Who are the Short Sellers?

The uptick rule has been a whipping boy in the market decline, but some skepticism is emerging as people examine the issue in detail.

Like Jim Cramer, Jack Risko has been criticizing short sellers and the uptick rule in particular. Supposedly they act like a pack to bring down a weak stock, and this is imperilling the financial system since big banks are currently weak.

I'm unconvinced that short sellers are not revealing the true value of overpriced banks and thereby legitimately contributing to price discovery. If short sellers are involved in a vicious circle, I'm unconvinced that it's a deliberate conspiracy; it could be emergent behavior that mimics conspiratorial actions.

But another interpretation altogether crossed my mind: the short-selling could be legitimate hedging.

IMHO the picture underlying option valuation is that the reward/risk ratios of a stock and its options should be the identical. Accordingly, under idealized conditions, you can construct a combination of stock and option such that the risks cancel each other out: this recipe leads to the Black-Scholes valuation equation.

Suppose you're a market maker who sells a put option on BankAmerica. You have taken the risk that the stock will be sold back to you at a higher price than the market will charge. To reduce that risk, you hedge by shorting the stock. The more the stock drops, the more you should short in order to minimize the risk. If the stock develops a strong downward trend, you the put seller will act so as to reinforce the trend, and you could become a participant in a vicious circle.

Moreover, it turns out that a "sophisticated" put shopper can dispense with the market maker altogether. If the market maker can cancel his risk by shorting the put and the stock, a put shopper can equivalize the risk of holding an unhedged put by trading like the market maker would. This is the notorious portfolio insurance that was a prime suspect in the 1987 crash.

Now consider that the financial system, expecially the big insitutions, are highly leveraged. Suppose it's June 2008 and you have bought a "diversified" package of concocted illiquid "AAA" securities from Wall Street. You are getting worried. How do you protect yourself against the decline of illiquid composite instruments that are so complicated that no one understands their details?--By shorting liquid instruments that are related as closely as possible to your holdings. You protect yourself against systemic risk by shorting the system. So you're ready to go: when trouble appears, you short the stocks of large-cap financial institutions.

The amount of money in these holdings is many times the net worth of the financial system, the potential for a vicious circle is compounded many times.

If I had a case, I'd rest it with a flourish now, but all I have is a plausibility argument so I'll mundanely stop.

My Dinocrat comment is here.

Addendum 20090806. Suppose the value of those illiquid securities is many times the value of the issuing institution, and people try to hedge with the value of the stock...

Tea and Antipathy

I never liked the goo-goo left, but neither have I ever been entirely comfortable with the religious right as a political force.

People are holding tea parties to protest Obama's economic policies. Salt-of-the-earth Americans. They've been there all along.

Yet the religious right has ignored them all along. Instead it has allied with the Bush/Rove/Lott/DeLay/Cunningham/Abramoff crowd to get working control over the GOP.

It confirms my suspicion that they want to force an illegitimate agenda on the country via government.

It Takes a Police State To Raise a Child

So says Texas Senator John Cornyn (Republican, of course), who believes all online activity should be archived for the police to peruse at their leisure:

"Keeping our children safe requires cooperation on the local, state, federal, and family level."

Background:

(CNET) -- Republican politicians on Thursday called for a sweeping new federal law that would require all Internet providers and operators of millions of Wi-Fi access points, even hotels, local coffee shops, and home users, to keep records about users for two years to aid police investigations.
U.S. Sen. John Cornyn of Texas, supporter of a bill that would require Internet user records to be saved for police.

The legislation, which echoes a measure proposed by one of their Democratic colleagues three years ago, would impose unprecedented data retention requirements on a broad swath of Internet access providers and is certain to draw fire from businesses and privacy advocates.

(HT: The Next Right, where I have ranted at greater length than here.)

Addendum 20090226. I just googled "inferring meaning in random data"[1]. At the bottom of the page, there was

In response to a legal request submitted to Google, we have removed 1 result(s) from this page. If you wish, you may read more about the request at ChillingEffects.org.

I don't know if the request is spurious or if Google's search engine is flawed, but I am entirely capable of navigating away from illegal material if I stumble into it. Except, of course, even if I do, I might get a visit from the police should Cornyn get his way.

And how long before people submit spurious complaints to search engines in order to suppress ideas they disagree with? I guess we'll have to hire more lawyers & more bureaucreats to assure that doesn't happen: everybody knows that the solution to a problem caused by big government is to make government bigger.
----------------
[1] I had recently found but forgotten the words 'pareidolia' and 'apophenia', and was trying to remember them

Be President, Barry

"House Democrats propose $410B spending bill", reports the AP. Including an 8% increase during a dangerous recession.

One of Bush's biggest mistakes was his failure, afaik, to veto a single spending bill while his party controlled Congress. Obama should not repeat it.

Let me fantasize. Everybody (Pelosi, Reid, etc.) gathers for the signing. Obama marches in stonefaced and announces he's not going to waste the American people's money with this and this and this and too much else to mention. He takes out a magic marker and writes a big block-letter VETO that he holds up for the cameras. Saying "Madame Speaker, take this back and fix it," he starts to hand the bill to Pelosi, but then he stops and says, "No, just start over." And marches out.

Seriously, "the President is who you vote for to protect you from other people's Congressmen." Obama should make it publicly clear that he is such a President. (Is he?) Note that early in his administration, Reagan fired government air traffic controllers who were striking illegally, even though their union had supported him in the election.

In other words, Obama should set up a kinder, gentler Sister Soujah moment with Pelosi.

Wow

Straight talk from Maureen Dowd:

We need leaders to help us through our crises, not provide us with crude evaluations of our character. And we don’t need sermons from liberal virtuecrats, anymore than from conservative virtuecrats.

The whole thing is worth reading. I'm gobsmacked to find myself agreeing with Maureen Dowd, but good for her. More like this, please. From all sides. This is America.

The Complexity Bubble May Not Deflate

At least, not without taking society with it.

I've remarked, elsewhere if not here, that Congress routinely passes bills that are too long to read. Obviously, things are being insinuated into those bills. Here's an example in the 'stimulus' legislation:

The provision, which attracted virtually no attention in the debate over the 1,073-page stimulus bill, creates something called the Recovery Accountability and Transparency Board...The board would oversee the in-house watchdogs, known as inspectors general, whose job is to independently investigate allegations of wrongdoing at various federal agencies, without fear of interference by political appointees or the White House.

In the name of accountability and transparency, Congress has given the RAT Board the authority to ask “that an inspector general conduct or refrain from conducting an audit or investigation.”...(p)The language means that the board — whose chairman will be appointed by the president — can reach deep inside a federal agency and tell an inspector general to lay off some particularly sensitive subject. Or, conversely, it can tell the inspector general to go after a tempting political target.

I asked Grassley how he learned that the RAT Board was part of the stimulus bill. You’d think that as a member of the House-Senate conference committee, he would have known all about it. But it turns out Grassley’s office first heard about the provision creating the RAT Board last Wednesday, in a tip from a worried inspector general...(p)When I inquired with the office of a Democratic senator, one who is a big fan of inspectors general, I was told the RAT Board was “something the Obama administration wanted included in this bill.”

Note both the power grab by the White House and the fact that it was snuck into an unrelated piece of legislation that the people who passed it did not read in its entirety.

Things fall apart?

'Nation of Cowards'

Attorney General Eric Holder speaks.

Well, after that, I wait for Elder to crack down on unnecessary speech codes that stifle legitimate free expression in the academy and workplace. I wait for him to crack down on spurious litigation about 'hostile work environments' and the like. I expect to be waiting a long time.

To be fair, a passage in Obama's Inaugural Address--

We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve...

--speaks to my sense of American exceptionalism: that the US has the opportunity to become the template for an advanced post-tribal society. The opportunity...

An Invisible Hand or One Hand Washing Another?

Despite plummeting oil prices, gas prices went up 15% in January. I didn't keep track of the dates, but at my station the price is up from a low of $1.57/gal to $1.88--while the price of oil has continued to drop.

