Wednesday, September 24, 2008

Who is credible to fix the mess? It's time for grownups.

I’ve been posting some of my better political essays on OpenSalon. Many of my offerings there are more formal. Less strident. Several are nonpartisan, unconventional win-win proposals that might help either major candidate to be successful and help us all.

(Folks are welcome to drop by, offering comments, diggs and del.icio.us upticks.)

Stipulate-electionAnother of my essays: “Why The Candidates Should Stipulate,” has been circulating in various forms for years. I know the most recent version was read by people in Obama’s campaign. Could this be what gave them the idea for the following?

At 8:30 this morning, Senator Obama called Senator McCain to ask him if he would join in issuing a joint statement outlining their shared principles and conditions for the Treasury proposal and urging Congress and the White House to act in a bipartisan manner to pass such a proposal. At 2:30 this afternoon, Senator McCain returned Senator Obama’s call and agreed to join him in issuing such a statement. The two campaigns are currently working together on the details.

It does sound like precisely what I recommended. And the latest version is re-posted here: Why Obama Asked McCain to "Stipulate" Common Ground.

Ah, but while those two essays were elevated, offering proposals that rise above partisan bickering...

...there is also a place for partisanship! And hence, the rest of this posting! Fasten seatbelts. My children are at stake. So are yours, whether you have any or not.


= POINT NUMBER ONE: Ask Warren Buffet to design the “bailout” - not those who made the mess =

PredictionsRegistryI’ve long argued that we need to do, in politics and government and management, what medical science did long ago -- try to allocate credibility based upon outcomes, or how often you were right, in the past. I’ve offered some possible ways to do this. And I’m a member of the core group appraising progress in Prediction Markets.

Recall how the people who forecast Saddam’s invasion of Kuwait were not rewarded, but bullied and fired, for the crime of having been right. More recently: Freddie Mac's Chief Risk Officer expressed concerns in mid-2004, that the company was buying bad loans that "would likely pose an enormous financial and reputational risk to the company and the country...leading to his being fired in 2005."

Let me suggest that the current drive toward a $700 billion bailout is being handled all wrong. Some sort of major intervention may be necessary, but who should design it?

As Russ Daggatt points out: “It was McCain’s economic guru, Phil Gramm, who in 2000 successfully fought to exempt all derivatives from any and all regulation, through the Commodity Futures Modernization Act.

On the other hand, Obama is being advised by Warren Buffett who over five years ago warned against derivatives, which he called “financial weapons of mass destruction.”


Note Gramm’s handiwork: The total derivatives market worldwide is estimated at around $450 trillion – or almost HALF A QUADRILLION dollars. (Do you think a mere $700,000,000,000.00 bailout is going to solve the problems of our financial system? Or is it merely a sop and a prayer to get McCain past November.)

Meanhile, Warren Buffett is actually helping to solve the problem with a massive investment in Goldman.

This must be our fundamental, no-compromise position: No “fix” unless the commission recommending solutions is run by people like Warren Buffet.

Keep this simple. Put Buffet in charge of this thing -- or it’s no deal.


= POINT NUMBER TWO: Connect this scam to others.

Yes, some are pointing to patterns that stretch back to the 80s S&L crisis. But it just occurred to me -- this new shell game is actually another version of "privatizing social security."

Think about it. Both endeavors aim to improve outcomes for those who already hold securities, by adding fresh purchasers and "greater fools" to buy up their bad wagers.

Unambiguously -- and even without deception -- the real winners of privatizing Social Security would have been the existing owners of stock. That’s even if there were no skulduggery, because when you expand the number of buyers, prices go up for those who already have. Duh. But at least the millions of new buyers would have been allowed to make some self-interested decisions. Some might win. A bit. Well, not really.

(Democrats must harp on this central Republican plank! How much would average folks have lost, if the GOP had its way and gambled Social Security in the stock market? Are you listening, Florida?)

Only now, the new scam is inherently far worse. Because - in the greatest act of socialism in US history - they want 300 million new buyers -- or greater fools -- to be forced to buy securities that are all dogs! Moreover, unlike the SocSec proposal, this one comes as a dire emergency measure like the trillion dollar no-bid contract festival called Iraq.

hm... fool me twice... shame on... who?
Is there a senator brave enough to say "filibuster"?


= POINT NUMBER THREE: More on “credibility to lead” =

In 2003, Bush-Cheney-Rumsfeld-Powel said (in effect) "We are the same gang who coddled both Saddam and bin Laden for years and propped Saddam back into power, in 1991 -- hence trust us as experts how to get rid of him."

In 2008, Bush-Cheney-Paulson-Cox say (in effect) "We are the same gang who created this mess, ignoring every warning -- hence trust us as experts how to fix it.''

It is that “hence” that should win them the Chutzpah Prize of all time.


-- Then there’s this --
WISDOM FROM THE 2008 REPUBLICAN PLATFORM

"We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all."

Ah, but... ABC News reports the bailout comes less than a year after Wall Street’s five biggest firms—Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley—paid a record $39 billion in bonuses to themselves - even though the shareholders in those firms last year collectively lost about $74 billion in stock declines


== Oh but... ==

Dang... when George F. Will abandons the Republicans, you know this ship is beyond worth saving. (Of course, true to habit, George Will spoils it by defending, of all people, SEC chairman Christopher Cox. Brrrr.)


== Fish, or cut bait ==

OfficerCorpsPurgeOkay, I’ve been saying, since 2004, that this crisis is not about political ideology. “Left-right” is pretty meaningless at this point, when small business, the budget and the stock market always do better under democrats and when the Republicans have proposed the biggest acts of pure socialism in US history. When the civil servants and Officer Corps have been beaten into the ground and our childrens’ security sold off.

Okay, time to get busy. And I am talking to you! That means actually offering up some time and money, for the survival of a civilization that’s been good to you. Yes, send $ to Obama, that’s good... though he needs it less than this bunch. These are the contributions that will partly go to changing Congress and statehouses (where the real action is.)

Of course, if you REALLY care... go to your local Congressional candidate. He or she is the focal point for community outreach and get out the vote in your area. (Or, better yet, go to a neighboring district that's actually contested.) You are actually likely to have some fun, meet people. Feel good.

Oh, and you republicans and nonpartisans, who know we need change, but can’t bring yourself to use the dems to do it? Well, your local nonpartisan pollwatching group, like the League of Women Voters or even the county elections board, can use volunteers. (A serious matter, with Diebold on the loose.) So can the Libertarians, who will get saner, trust me, if they get into double digits!

There are even some fun opportunities out there. For example...

“The Jewish Council for Education and Research -- a new pro-Obama political action committee -- is organizing "The Great Schlep," in which hundreds of Jews will make the Southern exodus on Columbus Day weekend, Oct. 10 13. They will travel to the Fort Lauderdale area, where they will visit their grandparents, organize political salons in their condos and eat incredibly bad food. The grandkids also will meet up at a bar one night, which -- if the psychological impact of spending a few days with frail, elderly, widowed relatives is taken fully into account -- may do more to repopulate the world's Jews than the creation of Israel.. More than hockey moms or gun-toting God lovers, old Floridian Jews are the most important demographic in this election. They make up about 5% of the voters in a swing state with 27 electoral college votes. They never miss so much as a condo board vote and are normally reliable Democrats. But...”

