Thursday, December 10, 2015

R.I.P. | Adele Wick, Economist (1950-2015) (Updated May 8, 2017)

Adele at a screening sponsored by the R.S. Schalkenbach
Foundation, which she chaired. Photo by JT Marlin.
Adele Ernst Wick died at her home in Greenland, N.H. on Sunday, September 27, 2015.

Born in 1950, in Gates Mills, Ohio, Adele received her B.A. in Economics from Wellesley College in 1972 (my wife Alice also graduated from Wellesley in Economics six years earlier).

Adele continued her education at the University of Chicago, receiving an M.A. in economics in 1976.

Adele taught Economics at the University of Tulane in the early 1980's. The family moved from New Orleans, La., to Greenland, N.H., in 1986. She took on many volunteer and free lance assignments while she was raising her children, including work on oral histories with the family of Cyrus Eaton. Her local work in Greenland included youth soccer, Greenland Public Library and the Weeks Brick House. She also took tremendous pride in pioneering Greenland's recycling program.
Adele was greatly attached to her family
and her dogs.

Adele combined her love for friends, family, her large dogs and nature by taking frequent "walk-talks" as she would call them. She was a good listener and avoided making judgments, which made her a good board chair.

She was involved in national organizations pursuing tax reform in the interest of greater and more equitable economic development. She was a peacemaker and with that credential was elected chair of the board of the Robert Schalkenbach Foundation in New York. I served on this Board and can testify to her calming influence. Schalkenbach was the printer for, and follower of, Henry George, author of Progress and Poverty.
Adele worked with Pugwash, the peace-promoting
project started by Cyrus Eaton of Cleveland.

She took an interest in other people's projects. When my mother (Hilda van Stockum) died in 2006 she wrote the nicest thing in my mother's condolence book:
April 19, 2007. John - [...] I'm about to finish The Winged Watchman. I don't want to finish it. The story, the style, and the illustrations I savor. I particularly love the beginning, making its young readers feel the war through hunger, and the father's line about preferring to think about what people do out of church to in. I usually don't look at illustrations, but hers draw me in with their delicacy, feeling and power. Thank you for introducing me to Hilda van Stockum.
She is survived by her sister Mary Bole; her four children, Douglas Miller, Patrick Miller, Charlie Miller, and Elizabeth Miller; and her grandchild Henry Miller.

With her death, the world is a less peaceful and beautiful place. Alice and I extend our sympathy to her family.


The obituary above was reprinted in the Georgist Journal. On the site connected with the Cleveland Plain Dealer, I found the following note posted that I thought I would share:

December 31, 2016
I just today learned of Adele's death. I wanted to confirm her address for a new year's card and found her obituary.
We were graduate students at the UofC forty years ago: classes together, study groups for comprehensive exams, tennis, and a lot -- a lot - of hilarious laughter.
We hadn't met or spoken since, but kept up an occasional correspondence, exchanged wedding gifts -- I think about her whenever I use the teapot she gave us -- Christmas cards, and so on. It didn't seem important when there was no Christmas card last year; we all get distracted.
Others have noted her crystalline intelligence, good humor, and friendship. Her children know those qualities better than anyone.
Please accept condolences from one of her quondam -- one of her favorite words -- friends.
- See more at:

Wednesday, December 9, 2015

GLASS-STEAGALL | Why Bill Moyers Likes David Stockman

David Stockman led the war on government spending for President Reagan. His idea was to "starve the beast." Reagan cut taxes, then had to restore them.

Stockman still considers among his enemies those who espouse fiscal stimulus and central planning.

But he now inveighs against both parties, arguing as Ralph Nader does that both are beholden to Big Money for campaign contributions.

Stockman, who attended the Harvard Divinity School, says he was deeply opposed to the bailout of the financial institutions.

No wonder Bill Moyers sees in David Stockman's new song a melody he likes. The financial bailouts, says Stockman, have lured American private enterprise into a casino of speculation that leads to greater economic inequality. The securities markets are rigged against small investors. "We have neither capitalism nor democracy," says Stockman. "We have crony capitalism."

It's not surprising that Stockman's villains include Democrats FDR and Barack Obama. The surprise is that they include Republicans Richard Nixon and George W. Bush ("who repudiated fiscal rectitude and ballooned the warfare state via senseless wars"), and Fed chairmen Greenspan and Bernanke.

It's not surprising that his heroes include Republicans Dwight Eisenhower and Bill Simon. The surprises are Democrats Carter Glass, Harry Truman and Bill Clinton.

I am bemused by the list, especially after listening to David Stockman talk to the Cato Institute in 2013. Stockman doesn't spare Ronald Reagan and Milton Friedman from his criticism. He said that his book languished, as you might expect a 700-page book on money markets to do, until it was denounced by Paul Krugman, when it shot up to #4 on the best-seller list, behind two diet books and "a book on the walking dead".

There's a lot for Krugman not to like about Stockman's enemies list. How can you give credit to Carter Glass without recognizing that FDR enabled his legislation and in his response to the bank panic took a tough line on the banks? FDR and his Treasury Secretary Will Woodin let the insolvent banks stay closed. It was FDR who created the SEC, and traded the creation of the FDIC for strict laws preventing the investment banks from using the banks as a source of cheap money to speculate with.

It all worked well until Glass-Steagall was chipped away at, with the biggest blows being the Gramm-Leach-Bliley Act (the Financial Services Modernization Act of 1999) and then the  Commodity Futures Modernization Act of 2000. The chief engineer of these laws was an architect of the Reagan Revolution, GOP Senator Phil Gramm.

Stockman was part of a revolution that got what it wanted. He just didn't want what it got. His populist call to arms against crony capitalism would be more effective if he would recognize on his enemies list the people who tore down Glass-Steagall, and champion its restoration.