1. Is this the invisible hand in action, or is it one hand washing another? Surely the oil companies wouldn't try price fixing in this market...or would they, with or without government collusion? Are new taxes being passed on to the consumer? What's going on?

2. Why hasn't this obvious price increase been mentioned by the media?

3. Why hasn't it been mentioned by our representatives, who are ever vigilant on our behalf?

Imminent Detection of Quantum Gravity?

I thought it was out of reach for the foreseeable future. In fact, I thought it was out of reach for humanity as we know it.

But look here (HT: arXiv blog).

Or here.

(Of course, detecting it--which remains to be established--doesn't mean you understand it, or that you've learned enough to try to understand it. Nevertheless this post's label is valid.)

Doth This Man Have the Right Sow by the Ear?

After a day like today in the market, voicing optimism feels like, ah, spitting into a strong wind.

The fact remains that insider buying continues robust. Knock on wood that they don't start selling after this major drop in the indices.

Here's another professor with a constructive attitude. Money quote (written just before the meltdown):

Our Venturesome Economy (TM !) has demonstrated a capacity to develop and deploy innovations that sustain our long run prosperity in good times and in bad. Personal computers recall took off in the dark days of the early 1980s. But we mustn’t let the ill-will generated by bad financial innovations lead to policies that harm innovators in the good economy! Clean out the stable, but please keep the horse.

I hope he's right.

Sheila Bair, Again

Dinocrat smells a rat behind Geithner's bad speech.

From the FT piece linked in the update:

...Mr Geithner’s sketchy plan raised suspicions of internal disagreement over the bail-out. Officials strongly deny those rumours, particularly any hint of divergence between Lawrence Summers, the head of the White House National Economic Council, and Mr Geithner, a former protégé of Mr Summers – though some acknowledge differences between the government and independent agencies involved in the process.

Bush-appointed FDIC head Sheila Bair is necessarily the only culprit, but she is an obvious one. This is worse than a leftist cabal. It's a compassionate conservative who cares about The Children.

Bair has essentially no private-sector experience. Apparently she views her agency, which is independent, as having powers which parallel some of the Treasury Department's functions. She gets fawning write-ups in the liberal media:

The high-ranking government official most likely to attack Obama's economic policies from the left is ... a Republican?

I take it as a contrarian indicator that Larry "Goldilocks Economy" Kudlow likes her.

To be fair, Bair spotted the housing trouble in late 2007, but her proposed solution was to have ARM teaser rates be made permanent. Unsurprisingly, the banks were not enthusiastic. (And lots of people saw the problem looming. Bair's approach, arguably, is to demagogue the situation and grab for power that she seems unqualified to wield.)

No worries, though. According to the Examiner piece linked in the previous paragraph:

Bair, though, said she remains "very much a capitalist."

For more reassurance, let's hear Obama say that he remains very much committed to holding elections in 2010 and 2012...

A Cultural Contradiction of Libertarianism

My instincts with respect to pornography and drugs are (ah, hard-core) libertarian.

Nevertheless, my gut feeling is that a society which flaunts genital flirting on the cover of a mass-circulation publication has gone signficantly awry.

Just because the government shouldn't control it doesn't mean it's healthy.

Just because it's suitable for discreet private use doesn't mean it should be splashed all over every public forum.
****************
The cover of the 2009 Sports Illustrated swimsuit issue shows Israeli model Bar Refaeli toying with the microscopic bikini bottom that she has taken partway off. Refaeli:

"This is the one I felt the most comfortable with...You have the beach, blue water and a body. That's it. I liked that the top of the suit was on."

Well, of course. She may act naughty, but she's really a nice Jewish girl. Gotta stay eligible to snag that tycoon hubbie, y'know...

SI speaks:

It's the cover that matters most, says SI group editor Terry McDonell...Refaeli wears a string bikini by Missoni — and the strings on the bikini bottom are being tugged south.

"The cover has to reflect the athleticism and sexiness of the culture. This photo is modern, her hair and swimsuit look natural. You see her freckles. Her body is amazing and she looks intelligent," McDonell said.

I'm all for athleticism and sexiness, but I wonder how much of the exercising is performed to enable people to spend more time f***ing. Not healthy.

Meanwhile, the libertines' counterparts in the culture wars, the cornfed religious right whose focus is on exorcising, are also obsessed about sex, but in a repressive way.

Both have me uneasy about the future.

Addendum. I had mixed feelings about whether Refaeli's ethnicity and citizenship were germane to this post. It turns out that they are:

In 2007, Refaeli became a source of controversy when it became known that she had evaded military service, mandatory for Israeli citizens over 18-years-old, by marrying a family acquaintance and divorcing him soon after. Refaeli stated in an interview with Yedioth Ahronoth, "I really wanted to serve in the IDF, but I don't regret not enlisting, because it paid off big-time," further adding, "Why is it good to die for our country? What, isn't it better to live in New York City?" Refaeli has since said the interview didn't accurately reflect her statements and threatened to file a lawsuit for libel. Consequently, the Israeli Forum for the Promotion of Equal Share in the Burden threatened to boycott the fashion chain Fox if they hired Refaeli, but the two sides reached a compromise in which the model agreed to visit injured IDF soldiers on visits to Israel and encourage enlistment in the army.

Societal acquiescence to her prominence is not a positive indicator for the futures of America and of Israel.

The New Kid Has Trouble Getting His Bearings

Dinocrat writes: President Obama has no executive experience. It would be an indication that he is learning on the job if he starts cutting back on his hyperbolic rhetoric. Otherwise, it’s going to be a long four years.

I agree completely, just as I agreed with George Will a few months ago:

It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

No guarantees.

With fingers crossed, I remember that Bill Clinton got off to a very rocky start and wound up with a successful Presidency (one that would have been extremely successful if not for his personal flaws).

Outing 'Climate Science'

Richard Lindzen has broken the scientific establishment's 'blue wall of silence'. His Introduction has something important to say about how our culture has devolved.

Somewhere, Lysenko is laughing.

Rocket Scientists are Smart...and Blameless

Here. The article has much to agree with, but I am uneasy with wording like this:

So if it is the physicists who are to blame, how do we explain the fact that large and not-so-large crashes have been appearing with frequencies that are approximately time-independent?

Just because no single component of a system is exclusively responsible for a systemic failure does not mean that every component is blameless.

And all the children sing:

"Once the rockets are up, who cares where they come down
That's not my department," says Wernher von Braun.

(Tom Lehrer, understandably, perhaps is too harsh on von Braun--but not off target.)

They Knew It All Along

Jack Risko quotes Business Week about the new conventional wisdom at Davos.

1. Everyone stupidly failed to see the financial calamity coming except roughly four economists who now must be heeded in everything they say and all they predict.

Ouch. I thought the shoe would drop at some point, but didn't expect it in 2008. I made decisions on the basis that the establishment had the minimal competence to duct-tape together a decent election-year economy.

I'm pretty sure that some economists who were correct last year have been wrong for many prior years. Hopefully sooner rather than later, the pessimists will go back to being wrong. That is not to say that their views are without merit.

Speaking of wrong economists, Alan Greenspan was just about the only major culprit with the intellectual integrity to admit he was mistaken. I wish he would resume speaking out. His thoughts have value and the derision they would attract would be appropriate penance.

2. The private sector has ruined the global economy and can no longer be trusted. 3. Government is ascendant, with regulation closest to godliness.

I don't mean to shug off a dangerous and inexcusable situation, but it remains true that risk is a cost of progress.

IMHO the people who are shocked shocked to discover they can't trust the private sector have, in fact, never had much good to say about it. Since we can't trust the private sector, apparently it follows that we should trust the government.

Regulation keeps us brutish greedy peasants to a semblance of civilized behavior. Regulation is not intended to waste the invaluable time of the extremely busy idealists who serve as regulators. (/sarc)

4. These conclusions are correct and will stand the test of time…

Per Jack, my fear is that these conclusions are incorrect but will stand the test of time.