Know any Jewish college students back east? Tell em about this!

And find some way of your own to help.

141 comments:

David Brin said...

Want to know why I am pissed off?

An editor at Salon SAT on my revised "Stipulation" essay, last week. I could have been on wider public record.

Till, I have -
http://www.davidbrin.com/candidatestipulation.html

and now -
http://open.salon.com/user_blog.php?uid=4802

And a cousin who's an Obama speechwriter who read it... though he tells me nothing.

Feh. But at least it is happening.

Rob said...

David, I'm impressed to offer one small criticism, while agreeing wholeheartedly that men like Warren Buffet should be leaders in redesigning market regulation:

You do not take into account the possibility that people are capable of learning from their mistakes, or of repentance, when you sardonically paraphrase them as saying, "Oh sure, we created the mess, therefore we're just the ones to clean it up."

Now, in the case of a man like Rumsfeld, such a criticism is certainly valid; he did the same things with his second and third chances at power as with his first, as far as my recollection can show.

But, isn't Woodward's reporting about the internal working of the White House, with respect to the Surge Policy and other about-faces on Iraq actually evidence of a degree of repentance, showing more flexibility in world leadership than any partisan Democrat has dared to publicly suppose?

And isn't it a certain kind of irony that Democrats, so hell-bent on removing hypocrisy from the ranks of Republican leaders, turned a very blind eye to Bill Clinton's most appalling behaviors, because they only tangentially intersected with the sphere of work Democrats wanted from him?

I think that's a hole in your reasoning.

You could counter that the Republicans in power today are far too idealistic to admit to being wrong, and that their own pride is fomenting current destructive trends. It would be a restatement of the case you've made here over the last four years against the "R'oil House" and its hangers-on. I would agree with that kind of thing, incidentally.

But what if much of the secrecy and cover-up about the surge debate was no more than simple face-saving pride, so important when one's political enemies pounce on every nuance of two-facedness, in order to be the ones pulling the levers?

Worth a minute or two of thought, ascribing to something besides premeditated malice, I think.

Rob said...

Want to know why I am pissed off?

An editor at Salon SAT on my revised "Stipulation" essay, last week. I could have been on wider public record.


Heh. I've been there, friend. I don't think you're the only one actively spreading those memes, though.

Very human of you to want a wider degree of influence. I salute you.

David Brin said...

Rob, you express yourself in a likable and genial way. But you could not be more off-base.

The Republicans NEVER repent and always seek the same scams, over and over again. This "bailout" is precisely the same scam as investing Social Security in stocks... a way to force millions of people to buy out their bad wagers.

In any event, you have to choose who you will listen to, based upon some notion of past experience. I do not care if a criminal confesses, on the road to Damascus. Let him go back to the farm teams and work his way back up through the ranks, proving his conversion is real.

Meanwhile, we should turn to those who have been right a lot. Nothing is plainer.

Again, Republicans have proved wrong with titanic consistency that correlates perfectly with venal self-interest and betrayal and theft. There are NO failures of correlation. None whatsoever.

As for Clinton, he was punished, in the zone that applied to his sins. He sinned in the area of behaving in a respectable way (though none of his sins in that regard remotely matched those of Giuliani or McCain etc.) He was thereupon punished in the area of public humiliation and lessened respect, which certainly hurt.

His sins were NOT in the area that we hired him for, management and policy and doing his job. Never, ever, ever was a single fault proved in that area, for him or any of the people he hired on our behalf. That is ever ever ever ever ever...

Hm... failures of personal behavior, that are laughably small compared to Republican moral peccadilos (yet they are forgiven when they repent!) While the democrats are white as driven snow with regards to actual public performance of duty... and the GOP is almost pure, jet black.

You cannot evade this, Rob. Nothing that I said was even remotely an exaggeration. Never in all of your life have you had laid before you such a perfect dichotomy, consistent with all facts.

If you ignore it, well, then (despite the fact that I like you a lot!) what kind of citizen are you?

Tony Fisk said...

Sure, people can learn from their mistakes.

If they first admit it was a mistake. (and, as David says, have these lads ever?)

Furthermore, the times don't really warrant the 'student' being allowed another crack for the sake of proving him/herself... the icebergs are looming over us, and the methane's fizzing underneath.

Rob said...

The Republicans NEVER repent and always seek the same scams, over and over again.

David, I have accepted that the current crop of Republican leaders have betrayed us all. It's my hope that my Republican friends will begin to see that, now that they've moved to nationalize double-digit percentages of the economy.

And, I am distressed and deeply leery of the bailouts, to the point where I hate the idea more completely than you have probably imagined.

It is a *small* criticism, not intended to refute your case! An adjustment to the case you've made against them. If you can surround and consider the notion of personal repentance, and demonstrate how these *current* leaders are unrepentant RINO's, if you will, your case is stronger, not weaker.

It would merely be a rephrasing of the case, directed at people who cannot accept your sweeping generalizations.

I simply expect better from the author of Foundation's Triumph than jingoism and sweeping generalizations.

Such things are far too simple. (Though, as October wanes, I fully expect you and encourage you to pull out all the stops and play your tune as loudly as you can.)

My family and I know, personally, far too many Republicans, including Republicans in office, for your case to be that general. Refine it!

For myself, David, how could I possibly stay around *here*, with so many quasi-marxist hangers-on and gibbering loonies, if I didn't at least stipulate *some* of the case you've made? If not for an opportunity to dialogue with one of the most literate and optimistic futurists alive today?

Let me share with you some of the fruits of my ostrich efforts, as a further plea for refinement.

I have attempted every line you recommend. The general response has been "Obama is a marxist, not to be trusted."

The case against Obama "as marxist" it marvelously tenuous, but my family and friends are clinging to it, and openly fearing the perceived danger, more stubbornly than I could have dreamed.

Help me refute that, and I might stand a chance at getting them to view Obama as more than a threat to their well-being, once he takes office.

As for the *vote*, though, we here in Washington State face a nearly opposite problem: the Democrats are about to obtain veto-proof supermajorities in the state house and senate.

For that reason alone, whatever, I'm compelled to support Dino Rossi (the guy who lost to Christine Gregoire in a weird inside-out repeat of Florida's 2000 recount crisis), and Republicans in the Senate and House in Washington (with one exception from my home District), in order to create and keep local balance.

But for President? Please. McCain cannot win Washington without a deeply demagogic October Surprise that he won't get. The Puget Sound megalopolis rules here, and it's winner take all.

The short answer is that my vote for President won't count. And your case against Republican hegemony is completely eclipsed by people like the editors at WorldNetDaily and by radio hosts like Mark Levin.

Good grief, man: I want your arguments *better* than they are, and I've been behind the lines with Conservatives all my life! Trust me on an angle or two, willya?

Jesse said...

Clinton?

I care a hell of a lot more about him ramming the destruction of Glass - Stegal through congress, bending Democrats ears untill there was "Veto Proof" majority he himself created in a grand buck-passing effort than I do about Monicas dress stains.