Friday, December 4, 2015

FOMC | Job Numbers Mean EZ Decision (Comment)

The Effective Fed Funds Rate. Source: FRED, St. Louis Fed. Since Dec. 2008
 the target rate has been between 0 percent and 0.25 percent, i.e., at the
"zero bound"; rate will likely be raised at the next FOMC meeting.
The job numbers from the BLS this morning show total nonfarm payroll employment increased by 211,000 in November.

The unemployment rate was unchanged at 5.0 percent.

Job gains occurred in construction, professional and technical services, and health care. Mining and information lost jobs.

The numbers have been widely anticipated because they are the last before the Ides of December FOMC meeting.

Fed Chair Janet Yellen made clear yesterday in her testimony before the Joint Economic Committee of the Congress that the Fed is ready to raise the zero-bound Federal Funds rate that has been at the zero-bound level since December 2008. The only major concern is lackluster economies in the rest of the world.


The Fed has a dual mandate (besides the basic one of ensuring stability in financial markets) – its traditional 1913 mandate to preserve the value of the dollar by reining in lending during periods of speculation and therefore inflation, plus its 1946 mandate to ensure full employment.

Interest-rate doves like Paul Krugman and Brad DeLong argue that since the United States has no inflationary pressure, interest rates should not be raised. If inflation is below the 2 percent Fed inflation target, leave rates alone. While unemployment is low, the employment/population ratio is also low and economic growth has been slow.  Why is anyone is thinking of raising interest rates? They are afraid raising rates will kill the economy.

One answer is that the zero-bound rate is an unnatural one, giving no flexibility on the stimulus side. The Fed wants to be able to respond to economic developments in either direction. So long as it is at the zero bound, it is powerless to do much to stimulate demand, notwithstanding the QE initiatives.

Saturday, November 28, 2015

R.I.P. | John E. Zuccotti (1937-2015)

John Zuccotti, former NYC Deputy Mayor.
Photo by Jin Lee.
John E[ugene] Zuccotti was former Deputy Mayor of New York City and subsequently Chairman of Brookfield Properties. Zuccotti Park was named in his honor.

He was born in Greenwich Village on June 23, 1937 to Angelo and Gemma Zuccotti. Angelo Zuccotti was an Italian immigrant to the United States who became well known in New York City as the longtime maitre d' of El Morocco. Angelo died in 1998.

John Zuccotti attended St. Joseph's Academy on Washington Square Park and LaSalle Military Academy in Oakdale, Long Island. He graduated in 1959 from Princeton University with a bachelor's degree. He served as an officer inn the U.S. Army and then earned a JD degree from Yale Law School in 1962. He met his wife Susan Sessions during a summer internship at the office of Sen. Jacob Javits; they were married in 1963.

He started his career as an urban consultant in Venezuela, then worked as assistant to the secretary of the Department of Housing and Urban Development in Washington. During the administration of Mayor John Lindsay he was a commissioner of the New York City Planning Commission and became its Chairman. In 1975 he served as First Deputy Mayor under Mayor Abraham Beame.

In 1978 he became a founding member of Tufo, Johnston & Zuccotti, partnering with  Peter Tufo, who had been a fellow student at Yale Law School and then a colleague in the Lindsay Administration. Their firm was merged with a larger firm to form Brown & Wood in 1983. Zuccotti has also worked as Senior Counsel with Weil, Gotshal & Manges.

He served as chairman of the Real Estate Board of New York, and as a member of the board of the World Trade Center Memorial Foundation and of the Visiting Nurse Service of New York.

Zuccotti was active in both Democratic and Republican politics on both the local and national level, serving at various times on the National Republican Congressional Committee and Joe Biden's presidential campaign.

After leaving political office he became a partner in Olympia & York, and was the U.S. chairman of Brookfield Properties and then Chairman of Global Operations at the time of his death.

He was a keen consumer of movies and liked to frequent Chelsea's Alan's Alley, which Alan Sklar operated at 23rd Street and Ninth Avenue for a quarter century until 2014, offering a huge collection of rare and foreign movies for rent and sale.

Zuccotti died of a heart attack on November 19, 2015, aged 78. He is survived by his wife Susan Sessions Zuccotti, their three children and their spouses – Gianna and David Weinstock; Andrew and Margaret Mauran; and Milena and Jason Merwin – and eight grandchildren: Sophie, Noa and Lia Weinstock; Nicholas, Emma and Robert Zuccotti; and Cassie and Lily Merwin. He is also survived by his brother Andrew, a lawyer in Seattle, and his wife Trish and their children.

Susan Zuccotti is the author of several award-winning books on the Holocaust – those who resisted, those who looked away, and those who collaborated – and its survivors.

The family will be celebrating John Zuccotti's life at a memorial service on Monday, Dec. 7, at 10:30 am at the David Geffen Hall (formerly Avery Fisher Hall) at Lincoln Center in New York City. A reception will follow at the same hall.

In lieu of flowers, the family has asked that contributions be made to the New York Methodist Hospital in Brooklyn, N.Y., the New York Blood Center, or the Group for the East End/Accabonac Protection Committee in Bridgehampton, N.Y.

Personal Comment

Before there were simpler devices for showing movies at home, John Zuccotti used to set up a movie projector and bring home reels of movies in metal cans, with breaks for reloading the way we old-timers remember it was done when we first watched movies.

Alice and I and our children were beneficiaries of this Saturday night custom, as we became regulars. His secretary, also a movie buff, would suggest movies and we saw some great ones.

The movie nights were a beautiful experience for our children, curled up in sleeping bags or quilts in front. We all loved them. We even had the cartoons first. The classic movies brought good old-fashioned moral lessons and fun for the children. We are grateful for being included.

