And it’s really cold. At least it is if you’re riding a bike along Lake Mendota before 9 a.m. with no hat and no gloves.

I’ve blogged before about the loopy brilliance of Ray Hudson’s soccer commentaries on GolTV, and linked to the Hudson Wikipedia entry in which some of his gems are collected.

But now I’ve learned (via DuNord, who says Grant Wahl told him about) that there’s now a whole friggin’ blog dedicated to “Hudsonia–the Wisdom of Ray Hudson.” Two recent samples (there are also audio links on the site):

The Russians wiped the floor with the most overrated international team, based on the most overrated individual footballers, based out of the most overrated domestic league in world international football – England, the premiership, and the rest of that sorry shower called England. Pathetic. …

Like a Jedi knight. No, better than that, a Templar knight. This is a flash of pure inspiration and let me tip my hat to the genesis of this goal, Ibarra. It’s Ibarra who plays it down the side, it gets pulled back for Lionel. Lionel only absolutely lights it up here. He lifts off it, flamethrowers it past poor Renny Vega, who does everything. It’s just as well Renny didn’t get a hand to that, because it would have taken it off his wrist …

I’ve been talking to lots of folks here at the University of Wisconsin about the future of the media and blogs and all that kinda claptrap, and I imagine such discussions will intensify as I move from the business school–where I spoke to classes Monday and Tuesday–to the journalism school. This Hudsonia thing strikes me as strong evidence that we are getting progressively closer to some sort of new media nirvana, in which every possible informational and amusement need is filled. Of course, I do worry that nobody gets paid in nirvana.

From a Larry Lessig review of Robert Reich’s new book, Supercapitalism (via Ezra Klein):

[W]e need to understand the nature of the corporation — to make money — and come to love it, and yet, to keep it in its proper place, just as you can love a tiger, but know that it’s not the sort of thing that should play with your kid. Corporations are not more efficient governments. They are instead increasingly efficient money making machines. And while there’s nothing at all wrong with money making machines — indeed, wealth and growth depends upon them — there is something fundamentally wrong with trusting these machines to restrain the drive for profits in the name of doing the right thing. The cushion that enabled that in the past (relatively limited competition) is gone. The job of GM is even more now to make money for GM.

Recognizing this point forces you to recognize how important it is that we make government work. It is government’s job to set the appropriate limits on corporations (and individuals) so that when corporations and individuals pursue their self-interest, they will not harm a public interest. If government were doing that sensibly, it would force carbon producers to internalize the negative externality of carbon (something our current government doesn’t do), just as it would force those who benefit from creative work to internalize the positive externality of creativity (something our current government is obsessed with doing).

And this leads to the link with the work on corruption: for notice (surprise!, surprise!), government is pretty good at forcing internalization when it benefits strong special interests (again, copyright), and not when it harms strong special interests (again, carbon).

What’s striking to me about this is the echo of Milton Friedman famous 1970 New York Times Magazine essay, “The Social Responsibility of Business Is to Increase its Profits,” in which he wrote:

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has a direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.

So Lessig basically endorses Friedman’s main point, demonstrating yet again how it has gone from very controversial in 1970 to commonplace today. He just sees that “the basic rules of society” that corporations are supposed to follow aren’t set in some kind of corporation-free vacuum. So how do you fix that? Lessig apparently gave a lecture on the topic last month, which appears to be available only in video form. I think he says the Internet will save us. I’m dubious, but I’ll reserve judgment until I take the time to watch it.

The guy sitting at the table next to mine at the Fair Trade Coffee House here in Madison had a Dell laptop. He asked me for help. It was his son’s computer, he said, and he couldn’t figure out how to make the wifi work. I looked at the screen for a minute and finally said, “I dunno, I’m a Mac guy.”

“Me too,” he said. We both looked around, to see if anybody else on the place was on a Windows machine. No luck. Only Macs in sight.

Now I realize that a coffeehouse in Madison isn’t America. But still, with Apple’s latest blowout earnings report due in large part to big Mac market-share gains, you’ve got to wonder: Is Mac on every table/desk really where we’re headed?

Naah, I don’t believe it either. But what’s gonna stop it?