Mitt Romney

Romney returned to Massachusetts to run for governor. He won and had a successful first term. He chose not to seek reelection in 2006, presumably in order to focus on preparing a Presidential campaign.

Rhetorically gifted Deval Patrick upset an establishment candidate for the Democratic nomination and easily won the general election to become the state's first black governor.

Suppose Romney had braved the odds and defeated a charismatic black challenger in a Democratic year. He would have entered the 2008 primaries as the sitting conservative governor of a liberal state. He would have been the natural candidate to oppose Obama (and his record would have have been clearly stronger than Hillary's). Picking Palin as VP would have secured the support of the religious right and swung a few female votes. IMO his chances would have been far better than McCain's (and don't forget that McCain had taken a small lead before his intemperate reaction to the financial crisis). IMO the financial crisis would have strengthened his candidacy.

The moral also applies to Hillary 2004:

He either fears his fate too much,
Or his deserts are small,
That dares not put it to the touch
To win or lose it all.

Obama's First Inaugural Address

The text is here.

In contrast to many online reactions, I liked it at first reading. (Is much of the widespread negative tone online due to the fact that it's easier to criticize than to formulate something defensibly constructive?)

A key paragraph:

For we know that our patchwork heritage is a strength, not a weakness. We are a nation of Christians and Muslims, Jews and Hindus — and nonbelievers. We are shaped by every language and culture, drawn from every end of this Earth; and because we have tasted the bitter swill of civil war and segregation, and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.

As an American exceptionalist in my fashion, I was pleased to read that. IMO a major, essential part of American exceptionalism is the USA's unique opportunity to become a template for a modern post-tribal society.

Unfortunately, I do not see how creating protected classes and quotas--almost fifty years after the Civil Rights Act of 1964--is a step in this direction. It is necessary to accentuate tribal distinctions in order to dissolve them? Ben Tre logic?

Martin Luther King Day

My gut impression: King does not strike me as a great moral leader. He strikes me as a great political leader who harvested a ripe moral issue.

This is meant as objectivity, not as criticism.

Can't Anybody Here Play This Game?

Bank of America, which supposedly was going to save Merrill Lynch's role in the financial system, now wants more TARP money to absorb Merrill's losses. After its stock nearly tripled from its recent low, Citicorp is plunging again.

Barney Frank and Phil Gramm have indignantly declared themselves blameless. Bernanke is an expert on the Great Depression, but he let Lehman fail. Paulson was going to buy up troubled assets, and then he wasn't. (Geithner didn't do his taxes correctly.)

This as though we'd broken the Japanese code in 1940 and then let Pearl Harbor happen anyway.

Addendum. Someone--I didn't save the link--argued that a binding government guarantee to cover unforeseen Merrill losses must have been part of the inducement for BofA to do the acquisition. Plausible but not compelling, IMO.

Instapundit and Porkbusters

Glenn Reynolds harrumphs about government waste and links to the Porkbusters site. As I type, its front page has not been updated since 2* May 2008. About Porkbusters:

Porkbusters was conceived of by Glenn Reynolds of Instapundit fame in the fall of 2005. Seeking help implementing his vision, he approached N.Z. Bear (now "out of the bear cave" and known also by his given name, Rob Neppell) and Porkbusters.org was born.

Ah, yes, a visionary. Experience has made "visionary" a dirty word to me...

I liked Instapundit a lot more when Reynolds had the 'If you have a modem, I have an opinion' logo.

Tax the Internet and Save the Planet!

The logical but (as-yet) unspoken corollary to this.

Addendum. Times commenter Don L of Hartford, CT anticipated the above post, using words identical to my title.

Addendum 20090114. US News reports that both Google and Alex Wissner-Gross, the author "quoted" by the UK Times, dispute the report. Network World:

Wissner-Gross said he did discuss Google with the newspaper in broad generalizations, in that Google uses energy, and that the generation of that energy would cause CO2 to be released.

However, Wissner-Gross said one of The Sunday Times writers seemed eager to confirm the seven-gram figure and link it to Google. The researcher said he did not do so. Wissner-Gross said he saw a draft of the story before publication and suggested some changes, but those edits were not made.

Efforts to reach the writers at The Sunday Times were unsuccessful.

How shocking to learn that a major newspaper might be slanting the news according to a predetermined agenda...

Climate Change

Several bloggers have noted that the Huffington Post, of all places, has published a slam against Gore and his shtick.
*********************************
IMO the real issue is not whether warming--ditto for cooling--is real and (if real) humanly caused. The real issue is whether we can make a determination with enough confidence to warrant immediate reengineering of our economy.

I don't question that there are forces that tend to warm (or cool) the earth. I don't doubt that the magnitude of each of these can be estimated reasonably well, but I am dubious that the short- and long-term feedbacks can be adequately quantified. I doubt that every relevant force has been identified.

And I am completely unconvinced that reliable predictions can be made about the resultant of offsetting forces.

It's possible that in the foreseeable future the climate will continue muddling along; it's possible that warming or cooling will emerge as an overriding ecological threat. However, it would be foolish or worse to reconfigure our civilization on the basis of what is understood today.

Roger Ehrenberg

After I've been thinking a semblance of normalcy is returning and watching the stock market move upward, this is chilling:

...the economic underpinnings of the US have become so fractured that it risks being marginalized on the global stage. This "change in fundamentals" that is creeping up on us? Our creditor's willingness to hold dollar-denominated assets in general and to finance our persistent budget deficits in particular. This is the real credit crisis facing the US.

Why are things different this time? The Great Depression is held up as the singular economic event in the US to be avoided at all costs. The Government put "safety nets" in place to help those who cannot help themselves in difficult times. But this doesn’t tell the whole story. We, as a nation, have been spending far beyond our means for generations; so much so, in fact, that the purported safety nets place a greater risk to our future than the risks they were created to avoid...

(Boldface mine.)

Bad News and Good News

The bad news: Whatever Happened to Silicon Valley Innovation?, asks Business Week.

Since Business Week covers have a reputation as contrary indicators, the good news is that What's Wrong With Silicon Valley (And How To Make It Right) is this week's cover.
******************
I wonder whether much--not all--of what Silicon Valley has done should be called exploitation rather than innovation. In particular, I'm thinking about the creation and basic infrastructure of the Internet. Libertarian purists are not keen to note that the Net is a child of the military-industrial complex.

I'm No Fan of This Guy, but He Has a Point

Chris Weigant:

Two images will bookend the history of George W. Bush and Iraq: the "Mission Accomplished" banner, and an Iraqi journalist throwing his shoes at Bush's head.

Some would prefer a photo of Bush being led away in chains and orange pajamas, but IMO such criminalization of foreign-policy decisions would significantly accelerate our decline.

Find a rationale to throw him in jail for gross economic mismanagement and you've got my attention.

Obama's Chiseled Pecs

The Anchoress comments.

Is this the subliminal message that Obama's MSM acolytes are trying to convey? Talk about a photoshop op!

Last year similar photos of Putin appeared. Is it just me, or does his body look more brutally functional than Obama's?

This Man Hath the Right Sow By the Ear*

Secular Right commenter Polichinello:

IOW, an argument for any given issue–abortion, gay “marriage”, euthanasia, etc–should not start and end with “Because God said so.” It should be based on and explicated with evidence and reason available to anyone, and if you can’t do that, then so much the worse for the argument.

He's commenting on Kathleen Parker, a columnist about whom the little I know leaves me with no wish to know more.
-----------
*H/T: Henry VIII.

Good News! No Depression Ahead...Probably

Intrade currently has the chance of a 2009 US depression as less than one in seven (down from one in five around election time).

At the moment the contract is currently on the front page. Alternatively, click on 'Financial' in the lefthand column of the front page. Then click on 'Economic Numbers' in the subheading.

Addendum. Back when all seemed under control, NYU Professor Nouriel Roubini sounded the alarm about the crisis and earned the nickname 'Dr. Doom'. He believes the worst is still to come but does not expect a depression.