John was a true family man. He did the father and grandfather thing right – taking youngsters out fishing and for walks in the neighborhood.

No one was more attuned to the times we lived in. He lived life to the brim. I think his success in life came not just from his legal and communication skills but from his decency. He was trusted because he was fair.

Monday, November 23, 2015

WINE BIZ | NY State Planning to Do a Bad Thing

The SLA's action will reduce wine choices. You may
have to settle for worse wine... or move to another state.
I mean, what's really important to you?
The New York State Liquor Authority (SLA) has sent out an Advisory that will change the state beverage law.

It would change how wine lists in top restaurants are written in the state. 

It would destroy the reputation that NY State enjoys as having the best wine lists in restaurants.

More on this story here. The NYS SLA wants comments within a few weeks.

Monday, November 16, 2015

LOSS | Terror Attacks – Paris vs. 9/11

The Physical-Human Losses to Paris Were Smaller than to NYC
 on 9/11, but Economic Losses May Be Greater Relative to Size.
November 16, 2015–As the chief economist for two different New York City Comptrollers in 1993 and 2001, I was required to prepare official numbers for the economic loss to New York City of both of the terrorist attacks on the World Trade Center.

A colleague has asked me – "How do the economic losses from the Paris attacks compare with the New York City numbers for 9/11?"

NYC,  2001. Business leaders in New York City were fearful after both attacks.
  • In 1993 it had been comforting that the attack could be dismissed as "the gang that couldn't shoot straight" because the explosives did relatively little damage to the World Trade Center (one post protected the next) and the driver of the rented truck used in the bombing tried to get back his deposit! He was of course quickly apprehended.
  • In 2001, it was 100 times worse. The cost of higher insurance premiums and deductibles in 2001, the cost of installing new security protections in offices and residences all over New York City and alternative sites in suburban areas, was far greater. That doesn't take into account the national response of launching a military attack on Iraq. The first official estimate in 2001 of the economic loss to New York City of 9/11 was made within two weeks. It was in a range of $95 to $105 billion, approximately 100 times the economic impact of the 1993 attack. 
The first estimate was made when the loss of life from the World Trade Center alone was believed to be close to 6,000 people. The approach was to estimate the one-time loss of buildings, property and lifetime earnings of people who were killed, and then to add to this the present value of adverse business-location decisions.

Within three months, by the end of 2001, the business consensus on the economic impact settled at about $80 billion, about 8 percent of NYC's current gross product.  The drop in the economic impact estimate occurred because:
  • As more survivors were identified, the estimate of the number of dead was lowered from 6,000 to 3,000 (including deaths from the Pentagon attack and all four crashed planes).  
  • Early on, the fear was that many businesses would relocate to New Jersey and Westchester County. In fact, many large companies acquired alternative office space in these areas. But few moved out.
  • With the election as Mayor in November of a successful member of their own fraternity – Michael Bloomberg – business leaders believed that their fears would be addressed fully and competently.
Paris, 2015.  The threat to Paris and to France from terrorism is greater than in New York City and the United States:
  • France is more dependent on Paris than the United States is on New York City. The NYC metro area accounts for 8 percent of U.S. gross product, whereas Paris accounts for one-fourth of French gross product. 
  • France is much more dependent on tourist revenue than the United States, and Paris is the main gateway.
  • The $17 trillion U.S. economy has well-monitored borders with Mexico and Canada and has invested heavily in Homeland Security. The less-than-$3 trillion French economy must cope with borders – in places porous – with Belgium, Luxembourg, Germany, Switzerland, Italy and Spain, not to mention the high volume of traffic to and from Britain. France has reportedly  suspended its commitment to the Schengen Agreement on open borders, which will entail new costs.
On the other hand, the regional and national alternatives to NYC for large American businesses are greater than for businesses in Paris that wish to remain in a francophone environment. It would probably be harder to pull up stakes from Paris and move to a suburban location or another French city because Paris uniquely dominates France, as London dominates Britain.

Based on these considerations, the Paris of the Hebdo and November terrorist attacks could add up to an economic loss for Paris less than but approaching the percentage estimated for the 9/11 attacks. The 8 percent figure applied to the metropolitan Paris economy would come to nearly $6 billion.

The USA and France.  The attack imposed large costs on the Federal Government – on the Federal Reserve System to fund the liquidity crisis immediately after the attack as well as a $20 billion commitment of grants and loans by the Federal Government to compensate New York City for losses in what was properly considered an act of war.

The cost of the damage to New York City was also spread to the rest of the country via private insurance payouts (insurers were not allowed to hide behind Act of God or Act of War clauses) and higher insurance premiums,

An interesting 2010 article in the journal Peace Economy, Peace Science and Public Policy by USC and Claremont economic professors Adam Z. Rose and S. Brock Blomberg, “Total Economic Consequences of Terrorist Attacks: Insights from 9/11”, concludes that the initial economic loss to the USA from 9/11 was at least $75 billion, or three-quarters of a percent of GDP.  This is not necessarily inconsistent with the New York City number because migrations of businesses out of New York City within the United States would not be a loss to the United States, so the national number could well be smaller than the local number at the center of the attack.

The authors make an important point that was always clear to me, namely that psychological factors are crucial for determining the ultimate economic loss from an attack. As they say:
[W]e, rather than the perpetrators, are the major determinant of the consequences of a major terrorist attack. After 9/11, our resilience was high, but so was our fear [... ]. [S]ubsequent anti-terrorist initiatives at home and abroad were more costly than the direct damage caused by the attack.
The United States has invested $650 billion since 2001 in Homeland Security. The French commitment before the latest attack was a little more than one-thousandth of that. France will have to spend more, and the United States needs to assist. American concern about terrorism is greater now than it was after the Boston Marathon attack.


