A math/probability problem I think is awesome and counterintuitive, and may be instructive about financial markets: A hedge fund manager puts 100 traders in a room and instructs them: “On the trading desk, there are 100 boxes. Each box has one of your names. You can go [one at a time] onto the trading desk and open any 50 boxes you choose, to try to find your name. If every one of the 100 traders in this room finds his or her name, you will each get a $1,000,000 bonus. If anyone fails, I will crush all your $100,000 BMWs to create my modern art masterpiece. You can devise a strategy before anyone leaves the room, but once a trader has opened the boxes, you must leave the trading desk exactly as it was before you entered and cannot communicate with anyone else.”

You didn’t change the game, the game changed you. Niko Bellic, Grand Theft Auto IV

‘Black swan’ is a term which is overused and under-understood.

*As far as the laws of mathematics refer to reality, they are not certain, as far as they are certain, they do not refer to reality. - Albert Einstein

The Chinese government has taken insecurity and paranoia up a notch in the wake of the Jasmine uprisings in the Arab world. They have ‘disappeared’ dissident artist Ai Weiwei and cracked down hard on human rights activists, meddlesome lawyers, and dissidents.

A question for Ben Bernanke at today’s press conference:

*The S&P rating downgrade was deservedly greeted as a big joke. *

The brilliant, provocative, and slightly mad GMU economist and blogger Tyler Cowen wrote his New York Times column about why the Euro zone is headed for breakup.

</a> I have been reading the poor reviews of Atlas Shrugged. I feel almost disappointed that it is by collective consensus a steaming turd. I would welcome a thoughtful movie about an interesting thought experiment, and I think the country could use a rare substantive debate about the size and role of government.

A lot of cool videos from INET’s Bretton Woods conference last week. Kind of like TED talks for econ supergeeks.

Let me say at the outset that I am bullish on gold in the long run. US demographics, politics, debt levels, harder-to-extract energy, peaking of globalization’s labor supply shock: all these point to inflation in the long run. And central bankers have not exactly covered themselves in glory lately. That being said, going back on the gold standard makes exactly as much sense as going back to horses and buggies. Here’s why.

A few technology megatrends:

China’s remarkable growth continues _ China has apparently now passed the US in industrial production, with the world GDP title in its sights (see previous post).

China’s surge from basket case to the world’s factory is simply breathtaking. But the powerful rise has outpaced institutions that Westerners see as prerequisites to capitalism.

A few years old, but new to me: an interesting perspective from Yegor Gaidar, reformist economist of the post-Gorbachev era.