Addendum 20081225. The Intrade chance of a 2009 depression has risen to 30%.

Ho ho ho.

The GOP's Parasites Still[1] Remain in Charge

The House Republicans just defeated a leadership proposal to forego earmarks for three months.

To the devil with those worthless parasites.

Speaking of the devil, Mike Huckabee, "the Christian candidate", has stated that libertarians are a threat to conservatism and the GOP. Yes, libertarians.
------------
[1] Original post here.

Trickle-Down Biotech?

Glenn Reynolds:

But what’s really nice about today’s world is that lots of things that were luxuries a few years ago are cheap — flat-screen HDTVs for under $500, for example. It’s possible to live quite well, even luxuriously in many respects, by the standards of previous decades on not all that much money, if you don’t insist on having the biggest, latest and trendiest.

This should be a model for the research and deployment of medical treatments.

Should be but won't. The political demagogic class will never tolerate having a life-saving treatment restricted to "the rich" even though the restriction is temporary--and the alternative, if any, is a slowed development cycle.

Million-Year Plan

The EPA has changed its mind about requiring a ten-thousand year assurance that Yucca Mountain will be a safe nuclear repository. It now requires a million-year assurance.

Are these people being paid off by interests like the Saudis, are they treasonous fanatics, are they callous cynics feathering their nests at the expense of society, or are they plain stupid? (Some of each, presumably.)

Piracy

An Iranian grain ship is the latest to be seized.

Fortunately, the intelligentsia is on the case:

Roger Middleton, a Horn of Africa specialist at the Chatham House think-tank, said that the capture was a crucial escalation. “Now that they have shown they are able to seize an enormous ship like this, it is beyond a military solution. You won’t fix this without a political solution.”

Actually, you could create a desolation and call it peace. On both practical and moral grounds, I don't favor that course at the moment, but you aren't thinking clearly if you don't put it on the list of options.
*************
Wait till pirates seize a cruise ship and demand a billion-dollar ransom.

Obviously there are not too many cruises near Somalia, but Haiti and similar Caribbean hellholes are possible staging areas.
************
The linked story claims that the Somali government is about to collapse as regrouped Islamists converge on the capital.

Was this in effect a repeat of Iraq? Did we engineer the ouster of the Islamists without giving thought to what would happen next?

Addendum 20090426. The foregoing was in the ballpark:

The captain of an Italian cruise ship carrying 1,500 passengers says his security staff fought off a pirate attack in the Indian Ocean with pistols and a water hose.

I underestimated either the pirates' technology or the cruise line's imprudence. Thank heaven the pirates were repelled. I hope, but am not confident, that there will not be investigations, by governments or NGOs, of 'disproportionate response'.

Cloning Frozen Mice

Japanese scientists have done it with mice that had been frozen for 16 years..

Will extinct species be next? The article quite properly expresses daunting reservations, but I remember when freezing supposedly did irreversible damage to cells.

The prospect of restoring the mammoths gives me chills.

Addendum. According to the NYT, a mammoth might be (re)created for as little as $10M. A Neanderthal might be possible although the means currently available, if I understand the article correctly, exacerbate the serious ethical issues.

Coming Soon: Living in a Computer Simulation

Mirror's Edge is an action video game. Its body-centered perspective is so realistic that players are said to vomit from vertigo.

Much much more is coming along such lines. For example, climb mountains in a virtual-reality body suit at reduced (or increased!) gravity. Climb Olympus Mons, for that matter.

And who needs human modes of locomotion? Maximize efficiency by training drivers, pilots, and operators to have a vehicle- or machine-centric perspective.

And who needs human bodies when just the brain is doing the work?

Etc. Much much more to come.

Obvious Words, Well Written

Bill Kristol writes that the GOP governors' meeting was constructive but somehow failed to confront the failed Bush economic legacy:

From 1933 to 1980, Republicans repeatedly failed to convince the country they were no longer the party of Herbert Hoover — the party, as it was perceived, of economic incompetence, austerity and recession (if not depression).

Only two Republicans won presidential elections in that half-century, Dwight D. Eisenhower and Richard M. Nixon. Both were able to take the White House only because we were mired down in difficult wars, in Korea and Vietnam. And Ike and Nixon were unable — they didn’t really try — to change the generally liberal course of domestic and economic policy. The G.O.P.’s fate on Capitol Hill was worse. The party controlled Congress for only 4 of those 47 years.

That’s what happens when a depression begins on your watch and when you can’t offer a coherent explanation of how and why it occurred and what you are going to do differently. That’s what happens when instead of having such an explanation, you spend decades in quarrels between pragmatic but unimaginative moderates who seek to be better tax collectors for the liberal welfare state, and principled but fanciful conservatives who hope for a wholesale rejection of that welfare state. And the fact that there were many successful Republican governors in those years didn’t much change the party’s status nationally.

The whole piece is worth reading.

Gitmo: Mend It, Don't End It

Next time the executives of a bailed-out bank give themselves bonuses while assuring us that government dollars weren't used...whoosh!

As for the prosperous respectable people, well hidden in the shadows, who suborned the government to open the border and flood the country with illegal aliens: lock 'em up! (Not the illegals, but the people who invited them. The fact that the illegals were invited is one of the toughest aspects of how to deal with them.)

Addenda. Who else deserves to go?

Bush, obviously.

Phil Gramm.

Barney Frank.

I'll give Greenspan probation because he voluntarily admitted he was wrong.

Hedge Fund Day at the House of Representatives

The House Committee on Oversight is holding hearings on the financial crisis. Thursday was Hedge Fund Day. According to George Soros,

The race to save the international financial system is still ongoing. Even if it is successful, consumers, investors, and businesses are undergoing a traumatic experience whose full impact on global economic activity is yet to be felt. A deep recession is now inevitable and the possibility of a depression cannot be ruled out. When I predicted earlier this year that we were facing the worst financial crisis since the 1930s, I did not anticipate that conditions would deteriorate so badly.

Otoh, Soros the trader is known to change his mind in a twinkling and reverse his positions accordingly.

(An old hand at testifying before Congress, Soros used the occasion to market his latest book. Not to be outdone, Indiana Republican Mark Souder took the opportunity to rant in favor of the War on Drugs.)

Addendum.The first link above is a generic link to the committee's continually updated hearings page. The committee held hearings on Lehman, AIG, rating agencies, regulation, and hedge funds.

Good Humor

Americans have always despised each other, so I'm not unduly upset by the elites' putdowns of flyover country; what gets my goat is the cloddish way the supposed sophisticates go about it. The NY Times' photo of 'Jeb Mason, the Treasury’s liaison to businesses...32, a lanky Texan in black cowboy boots who once worked in the White House for Karl Rove' is an artistic exception.

Toward Regeneration of Body Parts

The technique is called nanoscaffolding. The latest progress comes from US Army efforts, but research is ongoing around the world.

Wow. It's impossible to resist speculating where this might go:

What about replacing body parts lost to disease or surgery? What about in vitro?

Minor Afterthoughts to the Election

Kathryn Jean Lopez quotes a National Review staffer. The whole thing is worthwhile but this caught my eye:

2) Where was Bush? Once again, and right to the bitter end, he let his passion for "loyalty" supersede what was stragetically right for the party, not to mention what was best for the country. I think his reputation has nowhere to go but down; yes, he got one big thing right, but he got everything else wrong. Enough of this family in our country's politics!

If Bush had campaigned, IMO the loss would have been bigger, and I don't know how his passion for loyalty played a role in the election. Above all, this requires a correction:

I think his reputation has nowhere to go but down; yes, maybe he got one big thing partly right, but he got everything else wrong.

Fixed it.

And I couldn't agree more with the good-riddance to Liddy Dole. My immediate and never mitigated reaction to her was instinctive loathing.

Shielding Space Travelers From Solar Storms

Apparently the Europeans have devised a compact magnetic shield. A simulation was reported here. Preliminary measurements are reported here.