Glass-Steagall kept speculative foxes out of the commercial-bank henhouse.
Myth #1: Glass-Steagall is too complex for ordinary voters to understand. An investment banker says: "If one percent of people actually know what Glass-Steagall did and what it would do now, it’s not more than that.”  He says the Glass-Steagall issue will not change anyone's vote.
Fact: The law was simple – that's why it worked fine for half a century.  It traded federal deposit insurance for risk-limiting bank regs. People know the 2007-2009 crisis came from deregulation.
The Glass-Steagall Act (i.e., the Banking Act) of 1933 had two main parts. House Banking Chairman Rep. Henry Steagall, Democrat of Alabama, was carrying water for the banks, which wanted deposit insurance. They got deposit insurance up to $2,500 (soon raised to $5,000) per account.
Not complicated is that the half of the Banking Act of 1933 that the banks liked – deposit insurance – is still with us. The limit to coverage of deposit insurance has steadily increased 100-fold, from the original $2,500 per depositor to $250,000 per deposit account. Depositors are allowed to have more than one covered account (sole, joint, custodian etc.). Beyond that, the FDIC for valid efficiency reasons avoids the costly litigation involved in liquidating a bank and instead negotiates takeover over its assets and liabilities by a solvent bank. This in effect means 100 percent coverage of deposits.
FDR and Treasury Secretary Woodin were initially opposed to this giveaway to the banks. They were only induced to support Federal assumption of banking risks in return for bank regulations imposed in Sen. Carter Glass's bill, which was designed to protect the Federal Reserve System he helped create in 1913. 
Myth #2: Glass-Steagall was eliminated in 1999.
Fact: Only half of Glass-Steagall was gutted, the Glass part.
The Glass-Steagall law was simple. What was complicated was the piecemeal and devious dismantling by its opponents of the Glass component of the law, in the name of "modernization".  
The deregulatory moves culminating in the 1999 Gramm-Leach-Bliley Act kept the Federal deposit insurance and took down the wall between insured banking and speculative issuance of securities.
Harvard B School Prof. David A. Moss in 2009 put it well: [T]he success of New Deal financial regulation [may have] actually contributed to its own undoing. After nearly 50 years of relative financial calm, academics and policymakers alike may have begun to take that stability for granted. Given this mindset, financial regulation looked like an unnecessary burden. It was as if, after sharply reducing deadly epidemics through public-health measures, policymakers concluded that these measures weren’t really necessary, since major epidemics were not much of a threat anymore. [My italics.]
Former Federal Reserve Chairman Alan Greenspan said in October 2008: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” Nothing too complicated about this story. 
Myth #3: Glass-Steagall was about the big banks. Hillary Clinton: "[In my proposed bill] I go after all of Wall Street, not just the big banks"
Fact: Glass-Steagall was not just about the big banks. It was about all FDIC-insured banks. It was about protecting the henhouse assets of all insured banks from foxes selling speculative securities.
Glass-Steagall was about putting a wall between the humdrum business of taking deposits from consumers and making loans back to them (the henhouse), and the risky business of speculating in business equity and debt (the foxes, or wolves).
John Reed, former Chairman of Citigroup, wrote last week in the Financial Times that he has come to the view that the wall between banks and investment banks was a good one.
"As is now clear, traditional banking attracts one kind of talent, which is entirely different from the kinds drawn towards investment banking and trading. Traditional bankers tend to be extroverts, sociable people who are focused on longer term relationships. They are, in many important respects, risk averse. Investment bankers and their traders are more short termist. They are comfortable with, and many even seek out, risk and are more focused on immediate reward. In addition, investment banking organisations tend to organise and focus on products rather than customers. This creates fundamental differences in values."

Friday, November 13, 2015

FOMC | St. Louis Fed Chief Asks Hawks to Think Harder

James Bullard, President of the St.
Louis Fed, predisposed to raise rates
but wondering if this will actually
increase, not lower, inflation.
The President of the St. Louis Fed, James Bullard, is in line to join Jeffrey Lacker of the Richmond Fed in calling for an increase in the fed funds rate.

The St. Louis Fed has historically been the champion of the monetarist school, which keeps reminding Keynesians and New Keynesians who want to keep stimulating the economy that increasing the money supply will cause inflation.

At one time, zero-lower-bound interest rates were viewed as dangerously inflationary. The fact that inflation has remained low hasn't changed the tune of a hawk like Jeffrey Lacker of the Federal Reserve Bank of Richmond. Six years ago he predicted that the zero-lower-bound approach taken in 2008 would make inflation soar. Now he's been voting for a rate increase at the most recent meetings of the FOMC, warning that inflation will get out of control if the FOMC doesn't raise rates.

However, yesterday Bullard gave some support to the idea that the long period of low interest rates – the "Permazero" – might require a rethinking of monetary policy.  At a Cato conference he said that after seven years, expectations for permanently low interest rates might be baked into the cake.

Bullard says we should pay attention to the ideas of John Cochrane of Chicago's Booth School of Business, who suggests that raising the interest rate target off the zero-lower-bound floor may raise, not lower, inflation. The 94-page paper in which Cochrane lays out his theory and data poses the theory as a question – Do Higher Interest Rates Raise or Lower Inflation? 

Cochrane provides charts showing what happens to inflation under different assumptions. If you disagree with his story, I can hear him say, show me your model.

I note that Cochrane relies on the simple version of the Irving Fisher's equation, using an expected inflation rate added to "real" rate.
Most theories contain the Fisher relation that the nominal interest rate equals the real rate plus expected inflation, it = rt +Etπt+1, so they contain a steady state in which higher interest rates correspond to higher inflation. 
This is a simplification of the actual equation, which is multiplicative (rt Etπt+1). The distinction doesn't doesn't matter for low levels of expected inflation (the "Fisher premium"), but it certainly does for higher ones – far as that may be from our recent inflation numbers.

