horse had never been replaced, outdoor advertising, in modest flower, might have been tolerated indefinitely.

Outdoor advertising is peddling a commodity it does not own and without the owner’s permission: your field of vision. Possibly you have never thought to consider your rights in the matter.

See also:

This odious billboard appears in my town, encouraging me to rat on my neighbours because I don't understand what they throw away.

Two from the archive:

It is ironic: people don’t notice that noticing is important!

EyeTap technology comprises eyeglasses or contact lenses that cause the eye itself to function, in effect, as if it were both a camera and a display.

Louis Menand:

The interstates changed the phenomenology of driving.

How To Look At Billboards

Benjamin Wayne:

YouTube, that incandescent tower of video Babel; monument to the sloughed-off detritus of our exponentially-exploding digital culture; a Technicolor cataract of skateboarding dogs, lip-synching college students, political punditry, and porn; has reached the zenith of its meteoric rise; and Icarus-like, wings melting; is spiraling back to earth. Despite massive growth, ubiquitous global brand awareness, presidential endorsement, and the world’s greatest repository of illegally-pirated video content, Google’s massive video folly is on life-support, and the prognosis is grave.

Rattle:

I think Decius and I should start to practice claiming that MemeStreams is worth four billion while keeping a straight face.

Be advised:

We should probably tell you that the full title of this game is Zombies! Apocalypse - Massive Multiplayer Online Zombies Massacre, even though that's basically given away the point of it all.

Decius:

Ultimately, content is not king, and filters are not king. Bandwidth, and the money that funds it, is king. There will be as many social frameworks as there are societies. There will be many content producers, a small number of which will make money. But the market will only sustain a few free video hosting systems. Its not about production cost or end user value. It's about marginal cost. You can copy a floppy but you can't copy a server.

YouTube Is Doomed

Steven Gjerstad and Vernon Smith explain why the housing crash ruined the financial system but the dot-com collapse did not:

Why does one crash cause minimal damage to the financial system, so that the economy can pick itself up quickly, while another crash leaves a devastated financial sector in the wreckage? The hypothesis we propose is that a financial crisis that originates in consumer debt, especially consumer debt concentrated at the low end of the wealth and income distribution, can be transmitted quickly and forcefully into the financial system.

It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt -- especially mortgage debt -- that was transmitted into the financial sector during a sharp downturn.

It appears that we're witnessing the second great consumer debt crash, the end of a massive consumption binge.

How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?

In the equities-market downturn early in this decade, declining assets were held by institutional and individual investors that either owned the assets outright, or held only a small fraction on margin, so losses were absorbed by their owners. In the current crisis, declining housing assets were often, in effect, purchased between 90% and 100% on margin.

From last November, Decius:

It seems to me that something, and I don't know what, happened around 1995 that vastly increased the rate of investment in the stock market. I'd really like to know exactly what that was.

From the archive:

Marge: I'd really like to give it a try!
Homer: I don't know, Marge, trying is the first step towards failure.

What Marge really wanted to try was to sell real estate. Her propensity for honesty proved to be her downfall.

From Bubble to Depression?

The Economist's Valley correspondent reviews the last six years:

And so, as this correspondent prepares to leave, the Valley again finds itself in a curious position. It has been a boon to the world, helping people keep abreast of acquaintances on their social networks, wherever they go, and record and share much more of their own lives. But the Valley stands on ground that is as unstable, seismically and metaphorically, as it was in the earlier bust. Another bubble—this time, not of the Valley’s making—has burst. The world economy is in crisis, advertising is collapsing and start-ups are once again vanishing into thin air. Silicon Valley may be entering another nuclear winter.

Recently:

I thought I was unlucky graduating into the tech bust. I had no idea.

Two from last year:

Get real or go home.

It was so obvious it was going to fall apart eventually. What is so amazing is how long it took to actually happen.

From the archive, Ted Koppel to Malcolm Gladwell, via Tom Friedman:

Can you know you are in the middle of a tipping point, or is it only something you can see in retrospect?

Six years in the Valley | The Economist

All of the federal government’s efforts to stem the tide in the financial meltdown that began with the subprime mortgage crisis have added hundreds of billions of dollars to our national debt. FRONTLINE reports on how this debt will constrain and challenge the new Obama administration, and on the growing chorus on both sides of the aisle that without fiscal reform, the United States government may face a debt crisis of its own which makes the current financial situation pale in comparison. Through interviews with leading experts and insiders in government finance, the film investigates the causes and potential outcomes of—and possible solutions to—America’s $10 trillion debt.