I've read that passengers on a space elevator passing through the Van Allen belts would be endangered by radiation, and that strength of the elevator material could be endangered by radiation-produced defects. Might the magnetic technology be adapted to this situation?

The Palin Prank

Ouch: here, here, here, and here.

I don't want to believe she's a hick with a glassy smile & cheerleader persona, but you don't always get what you want...

Sarah Quaylin?

Atlas and I

Jennifer Rubin interviews Orrin Hatch. The whole piece consists of Hatch warning how bad the Democrats are. Rubin does not report what Hatch said about why the GOP lost Congress in 2006, or what the GOP is doing to regain the confidence of the electorate. I suspect that Hatch had nothing to say because the Republican establishment does not care as long as they retain their privileged positions. Given their criticism of the MSM for their being in the tank for Obama, I hope Pajamas Media asked Hatch such obvious questions.

The phrase 'Atlas Shrugged' is being revived to describe how productive Americans may react to a redistributionist Democrat government. It also describes my reaction to a GOP which feels entitled to my support because, supposedly, they wouldn't wreck the country quite as fast as the Democrats would.

This Is Victory?

McClatchy reports:

WASHINGTON — Two years ago, President Bush hailed Najim al Jabouri as a symbol of success in the battle to curb Iraq's sectarian violence. Today, Jabouri is a symbol of how uncertain that success is.

Last month, Jabouri quietly left Tal Afar, an ancient city near Iraq's desert border with Syria where he was the police chief and the mayor, collected his wife and four children and flew to safety in the United States.

Unfortunate, but at least the war was self-financing, right...?

And things are going great in Afghanistan, right?

And we showed Iran who's boss, right?

A Throw of the Dice for the Alaska GOP?

Ted Stevens has been found guilty. The conventional wisdom is that he will now lose his reelection bid and the GOP will lose the seat.

Suppose, for the good of the country and the party & in order to concentrate on the next phase of his his defense, Stevens pledged to resign after being reelected. Would Palin appoint his replacement? Would that sway Alaska voters? Could Stevens be...incentivized...to pledge resignation and held to his commitment?

Addendum. According to Alaska law, Palin could appoint a temporary replacement but a special election would be held within 2-3 months.

Bush's Economic Stewardship: A Grudgingly Mitigative Point

Until recently, the S&P 500 has been well above its historical norm.

Which in no way excuses the spending...

Palin and the Campaign Staff

The Politico reports:

And the final straw for Palin and her allies was the news that the campaign had reported spending $150,000 on her clothes, turning her, again, into the butt of late-night humor.

"She never even set foot in these stores," the senior Republican said, noting Palin hadn't realized the cost when the clothes were brought to her in her Minnesota hotel room.

The McCain campaign retaliates:

A second McCain source says she appears to be looking out for herself more than the McCain campaign.

"She is a diva. She takes no advice from anyone," said this McCain adviser. "She does not have any relationships of trust with any of us, her family or anyone else.

So, Senator Gang-of-14, how does the maverick stuff feel when you're on the receiving end? (Assuming you're even aware of what's going on and what your staff is leaking.) CNN:

Palin's 'going rogue,' McCain aide says

"Her lack of fundamental understanding of some key issues was dramatic," said another McCain source with direct knowledge of the process to prepare Palin after she was picked. The source said it was probably the "hardest" to get her "up to speed than any candidate in history."

And what did you expect when you picked a low-population-state governor who'd served less than two years of her first term?

Back to the Politico:

Palin's loyalists say she's grown particularly disenchanted with the veterans of the Bush reelection campaign, including Schmidt and Wallace, and that despite her anti-intellectual rhetoric, her closest ally among her new traveling aides is a policy adviser, former National Security Council official Steve Biegun. She's also said to be close with McCain's chief foreign policy adviser, Randy Scheunemann, who prepared her for the Oct. 2 vice presidential debate.

That's a constructive sign. If Palin is to have a positive future, she needs to create an intellectual basis for her instincts.
-------------
I've been getting disenchanted with Palin, but, okay, I'll give her a pass about the clothes and the make-up. My concerns about her spending and her immigration position remain.

My concerns about McCain have been resolved: I flat-out think he shouldn't be President.

A Dinocrat Rarity

A bad post.

Iirc Yahoo! Finance was flogging this "issue" a few days ago. The linked Bloomberg article is terrible too. Then again, 'Hedge Funds Experience Redemptions Despite Outperformance' would be a less gripping headline than 'Hedge Fund Withdrawals Stress Market; Citadel Reassures Clients'.

It opens with:

Oct. 25 (Bloomberg) -- Hedge funds are aggravating the worst market selloff in 50 years as they dump assets to meet investor redemptions and keep lenders at bay.

Aggravating a selloff...tsk, tsk, naughty, naughty. Record mutual fund redemptions...not mentioned.

"With the average hedge fund down 18 percent this year", you'd think that Bloomberg would add that the typical mutual fund is down about twice that, as is the S&P 500. Bloomberg doesn't.

I hope that the Bloomberg article is merely slovenly reportage and not the kind of agenda-driven "journalism" that is so flagrant this election year.

Redistribution Preview

A server at a restaurant wore an Obama tie, but he was not happy when told his tip would be given to the homeless person outside who "needed it more".

This might be an even more effective demonstration, if a legal way to do it could be found: the customer tips the waiter; then, as the waiter leaves the table, a couple of heavies waylay him, take away the tip, give some of it to the homeless guy and some back to the waiter, and keep the rest as expenses for services rendered.

Pit Bull Mike Huckabee with Lipstick?

USA Today reports:

WASHINGTON — Alaska Gov. Sarah Palin calls herself a fiscal conservative who wants to "rein in government spending." She says she "reformed the abuses of earmarks in our state." Republican John McCain said during the last debate that his running mate has "cut the size of government."

But Palin didn't cut the size of government as mayor of Wasilla, and she hasn't done so as Alaska's governor, city and state budget records show. Spending in fast-growing Wasilla increased by 55% during her tenure from 1996-2002, records show. In nearly two years as governor, she has presided over a 31% spending hike by a state government that sought earmarks from Washington even as it reaped billions from higher oil prices and Palin-backed tax increases on oil companies.

Bill McAllister, a governor's office spokesman in Alaska, said the state lived through painful budget cuts in the 1990s when low oil prices restricted revenue. "There's an element of catch-up here," he said.

The rate of spending growth in Wasilla is up to twice as high as the rate of population growth.

Why didn't the Democrats cite facts like this instead of making vicious personal attacks against Palin? Maybe some Democratic constituencies perceive such facts as positives. Maybe Camille Paglia perceives them instinctively.
-------------
Paglia's Palin piece includes:

I remember how John F. Kennedy (the first politician I ever campaigned for) electrified young people and transformed our political reality, which was about to emerge from the long, grey slog of the Cold War.

Bay of Pigs. Cuban Missile Crisis. Vietnam. Czechoslovakia. Soviet invasion of Afghanistan. That's a lot of emerging...

Pit Bull Trent Lott with Lipstick?

During the first half of October, the McCain campaign's single biggest personnel expenditure was for Palin's stylist.

Curious behavior for a populist. Is Palin being a dutiful soldier following the McCain campaign's instructions, or is she exhibiting a Pelosian sense of entitlement?

Fashion Plate Palin on Illegal Immigration

The Corner and View from the Right point out that she's for it. Another compassionate conservative. John Derbyshire, correctly, doesn't take excuses.

A child of destitute non-English-speaking refugees, I am strongly pro-immigration, but I am even more strongly for the rule of law[1]. A nation that pursues things like the War on Drugs but refuses to enforce its borders...well, I'll just say the USA's prospects looked bleak in the 1970s but that time we experienced a renaissance...

Enough is enough. I will do nothing to help the McCain-Palin ticket win this election. "McCain-Palin. We'll Wreck the Country Slower." is not a slogan to make me tap my precarious financial resources.

Note to McCain: Duke Cunningham was a war hero too.