"I don't give a damn who they're screwing in private, I want to know who they're screwing in public."

He ain't clean on this one. He ain't even close.

Rob said...

*Sigh*. I wish I were a better communicator.

The point about Clinton was not about Clinton. It was about realpolitik and the grubbing for power.

I lived through all eight years of Clinton. I was there and saw the Social Security Administration become helpful, almost on a dime. There were improvements like that across almost all of the Administration's Departments.

And there was, whoever is responsible, fiscal responsibility.

I long for that back. I don't think McCain can bring it. I think he'd try and I think he'd be suborned. I expect Obama will have a better chance of it.

But as I put forth before, my vote for President doesn't really count. Not in a winner-take-all electoral slate.

David Brin said...

Rob, there is plenty you can do, even in Washington State. And you say you are engaging your ostriches. That makes you NOT one, yourself.

Good on you, and no offense intended!

Still, Do not fear supermajorities of democrats. Let tham have their time in the sun. They'll need it, in order to clean up. And the GOP desperately needs a TOTAL shellacking, for republicans to take seriously the need to reform their own house, bottom up.

Have faith. The dems will fracture and self-limit. They always do.

And there is too much good in the DEEPER parts of libertarianism and conservatism, to keep it down for long.

Yes, yes. Marxism is typical. Like "He's a Muslim." These are the mantras chanted by people with their eyes scrunched hard shut while covering their ears and screaming "Nah!" in order not to hear. They have surrendered patriotism on the altar of ego.

I have done my best to supply "ostrich ammo" at:
http://www.davidbrin.com/ostrich.html

and at:
http://www.davidbrin.com/ostrich2a.html

All else that I can recommend is buying a copy of Obama's book and reading it aloud, chapter by chapter, to your friends, on the rationalization that you all might as well get to know him.

Ask them to name a time when democrats ever asked for $2,300 from every man, women and baby, to hand DIRECTLY to their rich supporters.

Is it "marxism" when the stock market and budget and small business ALWAYS does better under dems. And that is always. Always.

But enough. We don't have time, anymore, for ostriches.

TwinBeam said...

What if we did nothing about the current crisis? Not advocating that, just pointing out that the sensible position is to start at "do nothing", and expand from there as necessary, rather than start at some massive bailout scheme whose value is unknown.

Here's a blog with with what appear to be useful facts - anyone care to dispute them?

If those figures are correct, we could buy out all 3 million sub-prime mortgages for under $600B - or simply help out those borrowers for maybe $200B. Given also the "stay out of jail free card" written into the bailout, it's pretty clear that it's a brazen and massive robbery attempt.

Take the 9% of sub-prime-loan homes that aren't owner-occupied off the market for a while, and home prices might bottom out and maybe even recover, which would be enough of a bail out for the mortgage bankers as far as I'm concerned.


On a different vector - has anyone thought about what's going to happen to tax revenues next year? The US stock market was capitalized at $15-25 trillion, and has lost roughly 15%, or about $3T by my calculations. I found a source that says $4T.

That'll offset $3-4T of investment gains over the next few years, costing the US on the order of $500B in income tax revenues. (Some of the losses are on tax deferred accounts like 401Ks, some will offset long term capital gains rather than short term, etc.)

I'm not sure how to even start calculating tax revenue losses from derivative-based investment losses, but that'll likely be even bigger if "nothing" is done.

Even if we spend only $700B on a bailout, we're going to end up adding around $1-2 trillion to the US debt over the next two years. That's approaching the magnitude of all individual income taxes. I.e. it's BIG.

Interest rates will then soar as government is forced to borrow very heavily (AND has to cut back on spending - no more either/or there), further hurting all markets and depressing business activity, so we'll probably see another $1-2T of tax revenue reductions over the following couple of years. And don't forget we're coming up fast on all those other government finanical trainwrecks that have fallen out of the news lately.

We'll likely see a surge in inflation (Yep, stagflation again - maybe Obama will get blamed this time), as the politicians realize they can stem some of the losses to derivatives by simply inflating the dollar, to raise nominal asset values.


Maybe we should simply "print" enough money to cause a quick surge of inflation, ending the "crisis" by devaluing all the loans? I'd guess we'd only need to issue about $100B - we could create and spend that to save sub-prime borrowers with low interest loans. And it'd probably be fair to argue that we've artificially PREVENTED inflation that should have happened, by borrowing so heavily - inflating the money supply now would merely be a correction.

Rob said...

Heh. Moments before you replied I got a call from an earnest young man who was fundraising for the State Democratic Party.

I told him I would discuss things with my family

But I could not disagree with you more about the safety of a Democratic supermajority in Washington State. If they were actually permitted time in the sun, as you say, they would burn GOPpers here to a point where resentments would boil over.

I am as confident as you are about the swinging political pendulum, but there are conservative social issues in Washington I don't want to see overturned in a Dem supermajority, any more than I'd want other things overturned in a GOP supermajority.

Consider that Washington is one of only a very few progressive states with a DOMA, and also a domestic partnership registry which actually has some teeth. A Dem supermajority here would shatter that carefully compromised solution to one of our society's most vexing constitutional problems.

It's worse in California, where judges have taken the same issue and made half your state frothing angry, while the other half stomps on *them* with glee.

My deepest concern is for the Union, fundamentally. For that time when Conservatives finally give up in anger at hyper-progressives and turn reactionary, pulling their kids from the public schools. Three human generations later, the schism would be great enough to shatter us.

For that reason, among others, Washington needs a strong GOP minority party, able to sideline legislation. Or veto it.

Plus, the two Republicans running for State House and Senate in my district are not loonies. Without that comfort, I'd be voting a straight ticket.

David Brin said...

Rob. Yes, I believe that the Washington State GOP has been forced to have some non-loony officials. Indeed, I do not mind you supporting what might become the farm team for a totally upended Party.

Still, remain wary. I remain to be convinced that there's anything worth salvaging. One benefit of a blowout -- every Republican billionaire will announce his own "New Alliance" and one of them might find just the right combination to attract all the sane libertarians and decent conservatives. If so, they might choose to EITHER start a new party or go after re-taking the GOP.

The latter seems a lost cause. You saw the folks at the RNC in Minneapolis. You saw their eyes. They'll never let go. Ever.

It will have to be a new party. Ideally, a pragmatic and interesting and honest (!) counter-poise to the democrats. I'd love to see it. In fact, creating it might be the most dramatic and helpful endeavor in American political life, in several generations!

But I have to think of what our children need from us, right now. And for their sakes, our only course is to crush this corrupt, immoral, hypocritical, treasonous and deeply evil Were-Elephant into the ground.

If they were alive today, Teddy Roosevelt and Dwight Eisenhower would hold it down, while Abraham Lincoln and Barry Goldwater pounded a stake deep into its undead, vampire heart.

Rob said...

Regarding convention delegates, what else would you expect? These people were hand-picked McCain supporters, elected delegates because, well, they support McCain!

The same was true about the Dem convention, though I was brow-furrowed when I saw Pelosi give no time for dissent when Clinton called for that acclamation voice vote.

No matter. This election is still Obama's to lose. It would be better if his people wouldn't take Limbaugh or people like him out of context, because that is fueling my ostriches.