Bullard does not take the step of opposing a rate increase based on Cochrane's theories. That would put him in the same boat as Paul Krugman, who opposes a rate increase on Keynesian grounds that we still need more demand and higher rates could choke off demand.

After seven years of Zero Interest Rate Policy, the FOMC is getting cabin fever. They are generals who look like they are avoiding a battle. Bullard made clear that his predisposition in December is to vote to raise rates. The FOMC may in December want to give the benefit of any doubt to a rise in rates.

Cochrane has therefore done everyone a favor by providing a reason for inflation hawks to think a little harder... because raising rates just might be inflationary.

Sunday, November 8, 2015

CITYECONOMIST | 210K Pageviews

The CityEconomist blog has clicked past 210K page views.

Thank you for reading.

During the past month, the ten most-viewed posts are shown in the table below.

Most-Viewed Posts, Oct 9-Nov 8, 2015

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Comptroller Curry's Scary Comments Yesterday
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Saturday, November 7, 2015

MED BIZ | Cycle v Wheelchair - The Alinker™

The bicycle, it seems, originated in 1817
 in Germany as a running aid. The Germans
 never loved it as much as the Dutch. 
I am at the Social Venture Network conference in Baltimore and there is a new invention on display here, the Alinker™. I have tried it out and it works.

It looks a lot like the very first bicycle, invented nearly 200 years ago.

It's being positioned as a medical device–a replacement for the wheelchair. It is useful for people who can still walk but need assistance because their legs are weak. It provides mobility while not reducing the patient to total dependence. It provides mobility but doesn't end exercise.

It's like the difference between assisted living and a nursing home. A big difference...

Hobby horse with morris dancers.
I like the walking cycle for three reasons:

First, it keeps its users more active than a wheelchair.

Second, it allows the users to socialize more easily because they are upright.

Third, it is simpler than a motorized wheelchair and promises to be much cheaper, which matters a lot when we look down the road at looming medical costs for elderly people.

The new invention even shares the yellow color of the original walking cycle.

The First Bicycles
The Penny Farthing

I confess to a bias in favor of bicycles. I've been writing about them frequently over the years–for example, here.

  • They are so darned efficient.
  • Their concept is so simple. The original bicycle was a running cycle, with no pedals or chains or even brakes. Without pedals, the cycle doesn't go fast enough on level ground to need brakes–you stop the same way you stop running.
  • The early name for the running cycles was a "hobby horse", such as were used by morris dancers (see drawing) in England.
  • My Dutch relatives were pioneers in use of the bicycle in that country.


The major innovation in the 19th century was the addition of pedals.

After some experimentation, the penny-farthing bicycle became the most popular shape.

My great-grandfather Charles Boissevain is said to be the first person to bring a penny-farthing to Holland, a country that quickly cottoned on to it.

Germany, which was the origin of the first bicycle, never became a great user of it in the 1920s when it became the rage in Holland. Perhaps it was because the German landscape is more mountainous than Holland's. Germany was also deeply disoriented by the onerous reparations of the Versailles treaty at the beginning of the decade and the Crash of 1929 at its end and had no disposal income to spend on new ideas.

The 19th century bicycle had two serious problems:
  • The hard wheels made a "bone-shaker" of a ride.
  • The potential for the bicycle to get up some speed without a corresponding brake made it dangerous.
The Safety Bicycle
The Alinker™ in use.

The "safety bicycle" developed in the 20th century changed the shape back to two even wheels and added four things:
  • A chain to shift the force from the pedal to the back wheel and allowing the pedal to be located between the two wheels, which made the bicycle much safer.
  • Gears to control the revolutions of the pedal that were required per distance traveled.
  • Rubber wheels and inner tubes filled with air, providing a smooth ride.
  • A brake, either a back-pedaling mechanism or (better) calipers on the handles.
During World War II when gasoline was scarce, the bicycle was a transportation godsend for the Dutch people.

The tricycle has in recent decades been rediscovered in communities with many elderly people, where it can be used for recreation when a bicycle is too arduous, or for travel over short distances – to do shopping, walk a dog or meet with friends.

The 21st Century Alinker™

Your blogger on the Alinker™with its inventor, Barbara
Alink. I took it for a spin at the Social Venture Network
Conference in Baltimore. Photo by Alice Tepper Marlin.
The brand-new Alinker™ invention has three main differences from the original bicycle. The color, at least for the prototypes, is the same, but:
  • It uses the tricycle approach for the elderly as has been rediscovered in Florida, with two wheels in front.
  • It uses pneumatic tubes on the wheels for a smoother ride.
  • It is shaped more like the later 19th century penny-farthing cycles, with the larger wheels in front for maneuverability. The small turning radius is equivalent to that of a wheelchair, so that it can be used indoors.
The most interesting feature of the Alinker™ is that it can be used indoors like a wheelchair.

Its simplicity means that once in full production the price can be brought down and it could compete on price as well as function with the wheelchair in cases where people need support but have use of their legs for propulsion.

Right now the price is $2,000. For further information go to, or email

Friday, November 6, 2015

ED BIZ | Fundraising, Harvard 1945

Mason Gaffney, born Oct. 18,
Lyrics posted for "When the Saints Go
Marching In."
Joe Bain, volunteer class agent, Harvard College Class of 1945, sent an email to economics professor Mason Gaffney.

Class agents collect news from alumni and help with "friend-raising" and fundraising.

