Malcolm Gladwell, The New Yorker, The Gift of Doubt, here.
In the mid-nineteenth century, work began on a crucial section of the railway line connecting Boston to the Hudson River. The addition would run from Greenfield, Massachusetts, to Troy, New York, and it required tunnelling through Hoosac Mountain, a massive impediment, nearly five miles thick, that blocked passage between the Deerfield Valley and a tributary of the Hudson.
James Hayward, one of New England’s leading railroad engineers, estimated that penetrating the Hoosac would cost, at most, a very manageable two million dollars. The president of Amherst College, an accomplished geologist, said that the mountain was composed of soft rock and that tunnelling would be fairly easy once the engineers had breached the surface. “The Hoosac . . . is believed to be the only barrier between Boston and the Pacific,” the project’s promoter, Alvah Crocker, declared.
Everyone was wrong. Digging through the Hoosac turned out to be a nightmare. The project cost more than ten times the budgeted estimate. If the people involved had known the true nature of the challenges they faced, they would never have funded the Troy-Greenfield railroad. But, had they not, the factories of northwestern Massachusetts wouldn’t have been able to ship their goods so easily to the expanding West, the cost of freight would have remained stubbornly high, and the state of Massachusetts would have been immeasurably poorer. So is ignorance an impediment to progress or a precondition for it?
Gavyn Davies, FT, What the bond market is telling the Fed, here.
Another troubling message from the bond market is the extent to which the rise in yields has stemmed from a jump in expected short rates, rather than in the term premium (explained here). This is certainly not what the Fed intended when it started to warn about tapering, since it indicates that the market is bringing forward the expected date of the first rise in the Fed funds rate.
Joseph Stromberg, Smithsonian, How Do Death Valley’s ” Sailing Stone” Move Themselves Across the Desert? here.