Robert said...

Dr. Brin, I do believe you are approaching the ostrich situation from a slightly too-steep angle. The problem with this is that you risk bouncing off the atmosphere or entering at too steep an angle and burning up. What you need is a tangential angle to slip right into the atmosphere of the ostrich's beliefs and safely land.

Recently I have had a partial success with one of my ostriches. Unfortunately, my parents aren't going to change their view. My dad is a firm believer in gun rights and the NRA and refuses to see Obama as anyone but a gun-hating liberal who'll ban every firearm in creation. My mom... doesn't trust Obama at all. Fortunately, both live in a heavily Democratic state and their votes are more of a form of protest.

It's a protest I fully understand. I used to do it myself when I lived in that state. I considered myself part of the "loyal opposition" who felt the Democrats needed to be balanced by another party.

No. The ostrich in question is one of my best friends, who is a registered Republican. Last night, when talking on the phone with him, he told me he was so disgusted with the Republican party that he was going to switch his registration to Independent. He refuses to vote for Obama. So instead, I've been urging him to vote for a third party candidate.

With many ostriches, inertia and resistance to change is too ingrained. We're not going to get them to vote for Obama. Instead, we need to use politi-jitsu on them and redirect them to vote for anyone but McCain. Urge these ostriches to vote for a third party candidate. They know that the Republicans are currently rather vile and untrustworthy... but they are entirely too afraid of the Democrats to vote for them.

The alternatives are getting them not to vote, or getting them to vote for a third party candidate. And if a third party candidate shows enough strength (at the cost of McCain), then perhaps the very political structure of this country might shift... and the Republicans may find themselves disenfranchised while Constitution Party or Libertarians start becoming a viable presence for those conservatives who cannot vote Democrat... but are fed up with the Republican party.

The other alternative is encouraging them not to vote. But I don't think I'd go that far. Our vote is sacred. Telling someone not to vote... is telling them they don't have rights.

------

On another aside, Senator McCain dumped David Letterman and The Late Show to "go back to Washington D.C." Except... Letterman found out he was giving an interview to Katie Couric. Needless to say, Letterman was less than amused and was rather vocal about it.

I think this one line might very well cost McCain the Presidency:
DAVE: Are we suspending the campaign because there's an economic crisis or because the poll numbers are sliding?
PAUL: Oops!

Suspending the campaign... something doesn't smell quite right there. This is the ultimate Hail Mary pass. But there's no one in the end zone to catch the ball, and only one person running desperately to reach it in time. Unless Obama blows it big, I seriously think McCain's chances after the Late Show tonight will drop to 10%. If that.

Robert A. Howard, Tangents Reviews

zorgon the malevolent said...

Robert and travc asked "What hapopens if we do nothing?"

As Dr. Brin has pointed out, everyone is reluctant to say those magic 3 word "I don't know."

Well, at this point I have to say 'em. I don't know. Nobody knows. We are in unknown territory here.

We can say a few elementary things, but beyond that, it's guesswork even for the economists.

Direct comparisons to the Great Depression don't seem accurate. There was no FDIC deposit insurance when the Great Depression hit. That meant that a run on one bank could spread to the rest of the banking system and potentially take down the entire banking system. That can't happen today because each bank deposit is federally insured for up to $100,000.

Second, when the Depression started, the federal reserve tightened liquidity (apparently in order to reduce deficits, which would thought to be the thing to do back then to prevent further harm to the U.S. financial system). Today we're doing the opposite. You could argue that the governors of the Federal Reserve didn't know how to deal with sharp downturns because the Fed was only 16 years old back in 1929. Today, economists have a lot more experience using the Fed to adjust our economy, so we use its power more wisely.

Third, the Depression wasn't a purely monetary crisis. The Smoot-Hawley tariff got passed in 1928 and triggered retaliatory int'l tariffs from Canada, Europe, etc. This prevented int'l trade from bailing out the U.S. economy. Today, we're not stupid enough to set up those kinds of punitive tariffs, so a surge in int'l trade will likely take up some of the slack during this fiscal crisis.

Fourth, the U.S. government made up a much smaller part of the American economy back in 1929 and the Hoover administration set up very few federal programs to help bridge the gap during the downturn. Today, 25% of all employees in America work for the federal government, and we have a lot of federal programs to prevent people from starving to death or becoming completely homeless.

On the other hand, we still have people losing their life savings today. They're losing money invested in the stock market, not in banks, but it's still their life savings. Tent cities are sprouting up all over America because of the foreclosures, so we're getting eerie echoes of the Great Depression.

Economists seem divided on whether to do a bailout at all. 122 economists have signed a letter to Pelosi and Byrd opposing the bailout. A professor of economics at Duke says the current bailout bill will work, but the cost is too high and it's unnecessary. Warren Buffet says the bailout would buy securities at far too high a price. He claims their market value is far below the bailout price, and Buffet says the federal government should buy the securities at market value.

Other economists at Columbia university and the university of Chicago have provided alternatives to the current bailout plan. Not as simplistic as the naive idea of buying up the mortgages and refinancing them, these alternative plans involve buying equity in the failing banks themselves in return for the rescue package, or using alternative methods for the banks to raise capital, like zeroing out their dividend payments and issuing new equity backed directly by the government. Link.
On the other hand, banking expert Robert Ely claims a bailout isn't needed at all -- according to him, this crisis can be handled internally by the banking system as it exists right now.



One problem: nobody knows what the shadow banking system is really worth, so no one knows how big the losses really are. Estimates of the size of the shadow banking system run from 450 trillion to over 600 trillion. This article by a leading money manager claims the total value of current derivatives runs to 600 trillion, compared to the total value of the world economy at 450 trillion. This article claims there are 450 trillion dollars in credit default swaps oustatnding. Various other economists estimate the total value of endangered derivatives at 516 trillion.

The underlying value of real assets like office buildings and strip malls and houses to got foreclosed have a huge multiplier effect on the losses in derivatives, typically between 30 and 50 times the real asset value. What's not clear is how much that works in reverse. Does a decline in the value of derivatives affect the value of real assets -- and if so, how much? Economists know there's some relationship, because if enough derivatives go bust, the banks go bust, and in that case whole swaths of foreclosed office buildings and strip malls and houses become worth much less, and when that happens, the entire real estate market takes a dive. So it has a general effect of property values worldwide, mainly because property values worldwide have gotten way out of line with reality ove rthe past 20 to 25 years.

However, the blowup in the derivatives is also likely to make corporations and other tangible assets worth less, because gonig forward, there will be much tighters restrictions on loans by banks. Not nearly as many laons will be made in the foreseeable future, and many businesses that could get loans over the last 15 years will not be able to qualify under the new stricter lending stnadards going forward. Since businesses are valued at multiples of their growth rate, and since businesses will grow at a much slower rate in the near future when they're not able to borrow as much money from banks, this suggests that the entire value of the U.S. economy will decline as a result of the derivatives blowup. How much, and for how long, economists don't yet know.