I was sent a copy of a part of his email, in which he says to his class:
Social Security Actuarial Tables (2011) indicate that a 92-year-old man has a life expectancy of 3.4 years and that out of 184 surviving '45ers, only 11 will reach 100. 
The message might be construed as – "Get your affairs in order so that whatever you are leaving to Harvard can be handled with a minimum of testamentary hassle. Gaffney responded in a letter addressed to his entire class:
So the actuaries say 11 of us will reach 100, eh? Well "I want to be in that number, when the cents go marching in", and I will be. I expect there will more than 10 more of you, too. 
There are no shortcuts in this race, though, so keep your sense of humor and leave 'em laughing when we go!
End of this story.

However, I was curious who wrote "When the Saints Come Marching In," and dug up some more information. I have excerpted below from a much longer exposition in
“When the Saints Go Marching In” was popularized by Louis Armstrong who first recorded it on May 13, 1938, and [...] and some 40 times since then. [...] Armstrong had grown up knowing the gospel tune, played somberly for funerals by the marching bands that accompanied the mourners to the graveyard and played joyously on their return. Armstrong’s lively recording of the tune [...] transformed it into the jazz standard we know today, closely associated with New Orleans’ Dixieland bands and performed by musicians of every style. So well known is the song that it is commonly referred to as “The Saints.” [...] In 1951 the Weavers (Pete Seeger, Lee Hays, Ronnie Gilbert, and Fred Hellerman) recorded it with Leo Diamond and His Orchestra. [...] Throughout the years Armstrong constantly changed his performance of “The Saints,” and he is captured on film at the 1958 Newport Jazz Festival (Jazz on a Summer’s Day) and with Danny Kaye in the 1958 film The Five Pennies. New Orleans is now famous worldwide as the city of jazz and the marching song, “When the Saints Go Marching In”.

FOMC | Jobs Soar, Rate Hike Likely, But *100%*?

Payroll jobs in October exceed prior
months and forecasts.
The BLS reported this morning that nonfarm payrolls rose 271,000 in October, with a slight drop in unemployment to 5 percent.

The payroll-job increase was well above the 185,000 increase forecast by economists who do that kind of thing (a foolhardy activity, since a forecast on Thursday will definitely be proven wrong on Friday).

Caution: There will be another jobs report in early December before the FOMC meets in mid-December. But Bill Gross says there is a "100% chance" that the FOMC raises rates in December, regardless of the December jobs report.

The October increase is exceeds the 137,000 increase in September and a similar number in August, and paves the way for a December increase in the federal funds rate, which would be the first such move since the zero-bound level set in December 2008.

The Fed Funds rate has been at the zero bound for 7 years.
In January 2009 I posted a comment on the December 16, 2008 decision by the FOMC after hearing from Laurence Meyer, former Vice Chairman of the Fed.

Meyer recommended that the Fed take a long vacation, but I am pretty sure he didn't mean a vacation that would last this long.

The average monthly job growth for the three months August-October is about 150,000, well below the 210,000 per month first-half-2015 average.

The potential for a rate rise has pumped up the dollar to one-month high against the British pound and a three-month high against the euro.

Here are links to the BLS data:
Total nonfarm payroll employment increased by 271,000 in October, and the unemployment rate was essentially unchanged at 5.0 percent. Job gains occurred in professional and business services, health care, retail trade, food services and drinking places, and construction.

Tuesday, November 3, 2015

AWARD | Statistical Beaver 2015–ACS

CityEconomist has decided to give its 2015 Statistical Beaver Award to the U.S. Census Bureau for releasing their 2010-2014 American Community Survey (ACS) 5-year estimates one  week early.

In the statistical arena, the huge advances that have been made in communications technology have not made much of a dent in the reporting speed of many government statistics.

However, lags in release of routine government data make it harder to control access. Some innocent-looking numbers have great value in the private sector to those who get them before the general public.

In the case of the many monthly numbers, they are handed on to Federal agencies routinely by each state. State statistical agencies collect data against national standards. As years go by, it stands to reason that delays could be reduced.

It is encouraging when statistical agencies voluntarily move up the date of release of their data. In this case, users will have more time to analyze the new information before they leave for their holidays.

Here is the Census Bureau announcement that gave rise to the CityEconomist Statistical Beaver Award.
Release Date for 2010-2014 ACS 5-year Estimates  The 2010-2014 ACS 5-year estimates are now planned for release on Thursday, December 3, 2015, a week earlier than the initially planned date of Thursday, December 10, 2015. You can access the complete 2014 Release Schedule on our website. The 2010-2014 ACS 5-year estimates will be available for all geographic areas including census tracts, ZIP Code Tabulation Areas (ZCTAs), and block groups. For the first time, users will be able to compare two non-overlapping 5-year datasets (2005-2009 and 2010-2014).  Embargo subscribers will have access to these statistics beginning Tuesday, December 1. A pre-release webinar is scheduled for Monday, November 30 from 1:00-2:00 PM.  Information on how to log-in will be added to the Events. The ACS provides reliable statistics that are used to make informed decisions about the future. These statistics are required by all levels of government to manage or evaluate a wide range of programs, but are also useful for research, business, education, journalism, and advocacy. If you have questions about this survey, please call our Customer Services Center on 1 (800) 923-8282. Thank you,
American Community Survey Office
U.S. Census Bureau

Wednesday, October 28, 2015

FOMC | Committee Stands Pat

Jeffery Lacker, FRB Richmond
inflation hawk, voted again for
a rate increase, losing 9 to 1.
Today the Federal Open Market Committee voted to continue interest-rate policy at the zero-bound level, where it has been since 2008.

The sole vote against the decision was that of Jeffrey M. Lacker, President of the Federal Reserve Bank of Richmond, who would have preferred that the FOMC raise the target range for the federal funds rate by 25 basis points at this meeting. He had voted for a rate increase at the previous FOMC meeting.

The case for raising rates is that zero-bound interest policy makes it difficult for the Fed to encourage the economy should it take a turn for the worse, and unemployment rates are low by historical standards.