Update: I’m back at the Fair Trade on Tuesday afternoon, and the current count is eight Macs (mine included) to six Windows laptops.

Update 2: Commenter Dave is right to point out that what stands in the way of a nation of Macs is that Macs now cost much more than Windows machines. (I actually knew that but I thought what’s the point of a blog post that answers its own question.) But of course the high-end segment is much more profitable. And Apple’s dominance there is truly amazing. Philip Elmer-DeWitt reported a couple of weeks ago that Bernstein Research analyst Toni Sacconaghi Jr. estimates that Apple has a 29.4% market share among laptops in the top price quintile, and a 45.8% (!) market share in that quintile among consumer and education buyers (that is, the people who don’t have to go through humbug corporate IT managers).

Update 3: The Wednesday morning count at the Fair Trade appears to be five Macs to eight Windows laptops. The trend is against them!

I guess I should mention at some point that I’m writing this week from America’s most insanely livable city, Madison, Wisconsin. Above is the view from my table at the Fair Trade Coffee House on State Street, where I’m typing these very words. Here’s a view down State Street toward the Capitol:

I’m in Madison because I’m the “Business Writer in Residence” at the University of Wisconsin’s journalism and business schools. Which mainly means I go to classes and jabber. This was my first, Scott Troyan’s 9:30 communication class at the business school:

Anyway, I’ve got a column to write this afternoon. But I’m sure I’ll have more thrilling news to report from Madison in the coming days.

Stock markets around the world are having another crummy day. It’s always worth reiterating that the plus or minus 2% daily drops we’ve been seeing are nothing compared with the more than 20% decline on Oct. 19, 1987.

But this decline is not the product of some weird hiccup in the workings of financial markets, as was the case in 1998–and even, to a certain extent, in 1987. It would seem instead to be a belated realization that after years of taking on more and more debt, a large segment of the American population is completely tapped out, and nobody’s willing to lend it any more money.

This isn’t the end of the world. It doesn’t even necessarily mean we’re headed for a recession. It does mean that a significant source of corporate profits, especially the profits of the financial industry, may have disappeared for at least a couple of years. Which seems to be a pretty good reason for stock prices to go down, and possibly keep going down.

Hedge fund manager and poker ace David Einhorn was the speaker at the 17th annual Graham & Dodd breakfast Friday morning. I arrived too late to get a seat, and left early because I was starving, but I did write down this quote:

Regulators are good at cleaning up fraud after the money is gone. Government doesn’t really know what to do when it catches fraud in progress.

Einhorn was talking mainly about his long-running battle with investment firm Allied Capital over its accounting practices. He’s got a book about the saga coming out next year, and if the excerpt he read at the breakfast–about a grilling he underwent at the hands of two SEC lawyers–was any indication, it should be pretty entertaining.

But the lesson is a broader one: It is incredibly hard for government officials to step in and try to stop behavior that they think is illegal or unwise at companies that seem to be making lots of money off this behavior. It’s even harder if it’s an entire industry, such as, say, the subprime mortgage lenders of a couple years ago. Try to crack down while the party is still going and you’re likely to get hauled in front of Congressional committees, lambasted in the media and attacked by aggressive company lawyers. Wait until it all falls apart and, while you’ll still get lambasted a bit, most of the discussions in the media and Congress will be about how to give you more resources and power in the future.

Today’s the big day! The 20th anniversary of the Crash of 1987! We’ve already been deluged with reminiscences and will-it-happen-agains. If you want more, my friend and fellow Acalanes High School graduate Matthew Rees’s recounting in The American is the most thoughtful and exhaustive I’ve seen.

But, uh, will it happen again? Depends what it is. If it’s a 20+% one-day drop in the stock market, maybe not. If it’s a financial system freakout, where suddenly everybody stops trusting each other and lending each other money, well, that happened a couple of months ago. It happened in 1998, too.

In 1987, matters were at their worst the morning after the stock market crash. That’s when the global banking system threatened to freeze up and lots of people involved with Wall Street started worrying that modern capitalism was about to come to an end. Only the soothing words of Fed chairman Alan Greenspan and the determined arm-twisting of New York Fed president Gerry Corrigan kept us from a 1930s-style debacle. The Fed came to the rescue in 1998 and this summer, too.

