Steve Pomerance

The negative ads have taken their toll, so it`s been difficult to generate much enthusiasm for this election. But there are some bright spots. Cary Kennedy, running for re-election as Colorado state treasurer, has done some seriously good things for this state. Normally, the state treasurer is not noticed, as the job involves managing the state`s accounts in a risk-averse way. But in an economic collapse when many smart investors lost their shirts, Kennedy managed to prevent significant losses and even made money. Kennedy is also willing to invest the time to investigate new approaches that could help Colorado maintain its budget. She made a fundraising call to me that ended up lasting almost three-quarters of an hour, as we discussed the state transportation funding shortfall and alternatives to help solve it. Most fundraising calls are cursory, as the candidate is trying to get a donation and move on. For her to spend that amount of time with someone she doesn`t know is quite r...

Of the 15 books I`ve read on the financial crisis, by far the most interesting is “The Origin of Financial Crises” by George Cooper. Cooper`s fundamental observation, backed up by numerous examples and detailed analyses, is that the natural behavior for asset and credit markets is characterized by “positive feedback” where, once started in a particular direction, the market accelerates, leading to a rapidly inflating bubble. Eventually, there is a crisis, and when the bubble bursts, an accelerating collapse. What is frightening is that many societal and political processes follow a similar escalating course, perhaps far more than are self-regulating like the markets for goods and services that we all learned about in Econ 101: Markets operate with “negative feedback” and thus reach stable equilibrium as if regulated by a thermostat, historically called the “invisible hand,” which allocates goods and services to maximize societal welfare, the mantra of laissez-faire economists and f...