The majority view is that the FOMC has been charged since 1946 with steering between the twin dangers of inflation and unemployment. The inflation rate is below the Fed target of 2 percent and economic growth has been moderate by historical standards.

Meanwhile, the news from the Bureau of Labor Statistics this morning was that the September improvement in jobs was broadly based among metro areas.

The next meeting of the FOMC is in mid-December. The meeting will be informed by two more months' worth of new data on labor markets and other economic indicators.

Sunday, October 25, 2015

ART BIZ | Oct. 25–Pablo Picasso Born, Commercial Genius

Pablo Picasso (1881-1973)
This day in 1881 was born Pablo [Ruiz y] Picasso in Malaga, Spain. He and Henri Matisse and Marcel Duchamp are the three artists who most defined changes in 20th century painting and related arts.

Picasso's Acrobat on a Ball inspired the symbol for Occupy Wall Street.

Among his most famous works are his early-Cubist Les Demoiselles d'Avignon (1907), and Guernica (1937), a portrayal of the bombing of the Basque town of Guernica by German airplanes during the Spanish Civil War.

Picasso’s father was a professor of drawing and trained his son for a career in academic art. Picasso had his first exhibit at 13 showing extraordinary artistic talent. He was living in an artists'  enclave in Barcelona–painting portraits–when one of his paintings was selected for the 1900 World's Fair in Paris. He went to Paris for the exhibition at the Fair, saw paintings by Manet, Cézanne, Degas, and Toulouse-Lautrec, and decided to be an artist.

The following year got great reviews for an exhibition at a gallery on Paris’ gallery-rich rue Lafitte and decided to stay in Paris. He produced a series of paintings called the Blue Period (1901–1904), evoking the sadness of poverty. It includes The Old Guitarist (1903).

In sequence, Picasso tried different styles, from the Rose Period (1904–1906), in which he often depicted circus scenes such as the previously noted Acrobat on a Ball (1905), followed by the African-influenced Period (1907–1909). His Analytic Cubism (1909–1912) period was shared with the French painter Georges Braque, followed by his Synthetic Cubism (1912–1919) period, also referred to as the Crystal period.  The Cubist art has the subtext that art need not represent reality to have value, and brought collage to painting. Major Cubist works by Picasso included his costumes and sets for Sergey Diaghilev’s Ballets Russes (1917) and The Three Musicians (1921). After Cubism, Picasso explored various themes that included images of violence, culminating in Guernica.

His work comprises an impressive collection of more than 50,000 paintings, drawings, engravings, sculptures, and ceramics produced over 80 years.


My mother Hilda van Stockum stuck to traditional Dutch painting techniques and subjects, having gone to art school in Amsterdam and Dublin (she built a following in Ireland and is considered an Irish painter, having half-Irish mother). Her comment on Pablo Picasso is that he was one of many great painters but was a uniquely competent businessman. "A commercial genius," she said, because each of his artistic periods simulated his death.

My mother points to the many artists, like her cousin by marriage Vincent van Gogh, who were living either in poverty or in a situation where they relied heavily on a patron (in Vincent's case, his cousin Theo). She argues that Pablo Picasso, by killing off a subject matter or style of art, created scarcity in his art. This allowed his gallery promoters to consider the art produced in each period as having been capped, preventing dilution from subsequent paintings.

Thursday, October 22, 2015

BANKS | Comptroller Curry Is Scary

Thomas J. Curry, Comptroller of the
Thomas J. Curry, Comptroller of the Currency, gave mild speeches on March 2 and April 2 focused on risks from terrorist attacks on cybersecurity, a threat to bank operations. Worrisome, but with an enemy on some distant shore and technical fixes waiting in the wings.

Yesterday at the Exchequer Club in Washington, it was different. He allowed himself to step out and make a few spicier comments. He acknowledges that at this stage of the credit cycle, credit quality is and can be expected to deteriorate, and "credit risks are coming to the forefront," ahead of threats from jihadist hackers.

Curry doesn't go much further than that in his remarks. But he plants the seeds of worry. Wall Street on Parade spells out what Curry might have said. Reforms have failed and we may see in this credit cycle a repeat of what led up to the disaster of 2008. One solution is more unified oversight of the financial sector at the Federal level, i.e., encompassing the securities industry.

When I was working for the Federal Reserve and FDIC in the 1960s, the Bureau of the Budget was looking at unifying financial regulation just as a matter of efficiency as well as effectiveness. But if you are an institution being regulated, the last thing you want is efficiency and effectiveness. You want the maximum number of regulators, so you can shop among them.

And if you are the regulator, you don't want your agency eliminated. We can't expect the Comptroller of the Currency, speaking for a 150-year-old office that has had to fight to remain independent from the Federal Reserve System, to advocate for consolidation of Federal oversight agencies.

The issues are surfacing now because of the good work of Pam and Russ Martens of Wall Street on Parade, who are keeping up a steady Pecora-like stream of revelations of what Senator Wright Patman used to call malfeasance, misfeasance and nonfeasance. The candidacy of Bernie Sanders has kept the Glass-Steagall issue in the public eye during the first Democratic debate.