Afaic this is now beside the point, but what in heaven is McCain thinking?
---------------------
[1] Strongly as I am for the rule of law, I am just as strongly against a metastasized legal code choked with crimes which are little more than malfeasances of which an influential pressure group disapproves.

/rant

Addendum. Strongly though I am for closing the borders to intruders, I recognize that most of the people who are here illegally were de facto invited. A realistic decent policy should take this into account, but I'm not ready to talk about it until the borders are secure. Using the current illegals as an excuse to keep the borders open is outrageous hypocrisy in defense of the government's criminal behavior on behalf of special interests and against the American public.

Panicking is Patriotic

Liz Ann Sonders, who is Chief Investment Strategist at Charles Schwab, says a recession began in December 2007, and she sees signs of the panic selling that usually accompanies a market bottom.

The RNC Strikes Again

Mark Tapscott reports that the Republicans are decking populist Sarah Palin out in six-figure Saks finery (as Tapscott predicted, the Politico did not decline to follow up):

And then they wonder why the American people - most of whom for a dozen years looked to the GOP to fix America, as the party had been promising to do for decades - have mostly decided Republicans are no longer to be believed.

Whatever possessed McCain to turn the newly nominated Palin over to handlers associated with Bush?

But that's the Republicans. Since 1988 the pattern has been to do just enough to arouse my enthusiasm and support, and then WHAM! I was on the verge of sending the Republicans money after the Palin nomination, but this time I held off and I'm relieved that I did.

Unfortunately, this puts a bit of a cloud over Palin. We're entering a recession or--heaven forbid--worse, and Governor Hockey Mom is touring the country as a fashion plate. Is she just being a dutiful soldier following RNC orders, or does she consider the designer outfits her due?

Tapscott concludes:

Short of a top-to-bottom transformation in leadership, ethics, intelligence and principles, it's difficult to see a future for this bunch.

Look at it this way: George Bush will go down in history as a transformational President...

Ayers' Class Gets Him a Pass

Dinocrat quotes the Weekly Standard's Sam Schulman:

Why is Bill Ayers a respectable member of the upper middle class and Sarah Palin contemptible?

I've wondered about that myself, but I finally understand.

Ayres isn't a domestic terrorist; he is a nobleman gone wrong. Naturally, all is forgiven.

I suspect that applies to a number of 60s radicals.

Space Elevator

A few weeks ago, the Japanese announced they are getting serious about a space elevator. The Russians[1] may be stirring too.

Since the Japanese are currently the world's best engineers, they might pull this off.

It would probably be a game-changer insofar as the world balance of power goes. Accordingly, the USA doing it would be preferable afaic, but that's almost beside the big-picture point. What is essential is that humanity do it.

Just as during the chaos and pessimism of the 60s and 70s, the building blocks of the information era were being created,...?
---------------
[1] Although Tsiolkovsky had the original idea of a space elevator, the headline of this piece is unsupported by the text. I don't see corroboration that the Japanese will subcontract manufacturing to the Russians.

Traitor to My Class?

(H/T: Iowahawk)

Dreams from My Ghostwriter?

There are claims that Bill Ayers made essential contributions to Obama's auto(?)biography (H/T: Dinocrat).

Is there pattern-recognition software that could help to reach a conclusion? I seem to recall hearing about programs that test for plagiarism by professional authors or copying/plagiarism by students.

(It might be too late in the game for something like this, even if shown to be true, to turn the race around. It could have been a difference-maker if McCain had been running a coherent campaign instead of indulging in a series of stunts: some brilliant and others erratic, discomfiting, arguably self-disqualifying. Still, 'a week is an eternity in politics'.

I want Obama to lose, but McCain's temperament worries me and I question whether he has campaigned well enough to deserve to win. And a society that appoints a Bill Ayers to be a Distinguished Professor of Education at a state university...what does it deserve?)

Addendum. This looks like a job for a forensic linguist (H/T: Althouse commenter Pogo) or a stylometer: a courageous one, given how Joe the Plumber is being pilloried. In fact, since free software is available, I wonder if Rathergate debunker Charles Johnson is cranking away.

Addendum 20090429. The creator of the above stylometric software does not believe that Ayers ghosted 'Dreams from My Father'.

Addendum 20131203. The above link is dead, but not the post; see here.

Japan's PM : US bank bailout is 'insufficient'

Bush and his enablers got the Europeans looking down their economic noses at us. Now it's the Japanese:

Japan is sitting on more than $950 billion in foreign exchange reserves, second only to China's $1.9 trillion. Together, they control a major pool of funds that could come to the rescue of the West's severely strained financial industry. Options range from helping to provide credit to strapped financial institutions to cash infusions in return for ownership stakes in them.

Finance Minister Shoichi Nakagawa said Tuesday that Japan would be willing to contribute to a rescue led by the International Monetary Fund.

They'll help the ignorant barbarians--for a price, of course.

The IMF (or is it the World Bank?) imposes budgetary restrictions on banana republics it bails out. Might that kind of national humiliation would give our worthless political class a clue? I doubt it.

Addendum. The Chinese, too, are sneering at us. Dr. Doom agrees:

Our new $1 trillion annual deficits will likely cause Russia, China, and the other countries who are funding our spending spree to say, hey, wait a minute, why are we funding this banana republic.

Nationalization, Not Investment or Bailout

The financial crisis has seemed too serious to nitpick about, but I won't ignore the government "investment" in the banking sector.

A number of the big banks didn't want government money, but for practical purposes it was mandatory:

Under a programme described by President Bush as "unprecedented and aggressive", the US treasury will buy minority stakes in nine leading banks including Goldman Sachs, JP Morgan, Bank of America and Citigroup. Thousands of community banks will be eligible to follow.

Many of Wall Street's top banks were unwilling to take the money, fearing it would be seen as an admission of weakness, but they were given little choice by the US treasury secretary, Henry Paulson. In a televised address from the White House, Bush stressed that the measures were temporary and that banks would buy back the government's shares once the economy recovers: "These measures are not intended to take over the free market, but to preserve it." [hyperlink is mine, not the Guardian's--gs]

So it is necessary to destroy the free market in order to save it. Having stuck its nose under the tent, the camel will be content. Uh huh.

Intrade or somebody should start a long-term contract to see just how "temporary" those measures will be, especially with an Obama administration.

Addendum 20081018. This piece recalls that "emergency" Depression-era farm bailouts remain in place todday, and the programs have largely changed into corporate welfare from their original purpose of bailing out family farms.)

Three Words: Dollar. Cost. Averaging.

Dinocrat is relieved about today's jump in the markets, but notes:

Of course, it wasn’t until 1954 that the Dow undid the damage that had been done in 1929.

Not to be pedantic, but it took almost 3 years for the October Dow to bottom from its 1929 high. Come to think of it, I do hope my point is pedantic with no relation to the immediate future.

It's been too long since I read The Intelligent Investor, but iirc it states that an investor who began dollar-cost-averaging at the 1929 high would have compounded his money by an annual average of 8% by the time the market returned to the high.

Solitary, Poor, Nasty, Brutish and Short? Cool! When Can We Start?

The WSJ reports how the Swiss--the hardheaded Swiss for heaven's sake--have voted plants' rights:

Beat Keller, a molecular biologist at the University of Zurich,...recently sought government permission to do a field trial of genetically modified wheat that has been bred to resist a fungus. He first had to debate the finer points of plant dignity with university ethicists. Then, in a written application to the government, he tried to explain why the planned trial wouldn't "disturb the vital functions or lifestyle" of the plants. He eventually got the green light.

The rule, based on a constitutional amendment, came into being after the Swiss Parliament asked a panel of philosophers, lawyers, geneticists and theologians to establish the meaning of flora's dignity.
...
"Where does it stop?" asks Yves Poirier, a molecular biologist at the laboratory of plant biotechnology at the University of Lausanne. "Should we now defend the dignity of microbes and viruses?"