We're in unknown territory here because the entire derivatives market is new. Most of these exotic financial instruments didn't exist 15 years ago. The world "shadow banking system" based on these derivates like CDSs and CDOs has mushroomed enorusmly ove rthe past 15 years, and it's completely unregulated. So we've never dealt with a situation in which a gigantic pool of securities like this blew up and vanished. There's no precedent for predicting what will happen.

The general consensus among economists seems to be that it won't be as bad as the Great Depression, but estimates of the severity of the coming recession vary widely. Right now, nobody knows.

Dave X said...

Dr. Brin,

Your essay on stipulation was the first thing I thought of when I read about Obama contacting McCain.

However, I'm afraid I agree with the commenter on http://talkingpointsmemo.com/archives/219361.php -- McCain acted dishonorably and politically to quash significant stipulation.

And McCain's move to postpone the presidential debate to conflict with the VP debate is also political whackery.

We live in interesting times.

David Brin said...

I agree, Robert, and I have no problems with boosting the numbers for the Libertarian Party -- though I despise its candidates, deeply. He is a true monster. But if the LP were ever to crest above 10%, they would be forced to become a more pragmatic bunch And I would love to see THAT kind of kook in the opposition, instead of the kinds who have been incharge.

Re Stipulation, I'm glad BHO made the offer. It is noble and looks same.

McC flees to DC in order to look "responsible"... but any independent/undecided has to see he's ducking a debate he'd lose.

BHO has to go to DC too. But he also has to say -- even running for president, I have a better Senate attendance record than McCain.... who has the worst.

Finally, I don't understand everything in the bailout.

But one senator ONE! should stand up and fillibuster... and keep talking until one demand is met. Warren Buffet must be put in charge of the bailout.

No Buffet? No deal!

(viral it....)

tintinaus said...

One of the questions I have in the McCain - Letterman brouhaha is: Is it good or bad that McCain is apparently a really bad liar?

daveawayfromhome said...

Maybe I've missed something here, but the reason that Paulson et al seem to be giving for why the banks must be bailed out is so that the credit market will ease up, so that after the buyout then the banks will have money to lend. But banks and poor lending are the cause of this mess in the first place, and I'm not sure I trust a failed bank to make better decisions in the future.
Why not simply have the Treasury set up a credit line for whover needs it, loaning money where needed (and prudent) and letting those who made bad decisions live with them?
If the market urgently needs loans, let's skip the middleman and give them loans directly, rather than buying worthless assets so the banks can make the loans (and the profits) with our money.
Let the bad banks collapse. I fail to see how giving them pots of our money will motivate them to clean up their act. More likely they'll just keep screwing up, safe in the knowledge that we'll someday do it again.
Best part: The U.S. Treasury gets the interest on the loans, rather than the banks, which can then go towards repaying all the other things that we have been conned into paying for these last 7 years.

David Brin said...

Um... you're right!

If the problem is lack of liquidity and lending... why not have the US government lend out a few hundred billion dollars, directly, to worthy borrowers, at decent rates?

Rocky Persaud said...

Where would people line up for their loan... Pennsylvania Avenue? Wouldn't the gov have to create a bricks-and-mortar structure all over the country and hire people to staff it?

Rob said...

The federal government already uses registered realtors for managing HUD properties, embarred lawyers to argue its legal cases, and certificated doctors, pilots, and hairdressers to take care of its military.

The idea of coordinating sensible refinancing through Treasury is merely an extension of that, done through....

...mortgage brokers? A whole cadre of people now out of work who might have expertise in arranging things for people, in exchange for a commission or salary?

Is that an approach?

zorgon the malevolent said...

Brin:

The answer is that the main institutions in need of liquidity right now are the banks, and they'd simply slurp up the loans and use 'em to buy T-bills. It wouldn't help the liquidity crisis. That's what happened in Japan. I keep telling people those kinds of simplistic "solutions" won't work, but no one listens.

Head of Congressional Budget Office says bailout could make the crisis worse.
Link.

zorgon the malevolent said...

George Soros comes out against the bailout.
Link.

So does Krugman.
Link.

opit said...

I can't touch most of this analysis and won't try. Dynamite threads BTW.
The people Bu$hhCo put in charge are loyal ( to GOP ) nincompoops. Do you any way to ensure dysfunction better than putting idiots with an agenda in charge and penalizing those who try to set things straight ?
http://www.dailykos.com/storyonly/2008/5/16/1209/85649/949/516706
And on the question where does it stop ?
http://justanothercoverup.com/?p=545
We are none too sure.But hey, there are other interesting developments
http://verbena19.wordpress.com/2008/09/24/election-news-harpers-new-deep-integration-plans-for-canada/

NoOne said...

Buffet's role in this may be shadier than you think according to David Sirota.

Rob said...

David,

William H. Gross has offered to manage the bailout for free. Is this the kind of thing you had hoped Warren Buffet would do?

Jim said...

David,

http://freakonomics.blogs.nytimes.com/2008/09/17/a-bumper-sticker-that-saves-lives/index.html?ref=automobiles

is more transparency!

Jim

TwinBeam said...

Quick pointer to an interesting piece at the WSJ that suggests that at least part of the problem may be something called "Mark to Market", which forces banks to undervalue their mortgages - even if most of those mortgages would be perfectly safe and paid off if held until maturity.

I.e. maybe the crisis is only a crisis (as opposed to a slight down-turn in profits for those banks holding the relatively small number of bad loans) because government accounting rules force it to be so.

Mark to market was set in reaction to a previous crisis (S&L), trying to force more honest accounting on banks - but it may be too rigid.

Rob said...

Newt Gingrich agrees with revisiting "mark to market".

Stop listening after Hannity comes on; trust me: his questions are just as fallacious and leading as ever.

Here's another report of his deep opposition to the bailout plan as written, by a Republican.

Stefan Jones said...

Thanks to everyone for the interesting stuff about this issue.

I am glad we're not rushing into this. I'm glad people from all over the political spectrum are coming up with ideas.

And I am very glad we're not letting Bush and his cronies scare us any more.

zorgon the malevolent said...

This doesn't sound good:

China orders its banks to stop interbank lending to U.S. banks.
Link.

700 billion dollar bailout figure "not based on anything." Translation: Paulson and company just pulled that number out of their ass. Could be orders of magnitude higher...or lower.
Link.

Twinbeam:
"Mark to market" is a symptom, not the disease. The reason for "mark to market" is that nobody knows what all these goddamn exotic derivative financial instruments are actually worth. So "mark to market" gets used to guesstimate their actual future value for accounting purposes.

This would work for ordinary derivative instruments like stock options, where the future value is reasonably clear. But all these damned exotic new financial instruments like credit default swaps react in such complex ways to rising or falling values of the underlying mortgages, that it becomes impossible to predict how they'll act years in the future.

The real systemic solution here is to both cut back on "mark to market" accounting and get rid of these exotic new financial instruments entirely. This won't magically erase all the debt that's been built up, but it will prevent this kind of crisis from recurring.

CDSs? Eliminate 'em. CDOs? Get rid of 'em. There should be a simple rule: if the future net discounted value of the derivative can't be accurately predicted 10 years down the road, make it illegal.