Here is a snippet from today's post from the Martenses outlining the problem:
What Curry didn’t mention are the real elephants in the room – the casino room on Wall Street: the $180.29 trillion of derivatives held at the insured banking units of just four banks: JPMorgan Chase, Bank of America, Citibank (part of Citigroup) and Goldman Sachs. Just those four banks hold 91.1 percent of all derivatives held at the thousands of banks in the U.S. If that’s not concentrated risk, we don’t know what is. Curry also didn’t mention the frightening reality that some of the biggest banks are up to their old dirty tricks of dodging capital requirements through trades with dubious counterparties.
In June, the U.S. Treasury’s Office of Financial Research (OFR) released a report that set off alarm bells. The report, written by Jill Cetina, John McDonough, and Sriram Rajan, revealed that the big Wall Street banks are ginning up their capital measures by engaging in non-transparent “capital relief trades.”
The report indicated that JPMorgan’s London Whale trades, exposed in 2012 and the subject of multiple Congressional hearings and an in-depth report by the Senate’s Permanent Subcommittee on Investigations, was, in fact, a capital relief trade. JPMorgan Chase has owned up to losing at least $6.2 billion of bank depositors’ money on those trades.
Back in 1933, the Pecora Committee - a Senate Committee that was, unusually, named after the aggressive staff counsel, a New Yorker named Ferdinand Pecora - held hearings that led to the Glass-Steagall Act of 1933 and the Securities and Exchange Act of 1933 (while, alas, also skewering a few people who should not have been so impaled).

The Glass-Steagall Act was well-conceived and lasted 70 years. Banks traded deposit insurance for ring-fencing around the commercial banks to keep out the investment bankers. The flaw in the Act was there from the beginning, namely that the securities business was regulated separately and inadequately. The financial lobby has exploited that loophole in stages, notably in 1999 and 2002. The Economist Magazine in 1999 wisely opined that if the Congress was going to take away some Glass-Steagall controls, they would have to extend controls on the securities business; the reverse happened.

A predecessor of Curry as Comptroller of the Currency, John D. Hawke, Jr., in a speech to the NY State Bankers Association in 2000 said:
Regulatory competition has stimulated innovation and efficiency. Competition keeps all of us on our toes, and provides incentives to add real value to our supervision. While the system unquestionably provides opportunities for regulatory arbitrage, there is little evidence that it has stimulated the competition in laxity that former Federal Reserve Chairman Arthur Burns discussed 30 years ago.
Competition in laxity is exactly the term I would choose to describe what happened to the mortgage sector during the next seven years. New York State has now recognized that financial services has  become one industry, and has consolidated banking and securities oversight into one regulatory oversight body that talks openly about financial risk and the risk-taking enemies closer to home. It's time we consolidate financial regulation in Washington.

Wednesday, October 21, 2015

NYC COMPTROLLER | 1992-93, Then & Now (As of Nov. 15, 2015)

1. Fred Palm, Joe Benitez, Barry Skura, David Eichenthal, 
Bob Harris, at Russian Café Andruska. We said Bon Voyage 
to Bob, leaving for Moscow, 1993. Photos by JT Marlin.
Benitez, Joe
Carlsen, Guy
Cohen, Libby
Gmach, David
Dignam, Rhea
Eichenthal, David
Gu, Zheng
Halverson, Dick
Harris, Bob
Hathaway, Dixie
2. L to R: Marlene Rehkamp, Alice Tepper Marlin, Ibby 
Lang, Barry Skura, Joe Benitez, Bob Harris.
Holtzman, Comptroller Liz
Lang, Elizabeth (Ibby)
Marlin, Alice Tepper
Marlin, John Tepper
Mattei, Suzanne
Nairne, Michael
Neustadt, David
O'Marah, Maeve
Palm, Fred
3. Ibby Lang, Fred Palm, Benitez, Barry Skura,
David Neustadt, Bob Harris

Paul, Alice
Rosenthal, Andrew
Sanzillo, Tom
Schindelheim, Marc
Skura, Barry
Stewart, Lincoln
Tallarico, Claire
Wollman, Eric
More here from years 1994-2001.

If you can update present status of anyone on this list, please email me.

4. Bob Harris, Rhea Dignam, Michael Nairne.
Barry Skura
THEN: Office of Policy Management
NOW: Health and Hospitals Corporation

Bob Harris
THEN: Director, Office of Policy Management
5. Maeve O'Marah, John Tepper Marlin, 
David Gmach.
LATER: Gig in Moscow, married Russian lady
NOW: Retired

David Eichenthal
THEN: Deputy Director, OPM
NOW: State of Tennessee, Chattanooga

David Gmach
THEN: Comptroller's Office
LATER: Headed up Business Improvement District

David Neustadt
THEN: Press Officer
NOW: Press Officer, Financial Services Dept., NY State, Albany

Eric Wollman
THEN: Attorney, Comptroller's Office
NOW: Attorney, Comptroller's Office
(and manager of FOCEA, Former Office of Comptroller Employees Association) 

Lincoln Stewart
NOW: Department of Finance, NYC

6. Eric Wollman, at leisure.
He runs FOCEA (Former Office
of the Comptroller Employees Assn.).

Maeve O'Marah
THEN: Comptroller's Office
LATER: Went to Massachusetts Budget Office

Marlene Rehkamp
THEN: Assistant Comptroller
NOW: Editor, Writer

Rhea Dignam
THEN: Executive Deputy Comptroller
NOW: Senior Counsel, Office of Compliance Inspections and Examinations, Securities and Exchange Commission

7. Holiday party, Fiscal and Budget Studies (FABS), 1992.
Who will tackle the Santa Claus piñata? L to R: Zheng Gu,
John Tepper Marlin, Bob de Laurentis, Andrew Rosenthal.

Tom Sanzillo
THEN: Deputy Director, Office of Policy Management
NOW: Leader of
Energy Nonprofit in Cleveland

9. Santa doesn't have a chance. L to R: Zheng Gu,
Dick Halverson, Guy Carlsen.
8. Zheng Gu steps up to
 the plate.

Postscript, Jan. 30, 2017: More information on FOCEA is available in these posts:
2016 FOCEA Florida Meeting
2017 FOCEA Florida Meeting

10. L to R: Lincoln Stewart, Dixie Hathaway, Andrew Rosenthal.