Seeking clarity, Dr. Poirier recently invited the head of the Swiss ethics panel to his university. In their public discussion, Dr. Poirier said the new rules are flawed because decades of traditional plant breeding had led to widely available sterile fruit, such as seedless grapes. Things took a surreal turn when it was disclosed that some panel members believe plants have feelings, Dr. Poirier says.

This is a willing return to primitivism. It is much loonier than Lysenkoism or Algorism, which at least have the virtue(!) of being frauds.

Ecuador rolls back the Western imperialist heritage:

In another unusual move, the people of Ecuador last month voted for a new constitution that is the first to recognize ecosystem rights enforceable in a court of law. Thus, the nation's rivers, forests and air are no longer mere property, but right-bearing entities with "the right to exist, persist and...regenerate."

Back to Dr. Keller:

One morning recently, he stood by a field near Zurich where the three-year trial with transgenic wheat is under way. His observations suggest that the transgenic wheat does well in the wild. Yet Dr. Keller's troubles aren't over.

In June, about 35 members of a group opposed to the genetic modification of crops, invaded the test field. Clad in white overalls and masks, they scythed and trampled the plants, causing plenty of damage.

"They just cut them," says Dr. Keller, gesturing to wheat stumps left in the field. "Where's the dignity in that?"

Yeah right, sneer I, channeling the Progressive Soul. And I bet Dr. KKKeller believes says Sarah Palin is a woman and Clarence Thomas is black.

Addendum. The Swiss Constitution is here. See in particular Articles 78 and 120.

Why Liquidation Selling?

Maybe global investors are expressing no confidence in the US government after a $150B bribe to Congress was needed to get the bailout bill passed.

Somebody should do a skit about what it would take to get a declaration of war if today's Congress was in session after Pearl Harbor.

Hopefully we won't see a real-life demo. Would these clowns manage to authorize counteraction against a Mexican incursion into the Southwest? Even if they did, would the courts overrule it?

Ptoi! on Compassionate Conservatism

Great evil is upon us, wails the religious right[1].

They brought it on themselves. Compassionate conservatism is a gateway drug to socialism.
----------------
[1] The Anchoress:

...this election has been co-opted by something dark that has too many tentacles, and too many mindless ant-workers, in too many places.

Too many tentacles? Got it:

Obama == Cthulhu

Something dark with too many mindless ant-workers? Got it:

Michelle == Shub-Niggurath

<serious>The Anchoress would never stoop to race-baiting</serious>, but here's a helpful suggestion to those who would: replace or complement the Cthulhu Mythos with voodoo and the mindless ant-workers with zombies.

Complexity-Induced Decline?

According to a Dinocrat commenter, we're experiencing "how complex and elderly social systems decay and collapse."

I've been meaning to read Joseph Tainter's archeological study of that process. Cf. Glenn Reynolds:

The bailout bill -- once three pages long -- is now the length of a novel and larded with "sweeteners."

Supposedly innovation can counteract complexity-based decline. Unfortunately, much contemporary innovation involves the deliberate fabrication or manipulation of complexity to the overall detriment of society.

Revealing (Imputed) Bush Quote

Bush chairs the meeting with Congressional leaders about the bailout:

After some more give and ake, Sen. Richard Shelby, the top Republican on the Senate Banking Committee, presents a five-page list of 192 economists and business school professors who oppose the plan. Bush isn't impressed. "I don't care what somebody on some college campus says," Bush says. Instead, he says he trusts Hank Paulson, who, he says, has more than 35 years of experience and access to more information than those academics on Shelby's list. [Boldface imine.--gs]

Adam Smith? J.M. Keynes? Friedrich Hayek? Milton Friedman?

There's a hint here about what went wrong with the Republican party[1]: the lack of an intellectual foundation[2]. Not just the lack, but the belief that it is unnecessary and even contemptible.
----------------------
[1] The stupidity of addressing a political ally this way during a bipartisan conference is beside the point I'm driving at.
[2] Gingrich may have one, but it's annulled by his being such an obvious opportunist jerk.

Krugman & Meself?!

Three weeks ago, I tainted the Next Right site with "false doomsday preaching"--

Twenty years ago we were the last best hope of man. Ten years ago we were the locomotive of the world economy. Ten years from now, will we be a nuclear-armed banana republic?

Last week, Krugman wrote:

As a friend said last night, we’ve become a banana republic with nukes.

Not the first time I've wondered if I should switch sides...

McCain Surges...Then Stumbles

Proposition. A politician good enough to pull off the upset against Obama would have been good enough to defeat Bush for the nomination in 2000.

The contrapositive is...

"Prison for Dummies"?

Buy it here.

Addendum 20081012. Santos is a convicted drug dealer who has set out to rehabilitate himself within a prison system which is uninterested in rehabilitation. Being radically libertarian about the Drug War doesn't mean I admire drug dealers. Nevertheless, I believe in rehabilitation and wish Santos well with his extraordinary efforts. However, this gives me pause:

"Inside" could earn Santos a lot of money, but federal law prohibits him from profiting off his crimes. He has gotten around the rule by giving the manuscript to sister Julie, who now owns it. If she chooses to set aside the proceeds for her brother for when he is released, that's her prerogative.

That may be her prerogative, but will the government agree that it's his prerogative to accept the money?

Parker on Palin

With a friend like Parker, who needs enemies? Money quote:

Palin’s recent interviews with Charles Gibson, Sean Hannity, and now Katie Couric have all revealed an attractive, earnest, confident candidate. Who Is Clearly Out Of Her League.

This ignores a crucial distinction.

To be unready for prime time is not necessarily to be out of one's league.

(Notwithstanding some interleaved constructive advice, Kathryn Jean Lopez piles on:

And, frankly, if it turns out that the “authentic” Palin of rallies and the Republican convention is just good speech delivery in a woman with some good spirit, I want to know that sooner rather than later

To repeat, unready for prime time is not the same as out of one's league)

Addenda:
1. I'd been looking for 44-year-old Palin to get on the national stage in 2012, 2016 or later. Given achievements like her successful negotiation of a new Alaska pipeline, I believed she could climb the learning curve by that time. However, her early entry runs the risk that she may get permanently discredited before she gets her bearings.

2. Gibson and Couric were overtly and covertly hostile, but were they unfair? Palin's pit-bull-with-lipstick joke was a challenge to bring it on. Well, they brought it...

Where is the Turkish Army When We Need Them?

Appalling

Didn't Barney Frank block reform of the housing GSEs?

This morning's news:

Frank blames House GOP for breakdown of deal

Who has the majority?

I've been relentless against Bush and the Congressional GOP for not getting things done when they controlled the government.

Now it's looking like the Democrats will be just as bad if not worse.

Time to Rise above Principle?

A long time ago I heard that expression attributed to Senator Robert Kerr of Oklahoma.

My worry is that, after six DeLay/Lott years of spending like a drunken sailor who just won the lottery, Congressional Republicans may have chosen the

absolutely worst possible time

to begin insisting on frugality, limited government powers, letting the market work, etc.

We might all be much better off if they continue prostituting themselves for just a little longer. Then again, who knows?

'Country First' or 'L'État, C'est Moi'?

Press release from McCain headquarters:

Senator John McCain announced today that, in order to focus on his search for a clue leading the country out of the financial crisis, he is suspending his presidential campaign and replacing running mate Sarah Palin with New York Attorney General Andrew Cuomo. "I thank Governor Palin for her willingness to serve, but Andrew is the man I need," declared McCain. "Who understands the housing disaster better than Bill Clinton's HUD Secretary?"

Kidding aside, McCain's action might be credible if his recent responses to the crisis had been cogent. They weren't and it isn't.

Do we want the loonie or the empty suit?

Is McCain Unfit to Be President?

Consider Will Collier's and Stephen Bainbridge's, and Robert George's comments on McCain's rants about the mortgage crisis. I chime in here and with the third comment here.

George Will:

It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

The point can't be made any better than that.
************
I took an online quiz which presented choices between the candidates' anonymously presented positions, and I overwhelmingly preferred McCain's.