Second, we need to unleash the antitrust dogs. This is (once again) a problem entirely caused the current maladministration refusing to enforce the law. This crisis came about in part because institutions got too big to fail and had to be propped up. Well, if they're too big to fail, they're too big to exist. There is no reason why we should have only 2 internet providers in most metropolitan areas in America. Unleash DOJ antitrust. Break 'em up. There is no reason why the United States should have only 4 major publishers printing every book. Unleash the antitrust dogs. Break 'em up. There is no reason why America should have only 4 major record labels releasing every CD. Unleash the DOJ. Break 'em up. There is no reason why Microsoft shold be allowed to try to force a worthless useless piece-of-sh*t operating system like Vista on the public despite massive consumer revulsion. Unleash the DOJ. Break 'em up. There is no reason why every major movie studio is also allowed to owned all the major movie theater chains in America and to manufacture and distribute all the DVDs in America. This is crass anti-competitive monopoly at its worst, or tetrapoly if you prefer, or a gigantic scale. Unleash the antitrust lawyers. Break 'em all up.

Right now, major swaths of American society operate under territorial 3-way or 2-way or 4-way monopolies like rackets under Al Capone in old Chicago. Comcast gets the west coast, Adelphia gets the east coast. It's like the mafia. These giant monopolistic companies need to be broken up and made competitive again.

Nobody seems to look around and realize how grossly abnormal it is for all the movies in America to be divided up between 4 major studios which also own the 3 major theater chains in America and also own the 5 major nationwide cable TV companies in America and also (in the case of Sony) manufacture 1/3 of all the DVD players sold and 1/3 to 1/4 of all the new DVDs manufactured and sold in America, and now 100% of all the new blu-ray players and blu-ray discs sold in America. That's just so grotesquely anti-competitive, it's like a satire out of some Soviet propaganda piece about how evil capitalism is.

Once these giant monolithic vertically integrated monopolies like Citicorp and Time-Warner and Sony-Columbia get broken up, bailouts no longer present a problem. Individual competitors can be allowed to fail because another competitive investment bank or nationwide mortgage underwriter or cable TV provider or internet provider or whatever will step in and take its place. Once existing antitrust laws get enforced, we won't need bailouts. The market can take take of these problems itself. That's what I mean when I say that after Obama gets elected, you'll be shocked at how much better things will get, and by how fast they'll get better. As soon as we actually start enforcing the laws the current maladministration has refused to enforce, the system will start to correct itself.

Cliff said...

That means actually offering up some time and money, for the survival of a civilization that’s been good to you.

I have been donating this campaign season. Not to Obama, but to various congressional candidates like the New Mexico Udall (I can't remember his first name, there's a passel of Udalls in politics).
I've also given money to ad campaigns against the vile Blue Dog democrats.

And I'm joining a meetup of Obama supporters here in Phoenix. Any suggestions on how to undermine McCain on his home turf? (I see a lot of Obama and Ron Paul bumper stickers, so it may not be as futile as you think.)

David Brin said...

Blue dogs ain't the worst thing. They are good to point out to goppers.

I agree that we have no idea. The $450 trillion in these instruments... aren't they supposedly set up so they largely cancel each other out? Wasn't that the original idea?

If a million mortgages are propped-up... and maybe just $100B of derivatives are negative auctioned to the lowest selling price bidder...shouldn't that allow a cascade of real pricings to converge on the instruments that remain outstanding?

Among the demos' mincing, half-step measures to ammend this horrid proposal, the negative auction requirement (if it is still there) is best. Followed by the "lets do it $100B at a time."

But needed is not only to point out the monopoly aspect (zorgon's pt) but also the list of maybe 5,000 INDIVIDUALS who will benefit most. It shouldn't be hard to list them.

Also... a provision liberating losers to sue the CEOs who left Lehman etc a year or two ago with diamond-platinum parachutes.

Cliff said...
This comment has been removed by the author.
Cliff said...

I'm sorry, but I'm firmly with Greenwald on the Blue Dogs. Politicians that claim to be Democrats but continually side with the worst president in the history of the United States?
Pretty bad in my book, considering everything else going on.

They're a big part of the reason why this Congress has been utterly ineffective - they keep siding with the GOP and blocking Democratic initiative.

And I'm not sure what goppers are, or why pointing the Blue Dogs out to them is useful.

David Brin said...

I retract. I was thinking of the Blue Somethingelse... a bunch of retired combat vets like Eric Massa, who have taken on incumbents in GOP districts. Many of them are "conservative" in some classic sense. But they are genuine democrats.

David Brin said...

Still waiting for any significant number of you guys to digg and "friend" and comment at:
http://open.salon.com/user_blog.php?uid=4802

or
http://open.salon.com/content.php?cid=21990#post_comments

In fact, have any of you digg'd HERE??

David Brin said...

Any of you old china hands? Know some Mandarin. Know your way around Shanghai? I have this new story....

Escher-Reutersvard said...

I want to grow your Salon comment-cascades, but I don't know what to add that isn't here. I'm jammed frozen and my guilt accumulates.

Oh, here might be a useful motivational "ostrich-rouser" recruitment handout.

David Brin said...

A cute NYT column imagining Obama getting advice from fictional (West Wing) president Bartlett:

BARTLET GET ANGRIER! Call them liars, because that’s what they are. Sarah Palin didn’t say “thanks but no thanks” to the Bridge to Nowhere. She just said “Thanks.” You were raised by a single mother on food stamps — where does a guy with eight houses who was legacied into Annapolis get off calling you an elitist? And by the way, if you do nothing else, take that word back. Elite is a good word, it means well above average. I’d ask them what their problem is with excellence. While you’re at it, I want the word “patriot” back. McCain can say that the transcendent issue of our time is the spread of Islamic fanaticism or he can choose a running mate who doesn’t know the Bush doctrine from the Monroe Doctrine, but he can’t do both at the same time and call it patriotic. They have to lie — the truth isn’t their friend right now. Get angry. Mock them mercilessly; they’ve earned it. McCain decried agents of intolerance, then chose a running mate who had to ask if she was allowed to ban books from a public library. It’s not bad enough she thinks the planet Earth was created in six days 6,000 years ago complete with a man, a woman and a talking snake, she wants schools to teach the rest of our kids to deny geology, anthropology, archaeology and common sense too? It’s not bad enough she’s forcing her own daughter into a loveless marriage to a teenage hood, she wants the rest of us to guide our daughters in that direction too? It’s not enough that a woman shouldn’t have the right to choose, it should be the law of the land that she has to carry and deliver her rapist’s baby too? I don’t know whether or not Governor Palin has the tenacity of a pit bull, but I know for sure she’s got the qualifications of one. And you’re worried about seeming angry? You could eat their lunch, make them cry and tell their mamas about it and God himself would call it restrained. There are times when you are simply required to be impolite. There are times when condescension is called for!

OBAMA So what about hope? Chuck it for outrage and put-downs?

BARTLET No. You’re elite, you can do both. Four weeks ago you had the best week of your campaign, followed — granted, inexplicably — by the worst week of your campaign. And you’re still in a statistical dead heat. You’re a 47-year-old black man with a foreign-sounding name who went to Harvard and thinks devotion to your country and lapel pins aren’t the same thing and you’re in a statistical tie with a war hero and a Cinemax heroine. To these aged eyes, Senator, that’s what progress looks like. You guys got four debates. Get out of my house and go back to work.

escher-reutersvard said...

