Garret Jones, via twitter, links to a very interesting paper by the Swiss Finance Institutue. Mei Wang, Marc Oliver Rieger and Thorseten Hens did a study titled How Time Preferences Differ: Evidence from 45 Countries.  In this study, they found that not all countries are equal. Richer countries were more likely to contain more patient citizens*.  Countries with more punctuality and a higher working speed and more innovation also had more patient people.

The chart below measured what percent of the respondents decided to wait for $3800 next month rather than taking $3400 this month. If you look at the top of the chart where more people would wait for a monthly return of over 11%, you will generally find countries with less severe financial crises. At the bottom of the chart are countries who are either undeveloped or particuarly at risk of financial crisis.  While it is possible that the current situation of countries like Greece and Spain make people very short term oriented, the different perspectives that these cultures have on time has been noted previous to the crisis so it is more likely that the shorter term perspective of their population is what helped get them into their current financial mess in the first place.

The US comes in slightly less patient than Ireland and more patient than Turkey.  It is distinctly less patient than the German-Nordic countries.  The paper notes that a larger sample done in a previous survey gave the US a score of only 40%, which is below even Greece in this sample.  If the US is anything like Greece, this implies that it that people won't want to suffer through fiscal tightening now to make the future better, so spending without taxing is going to continue until it is stopped by a market crisis. 

*It should be noted that their data was only on university students rather than the population as a whole

This is all ridiculous, of course. If there were a significant amount of dedicated terrorists in this country, we would know. Just ask Israel. Think about what 10 or 20 coordinated people can do.  They don't have to hit the targets they hit before. Two people with a gun and modified car shut down an entire metropolitan area.  Multiple this by 5 or 10 and you have a very large population living in even more of a police state.  The lives lost will be nothing in comparison to the damage done to society during the response to the crisis.  The airport security isn't making anyone safer either, and if there were suicide bombers in the US then they could buy a ticket (or print out a fake ticket) and walk into any packed airline security line and be sure that they are in a crown of people when they go off.  Thankfully, none of these or any other number of simple ideas for terrorists to implement has occurred. When something did happen outside the US in Sweden, the terrorist was apparently so incompetent that they barely manage to kill more than a few people other than themselves in a completely unsuspecting population.

The lack of US terrorist events means that the dedicated terrorists in the US are either planning something really big, have been effectively shutdown by intelligence agents more times than we know or they are in no way organized or motivated enough to give their lives.  Sadly, terrorists don't even have to be organized or even successful to make an impact.  As we've seen, even one or two failed attacks causes billions of dollars of damages by causing money to be sunk into security theater spending that wastes people's time and offends their dignity.  

When we hear that something is being done mainly for our safety, we need to keep Benjamin Franklin's words in mind.

Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.

I would extend this thought to specifically cover those people trying to take away essential liberties. That is the bright side of wikileaks. It may have hurt the US by revealing key people who were helping them, but reminding government workers that their reasons behind their actions might see the light of day sooner than they think will hopefully remove a safety blanket and make them think twice about what they are doing.

When people worry about inflation or deflation, they are wrong as long as politics are functional. However, events like the recent compromise demonstrate that politics are not really functional.  If more compromises of this nature are expected, then that means that it might take a crisis to fix the deficit.  If the crisis is about dollar confidence, then the crisis will be inflationary. If the government is able to react with austerity to head off the crisis then the crisis will be deflationary.

It is hard to know which way the economy will break, but with each compromise of this nature the probability of a long term goldilocks goes down.

It seems like the people selling lottery tickets are making money, but it is unfortunate that his sample analysis period doesn't go back to the crisis of late 2008.  Any trading strategy that was short volatility over a 10 year period and didn't blow up completely in that time period would probably have made a lot of money overall, but the "not blowing up completely" part is not trivial without utilizing future information.

He links a post from VIX and More where the author of that blog highlights new VIX Exchange Traded Notes (ETNs) and reveals that they are short VXX, one of the front month VIX ETNs.  

One conclusion that can be drawn from this is that if someone wanted to go long volatility to protect their portfolio, front month VIX at this level of contango is one of the most expensive and therefore worst ways to do so.  Now, there are probably good traders who are long the VIX at the short end, but these would be people who are either trading at small enough holding periods that the annual drift doesn't impact them or traders who have found something even better to be short and need to be long the VIX to protect their portfolio.