Then again, I know what a Republican politician's solemn commitment is worth.
************
McCain is slipping on Intrade--and he deserves to.

Next-Day Addendum. The right blogosphere did not exactly explode in indignation at Will's column.

We Need a Commission

There's plenty of blame to go around for the current financial crisis, but I'm not sure whether it should be evenly distributed. Here's a high-grade amoral ploy: the faction that primarily caused a given problem makes political hay by pinning the blame on the faction that tried to prevent it[1].

Something like the Challenger Commission or 9/11 Commission is needed, i.e. a council of elders composed of people with reputations for objectivity and integrity. Put some credentialed foreigners on it too.

Who were the Republican legislators that helped the Democrats block the regulatory Fannie proposals that failed a few years ago?
***************
Nobody seems to be talking about putting the federal budget so we're better positioned to deal with the next crisis when it comes along.
------------------------
[1] Not that I wrote "a given problem". There are plenty of problems and plenty of responsibility for them, and I don't doubt that both parties and multiple factions are trying the ploy I mentioned.

Flagrant Market Manipulation

SEC Press Release Friday September 19, 2008: "SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets; Commission Also Takes Steps to Increase Market Transparency and Liquidity" How does banning short selling increase liquidity? That would be 799 financial stocks, btw. SEC to market makers: never mind, short away!

SEC Press Release Sunday September 21, 2008: "Statement of SEC Division of Trading and Markets Regarding Technical Amendments to Short Sale Order"--

...However, this exception now requires that, for new positions, a market maker may not sell short if the market maker knows a customer or counterparty is increasing an economic net short position in the shares of the Included Financial Firm.

In effect, they're not allowing investors to buy puts.

Doubtless entirely of its own volition--

The SEC has delegated to each national securities exchange the authority to identify additional listed companies that qualify for inclusion in the list of companies covered by the revised prohibition.

--, the New York Stock Exchange has added 31 companies to its do-not-short list, including major foreign banks, General Motors, and the icon General Electric.

Such flailing around does not increase my confidence in the powers-that-be. If things are really serious, they should close the market and coordinate a coherent response.

Indicators?

During the Friday bailout rally, a number of ETFs--SPY, QQQQ, MDY, XLF, etc.--closed below their opening prices (which, of course, were up sharply over the previous close). Now premarket prices are down close to 2%.

Was This a Smear of Obama?

After this column, the right blogosphere was aflame with accusations that Obama had violated the Logan Act, which forbids unauthorized US citizens from intervening into American diplomatic disputes.

Oops. Never mind...

I must say that the right blogosphere hasn't exactly been cluttered with retractions...

The Corner Thinks This is 'Brilliant'?!

Or is Palin starting to believe her own hype?

Gov. Sarah Palin is now talking about "a Palin and McCain administration."

I've also heard her refer to McCain as "my running mate" -- a term I don't recall ever hearing a VP nominee use when discussing the guy at the top of the ticket.

This is the first meaningful negative I've seen about Palin--and it's a big one.

Ambition is healthy. Overweening ambition is dangerous. That applies to Palin every bit as much as it applies to Obama.

The jury remains out, but maybe Krauthammer will get to say "I told you so" after all.

Couple this with McCain's ignorant demagoguery against the SEC Chairman, and you see serious mistakes by a campaign that needs to play a near-perfect game.
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Two quibbles about Palin (but quibbles count in a close election):

1. All her photos look more or less the same.
2. When I'm in a bad mood, she looks like a younger version of Harriet Miers.

Award a Point to Obama

"John McCain can't decide whether he's Barry Goldwater or Dennis Kucinich."

Wham! That oughta leave a mark.

(Via Jake Tapper, or see here.)

A Modest Proposal for a Stock Market Regulation

If we're going to regulate, let's regulate effectively:

No common or preferred stock shall be sold in the United States except at a profit to the seller.

This way stocks will only go up!

Embarrassed afterthought. Mea culpa.

If an investor acquired a stock sufficiently under the current price, of course the price can decline while he sells it at a profit.

I don't have this securities-regulation thing down pat yet, but if first you don't succeed...

The correct answer lies in the uptick rule. Don't just reinstate it. Give it teeth!

No common or preferred stock shall be traded in the United States except at a price greater than or equal to the preceding price.

Take that, you unAmerican pessimists!

I'm Not a Fan of Larry Kudlow

Kudlow, one day before the AIG bailout (see here or here):

Treasury Secretary Henry Paulson is the man of the hour. This weekend he drew a clear line in the sand: no more federal bailouts. Not for Lehman Brothers. Not for Merrill Lynch. Not for anyone, at least as of this writing.

At least he's noticed that we're no longer in the Goldilocks Economy with King Dollar...

Uptick Rule, Again

One of the country's most famous traders, who spurned incredible wealth to heed a call to public service, has advocated--in a laudably measured manner, whether one agrees or not--reexamination of the uptick rule.
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Seriously:

Assume for the sake of argument that the market is locked into a downward spiral and a catastrophic crash can only be avoided by external intervention.

Ad hoc, kneejerk regulatory responses are even more transparent attempts at manipulation than what short sellers are allegedly doing. At worst, such responses, coming on the heels of political/bureaucratic incompetence and phony reassurances from Fannie, Freddie, Lehman, et al, will only aggravate the panic. At best, kneejerk regulation is likely to lock in distortions that will impair the competitiveness of US markets going forward.

If the threat is not catastrophic, let the market do its work of creative destruction[1]. If the threat is catastrophic, close the market for a week or two and coordinate a solution with a critical mass of domestic and foreign heavy hitters.
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[1] There is also the alternative of letting the market unwind the mess even if the threat is catastrophic.

Preciousss, We Sstill Hatesss Nasssty Short Sellerss

I keep saying the following. The markets should treat buyers and sellers evenhandedly. To that end, the SEC prefaced its repeal of the uptick rule with a crackdown on naked shorting, and the agency continues to implement that crackdown. I don't favor reimposition of the uptick rule, but if the rule is brought back it should be balanced by a downtick rule on margin purchases.

Dinocrat notes that Jim Cramer has resumed slamming the repeal of the uptick rule. Jim Cramer readily went long-short when he ran a hedge fund but his current customers are retail investors who primarily go long (and his stock is down over 60%). This Jim Cramer:

The last two market tops -- one in the spring of 2000, the other last October, when the Dow pushed through all-time highs -- had little in common...(p)Here's what both market tops did have in common, at least for Cramer: He buried his head under the pillow and pretended logic made no sense. He told investors to discard everything they'd learned over the years as nonsense. He told investors to keep buying stocks just because it felt good. Without peeking, I'm sure you can guess the outcomes.

Cramer is an energetic entrepreneur, but I don't find him credible as a policy wonk. Where were his calls for the uptick rule while the oil price was dropping?

Vodkapundit's Will Collier notices somebody else who is not cut out to be a policy wonk:

Just When I Think It’s Safe To Stop Holding My Nose…McCain goes and says something really, really stupid:

John McCain said in an interview with CNBC Tuesday that...regulators also need to “do a better job in reining in short sellers.”

Unbelievably dumb. Nancy Pelosi dumb. Herbert Hoover dumb.

Yep. Couple that with McCain's sneaky campaigning for immigration amnesty, and I'm glad I restrained my impulse to donate when McCain picked Palin.

Who's Responsible for the Mortgage Mess?

My uninformed guess is that the Democrats started the corruption, but support or acquiescence from key Republicans was essential to keep it going past the danger point.

We know where the buck is supposed to stop[1].

The longer we go without ubiquitous comparisons to Enron and without Congressional calls for prosecutions, the likelier it is that the primary malefactors are Democrats. Nevertheless, the Democrats might succeed in finessing the issue so as to seize the White House and increase their Congressional majorities[2]. Addendum: See here.

Addendum: See here.
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[1] The administration has long been aware that the mortgage situation was precarious. Did it back off as a quid pro quo for Congress's going along with George's Excellent Nation Building Adventures?

[2] But they'll fix it once they have power. Sure they will.