No Mandarin. Would an Okinawa habitue substitute, to start?

escher-reutersvard said...

That's why they call it the New York Times Manual of Style and Usage, folks!

Persuasive!

William_Shatner said...

@Rob.

"Learning from your mistakes" doesn't cut it when; 1) You've lost a few hundred trillion dollars. 2) When better people are available who didn't make these mistakes in the first place and this is kind of important not to screw up. 3) You haven't repented your previous crimes or talked enough about what you did wrong that would lead someone to believe you learned something.

It appears that everyone is in alignment with these points I'm making.

>> Democrats did not turn a blind eye to Clinton. Let's not rehash this nonsense that any many would lie about on public TV, and is certainly a crime that 90% of those with gonads commit in Washington -- just nobody has spent $50 million to find this out.

>> You seem to be looking for splinters in the eyes of Democrats. Accept that our current Republicans may be irredeemable and look at where it may be that the philosophy was wrong -- or the implementation.

I simply expect better from the author of Foundation's Triumph than jingoism and sweeping generalizations.
Please. You seem as unable as the Republican leaders to admit what is wrong. There are people who should be going to prison on this issue (if it were the ONLY crime committed) -- much less be sitting at the table to decide what to do about it. Their priorities are; saving their own asses, and making sure their financial buddies do OK.


@ David Brin.
Have I insulted you such that you no longer read my posts?
That $450 Trillion figure is from 2007. NOW, it is more like $1,200 Trillion -- as I posted on the last thread. It has gone into geometric progression mode, because the only way to offset a failing fantasy is with a bigger one. Perhaps if it were allowed to spin off in it's own "Fantasy Wishes and Caviar Dreams" dimension and form a new reality.

That's why no bailout can possibly solve this and anything we throw into this black hole will be lost forever -- or at least end up in an offshore bank account.

Please use my quote; "This bailout is the equivalent of the minstrels playing, while the upper class got on the lifeboats of the Titanic." You can attribute it to the Fake William Shatner. mpjstuff AT gmail.com

@Travc,
You are giving me some hope. There is a real possibility that this cataclysm will be more of a blast to the parasites than the peons. People still have to eat, there are still THINGS that get made and done -- I'm wondering if the derivatives market actually have a DEBIT to our CREDIT -- or is it all bets on bets? I never put my money into a derivative. There are still corporations and they have stock. The derivatives are BASED on financial instruments BASED on something that is almost real.

But it is the financial magicians, the hedge funds, and the uber rich that played here.

It has been a financial drain, sucking up the air in the room for labor for a few years.

If I were emperor for the day, I would just make three commandments. "All our laws on finance and trade shall heretofore go back to 1979. All people appointed to Government by the Bush Administration, are hereby relieved of duty, and should put themselves in the custody of the Truth & Reconciliation Department that I'm forming today, until such time as they can prove their innocence and qualifications for a position in government -- anybody fired by Bush, will be reinstated with back pay, and moved one grade higher. My third decree, is that we declare all Derivatives null and void, as anyone involved in them should have known better, and this is the wages they earn off greed.

It basically is, the greed of the super wealthy vs. the preservation of the prosperity for the entire world. If you try and REALIZE the Derivatives market -- or monetize it, you will have to put everyone in indentured servitude for 200 years, even if you charged a -5% interest. You could then start a new currency.

But really, who do you PAY for a Quadrillion Dollars give or take a few hundred Trillion dollars? How is it the debt of anyone who works for a living?

>> My vote is with William Buffet as well. And add in Stephen Hawkings because he understands the Big Bang inflation model.

William_Shatner said...

David Brin said...

Um... you're right!

If the problem is lack of liquidity and lending... why not have the US government lend out a few hundred billion dollars, directly, to worthy borrowers, at decent rates?


There isn't a liquidity problem. Look here -- they are deliberately draining liquidity from banks; http://market-ticker.denninger.net/archives/590-FLASH-Fed-Speaking-Out-Both-Sides-Of-Mouth.html

But the point is essentially correct; There is a MARKET problem. If there aren't people with money to buy homes and things -- then no bank or other industry is going to invest in a business that services them.

Bailing out banks is a Supply-side solution while bailing out people is NOT Socialism, it is a demand-side or Market driven solution. It is also, much saner.

William_Shatner said...

David Brin said...

Still waiting for any significant number of you guys to digg and "friend" and comment at:
http://open.salon.com/user_blog.php?uid=4802


>> Sorry, I'm on digg -- I know how to recommend a story, but not how to "digg" a website.

I've tried to push up numerous stories, but unless you are one of the "popular" diggers, it is a complete waste of time.

I admit ignorance in this area. I will comply with your edification.

Travc said...

Zorg, I'm with you on anti-trust, though maybe from a different angle.

Allowing an enterprise to become a corporation is a privilege not a right. If an enterprise does not have a simple clear business model with at least an arguable public benefit, we have no reason to grant them special status. Let the owners take 100% liability.

The idea that we grant charters to "holding companies" is simply absurd IMO.

If we had a "Sony Home Electronics" as an independent entity which sold 50% of DVD players, ok... not great, but maybe they really do make the best DVD players (for now)... watch like a hawk for anti-competitive behaviour. Letting an uber-company like Sony Entertainment be so huge in so many different markets and 'vertically integrate' is just wrong.

Vertical integration is horrible. Companies will naturally form relationships and alliances, but if they are separate entities we can at least watch them and make sure that they aren't playing favorites with each other too much. There is a real transparency angle: we can observe (imperfectly) the transactions between discrete companies, but letting them be under the same umbrella corp makes anti-trust oversight neigh impossible.

Travc said...

RE: "Blue Dog" Dems....

Digby (or dday?) made the distinction between...

Blue Dogs: 'real conservative' Dems
Bush Dogs: 'movement conservative' Dems (aka, GOP tools)

I thought that was a good one.

There is also the "yellow dog Dem" thing, which IIRC is a DINO supported by people who just vote "D" regardless of the candidate.

Tony Fisk said...

I've given you a tag on Delicious. It seems to be the only one so far...

(On a brighter note, this blog has 164 tags)

David Brin said...

Russ Daggatt at his best! Here's some excerpts:

Yesterday, McCain announced that he was “suspending his campaign” (although he continues to run attack ads in key battleground states, his campaign surrogates continue to fill the airwaves, his fundraising operations and campaign offices are all still up and operational, and he spent the day with his campaign manager – so it is not really clear what he has “suspended”).

He also proposed that tomorrow’s debate with Obama be postponed so that they could together solve the country’s financial crisis (more on that below). He tried to portray all of this as rising about partisan politics, but it was anything but. By pulling this stunt unilaterally rather than in concert with Obama, McCain was seeking to shift the agenda from a focus on the financial mess created by Republican antipathy to regulation to McCain’s own HEROIC LEADERSHIP in forging a political consensus behind a bailout plan. Bush became an accomplice in McCain’s ploy by inviting him and Obama to the White House today – an offer Obama, of course, couldn’t refuse.