This appears to have become our new financial market reality. Every ten years or so a crisis, usually brought on by some financial innovation that not everybody has figured out how to use wisely.

This also happens to have been our old financial reality. In the 19th century, financial-system lockups occurred with such regularity (every 10 or 11 years) that English economist William Stanley Jevons tried to explain them as a product of the 11-year sunspot cycle. After the Depression, tight regulation of financial markets put a halt to those crises for a few decades. In 1987, with markets freed of many of their fetters, the crisis cycle made its return.

Is that such a bad thing? Maybe not. A few weeks ago, Princeton historian Harold James wrote:

If today’s credit crunch has historical parallels, they are closer to nineteenth-century “normal crises” like 1837, 1847, or 1857. In those panics, financial innovation caused uncertainty and nervousness, but also induced an important and beneficial learning process. The financial institutions that survived the crises went on to play a crucial role in pushing further development, and they had enhanced reputations because they withstood a crisis.

That raises the question, though, of what role the Fed and other central banks ought to play. Hardly anybody second-guesses what Greenspan and Corrigan did in 1987. The Fed’s actions in 1998 and today have many more critics. The argument is that they’re standing in the way of that “important and beneficial learning process.” It’s the possibility that they may also be standing in the way of the abyss that makes things complicated.

Update: Nice of the Dow to commemorate the big anniversary by falling 367 points, don’t you think? (That’s not all that far off the 508-point drop of 20 years ago, but is only a 2.64% decline, compared with 22.6% in 1987.) A few more interesting 1987-related links: Nouriel Roubini argues that it could happen again, Barry Ritholtz gawks at a WSJ chart of how the Dow stocks have performed since the 1987 crash, and Herb Greenberg tells how the crash sent him back into journalism.

As for the whole “peak oil” discussion in the comments below, the lessons of the 1987 crash would seem to be that:
(1) Unimaginable things do in fact happen. According to the risk models of the day, a 20% one-day drop in stock prices was only supposed to happen once in a billion billion years. So I wouldn’t entirely rule out any worst-case scenario.
2) Nothing is inevitable. If economists and central bankers hadn’t learned anything from the experience of the early 1930s, the 1987 crash might have led to an economic disaster. But we humans are in fact capable of learning and adapting.

Yep, that’s him, the universally beloved New York Times columnist and author of the new book The Conscience of a Liberal (not to be confused with The Conscience of a Liberal). Why such a low-quality photo? Well, this is now the third in a series of Curious Capitalist posts featuring lousy cameraphone photos from book parties, and it would be kind of weird to switch to a good camera now (plus, Mrs. CC has the family camera out in California at the moment).

I only stayed at the party for a couple of minutes. I was in a cranky mood when I arrived, and when I surveyed the crowd of tweedy, conscience-filled liberals and realized I didn’t recognize a single one except for Paul, who wasn’t exactly going to have the time or the inclination to hang with me, I decided to bail. After shaking Paul’s hand, of course.

Let me emphasize that my crankiness had nothing to do with Paul Krugman. Although maybe it did have something to do with it being a book party. Because that means he finished his book. For any regular readers wondering what came of last week, when I handed this blog over to Mark Gimein so I could work on The Myth of the Rational Market, I’m afraid I have to report: Not nearly enough. During the workweek I spent some of the time working on my Denmark saga, which I should have finished writing the week before. Then on Saturday I ended up blowing almost the entire day watching college football. I did have my laptop in front of me, but let’s say I was a little distracted. And after Cal lost that game to Oregon State, I was also disconsolate. So no, I didn’t get nearly as much done as I should have. Which, after more than four years of messing around with this thing, is seriously pathetic. So I’ve been intermittently furious at myself all week and, well, that’s the state of mind I was in when I arrived at the Lotos Club

There. Glad to have gotten that off my chest. As for Krugman’s book: Haven’t read it. Been busy. I did crack it open briefly today to see if I could find anything I disagreed with violently enough to write a column about, but no luck.