Tune in Tuesday.

Recently, Niall Ferguson:

This hunt for scapegoats is futile.

From the archive:

When you're chewing on life's gristle
Don't grumble, give a whistle.
And this'll help things turn out for the best.

Ten Trillion and Counting | PBS Frontline

David Leonhardt:

Sixteen years ago, two economists published a research paper with a delightfully simple title: “Looting.”

“Looting” provides a really useful framework. The paper’s message is that the promise of government bailouts isn’t merely one aspect of the problem. It is the core problem.

With moral hazard, bankers are making real wagers. If those wagers pay off, the government has no role in the transaction. With looting, the government’s involvement is crucial to the whole enterprise.

If we don’t get rid of the incentive to loot, the only question is what form the next round of looting will take.

The human mind has a tremendous ability to rationalize, and the possibility of making millions of dollars invites some hard-core rationalization.

Looting

On corporate life:

I think now, with what we’re seeing with mobility, we’re going to have a totally different concept of what it means to go to work.

On management:

You always have this problem of being surrounded by “yes men” and people who want to predigest everything for you. In the old organization, you had to have this whole army of people digesting information to be able to feed it to the decision maker at the top. But that’s not the way it works anymore.

On intellectual property:

It’s not so much the question of what’s owned or what’s not owned. It’s a question of how can you leverage the assets you have to realize the most value.

On scarcity:

We have to look at today’s economy and say, “What is it that’s really scarce in the Internet economy?” And the answer is attention.

Hal Varian on how the Web challenges managers

Amid the global economic meltdown, companies continue to announce significant job cuts. Below, take a look at some of the largest layoffs in the fourth quarter of 2008 and the first quarter of 2009 in selected industries.

List of Layoffs and Job Cuts by Major Employers

Michael Lewis:

One of the distinctive traits about Iceland’s disaster, and Wall Street’s, is how little women had to do with it.

There are plenty of women, but this is a men’s history.

When you borrow a lot of money to create a false prosperity, you import the future into the present. It isn’t the actual future so much as some grotesque silicon version of it. Leverage buys you a glimpse of a prosperity you haven’t really earned. The striking thing about the future the Icelandic male briefly imported was how much it resembled the past that he celebrates. I’m betting now they’ve seen their false future the Icelandic female will have a great deal more to say about the actual one.

From the archive:

The sheer amount of sewing done by gentlewomen in those days sometimes takes us moderns aback, but it would probably generally be a mistake to view it either as merely constant joyless toiling, or as young ladies turning out highly embroidered ornamental knicknacks to show off their elegant but meaningless accomplishments.

From a year ago, Barry Ritholtz:

You're supposed to raise your standard of living by working harder, being clever, earning more income -- not by using your long-term savings. And now this current generation is pretty much fucked.

From last December, Malcom Gladwell:

We should be lowering our standards, because there is no point in raising standards if standards don’t track with what we care about.

Have you seen "Revolutionary Road"?

Hopeless emptiness. Now you've said it. Plenty of people are onto the emptiness, but it takes real guts to see the hopelessness.

Wall Street on the Tundra

Shankar Vedantam:

David Levine, an economist at Washington University in St. Louis, said it was useful to distinguish between altruistic punishment and schadenfreude. Taking pleasure in the discomfort of others is counterproductive, whereas targeting anger at people who violate the public trust can serve a strategic and useful purpose.

The problem with altruistic punishment, of course, is that it is driven by a feeling of uncontrollable anger. From an evolutionary perspective, this makes sense. Only a very strong drive could prompt individuals to put themselves at risk for the good of the group. But as a result, experiments show, there are people even willing to bring the entire house down if that is the only way to punish the fat cats who elevate narrow self-interest above the common good.

There is a middle way between cold rationalism and irrational, self-destructive anger: Pour taxpayer money into fixing broken institutions, but make sure those responsible for the catastrophe pay -- and pay publicly. As Levine put it, just because you don't want to throw the baby out with the bath water doesn't mean you don't throw out the bath water.

The Rational Underpinnings of Irrational Anger