Events began yesterday with Obama calling McCain at 8:30 in the morning to propose that they issued a joint statement on principles for any financial bailout plan. This was done privately so they could work something out and announce it together. Instead, McCain huddled with his advisors and made it … ALL ABOUT HIM (of course). In other words, Obama was attempting to privately orchestrate a bipartisan response, but McCain chose to unilaterally trumpet his own HEROIC LEADERSHIP. McCain is the White Knight who will ride into Washington and personally save the country from economic ruin. All while being “above politics” and “bipartisan”, of course.

Oh... McCain is not on the Senate Finance Committee which, along with the House Financial Services Committee, is negotiating the bailout deal with the Treasury secretary Paulson. The chairman of the Senate committee, Chris Dodd, said that he had not heard a peep from McCain all week (while Obama had been in contact with him throughout the week as well as with Paulson and Fed chairman Bernanke).


McCain also has the worst attendance record in the Senate, by far.He has missed 64% of all Senate votes.  (The next most absent, Tim Johnson, who missed 48% of all votes, suffered a severe cerebral hemorrhage that almost took his life but eventually returned to outvote McCain.)

There have been 643 votes taken in the current Senate session: McCain has missed 412 of them.  McCain has not voted in the Senate since April 8th. Since March, he has missed 109 of the last 110 votes.  He missed votes on the GI Bill, energy policy, and in 2007 he missed "all 15 critical environmental votes in the Senate" -- giving him a 2007 rating of 0% from the League of Conservation Voters. Zero percent? I don't think that's fair. I think they should have given him an "incomplete", and told him that he had to stay for summer session if he wants to graduate from the Senate.


McCain has apparently had so little interest in the substance of the bailout proposal that as of Tuesday, four days after Paulson sent it up to the Hill, McCain admitted he still hadn’t read it.  AND IT IS ONLY TWO AND A HALF PAGES LONG!
 
There is another intriguing twist to this whole thing.  McCain is seeking to “postpone” tomorrow’s debate until October 2 – which conveniently is when the vice presidential debate is scheduled to take place.  It’s become abundantly clear that Palin is a full-on train wreck.  The McCain campaign has not let her hold a single news conference since she was named to the ticket.  (Even Dan Quayle held a press conference the day after he was nominated.  Biden has held dozens since he was named.)  They are doing everything they can to hide her from the press and won’t let her say a word without careful scripting and supervision.  This is truly astounding.  We are looking at the possibility of a virtual unknown being put in the position of becoming the most powerful person on the planet without holding a single press conference before the election.  She is not yet VP and she is already in Cheney’s secure, undisclosed location as far as press access is concerned. 

Russ quotes Chris Matthews: John McCain is in trouble every time conditions prevail. And that's when he pulls a razzle-dazzle. McCain calls this move when he sees the voter going back to the default button.
 
"Fire Chris Cox!" "Bring in Gov. Palin!" "Call off the first night of the Republican convention!" Anything that changes the situation away from that default button where people naturally say, "When one administration fails, when one party fails, you try the other one."
 
We saw it again when he called Wednesday night calling for a delay of the debates, "I'm not going to the debates."

 
There's a lot more. Read the whole thing at:
http://daggatt.blogspot.com/2008/09/drama-queen.html

Anders Brink said...

Mark to market is the only sensible model for these complex financial instruments. The alternative to "mark to market" is "mark to model" and what that means is to price these instruments in terms of some mathematical model. Which amounts to saying that the price is whatever you want it to be, rather than what the market will purchase.

I would like to know what the WSJ is snorting.

Tony Fisk said...

Speaking of bailouts....

Do they have an agreement or don't they?

Rob said...

@William_Shatner

At the risk of committing a red herring, I offer to you that disrespectful missive from a pseudonymous direction such as yours, which also carries no evidence of decent paraphrasing or any sense of the scope of my case or any knowledge of my own refining followups, well, I can't seem to bring myself to respect it in turn.

And at the risk of derailing what has become a very vibrant conversation, it was never about the sex, for me. It was about the sexual harassment and the pass NOW gave him on that front.

And, I note that I didn't really get an answer to my question, from David or anyone, about whether the actions connected to the surge constitute any degree of repentance compared to the administration's previous positions.

No matter. There are bigger fish to fry, especially this week. I'm glad Congress finally grew a pair and sprouted a rash at this latest giveaway proposal.

Rob said...

Oh, and every source I can find puts the world economy at between $48 trillion and $66 trillion, making William_Shatner's quadrillion-plus figures kind of laughable.

Tony Fisk said...

...trouble is, the white knight tactic works, at least for a while.

Obama and McCain even at 46%

Brian Claymore said...

Polls are almost meaningless these days, especially one poll that shows a slight uptick for McCain. I have found little to no coverage on the reliability of the polls this time around.

The "margin of error" is really a 95% confidence band, so one out of twenty polls have their true result outside the margin of error. Beyond this, there is also a bias error. An increasing number of individuals are without land lines. Before, the correlation between voters and owners of land lines was extremely high. As time goes on, this correlation seems to becoming weaker, albeit it is not total nonsense.

There are also fundamental assumptions about the sampling of the population. Certain numbers of republicans, democrats, independents, age groups, income/education levels are done based on some election data, which may be quite different this time around. Your assumptions on how you sample the population can drive your results in the polls, especially in the close race.

For instance, several of my friends and I are Obama supporters and do not get counted in the polls because we do not own land lines. We are not represented and skew the results. Of course, it can skew the other way to against Obama if latent racism plays a role.

Either way, the race is fairly close, but other than that such spreads of being even or Obama leading by 3-4 points is insignificant because of all the uncertainties in selection biases this time around.

David Brin said...

Gallup is alone in seeing a tie. See:
http://www.realclearpolitics.com/polls/

Note that Bush's approval ratings and "right direction" figures are heading even lower.

See especially:
http://www.realclearpolitics.com/epolls/maps/obama_vs_mccain/

Note Obama only has to pick up 4 battleground states that Kerry won in 04 -- out of 10 states in play.

Yes, most polls ignore people who have only a cell and no landline. These tend very heavily toward Obama... though the demographic seems a less dependable-to-vote crowd. Alas, we've seen that people being polled also lie about their own degrees of racism.

Rob, the wagers amounting to a quadrillion dollars are both fantastic and yet credible. These guys kept betting, then making side bets on the bets, then side bets on those side bets. Supposedly, there should be enough counter-hedging that ANY final resting place in the mortgage bubble should see most of the bets cancel each other out. That was the theory on which this whole mess was founded.

Except that few betters included a bubble collapse in their hedge wager profiles. Idiots. Who should be cleaning toilets and selling used cars, and who certainly should absorb the main blow.

Still, if we can support enough mortgages so that the book values don't "crater" (McCain's cheery term), then we should be able to get into territory where MOST of the quadrillion dollar bets do cancel out.

If they don't then holders go bankrupt and these "assets simply evaporate. I'd love that, if it were only the inventors of these "instruments". But of course when whole banks go under, you do get a liquidity crisis in the economy.

Rob said...

I was talking with my ostrich father, who basically agreed with you about the deserved destiny of hedgers and credit raters who inflated the value of all this paper.

So, yeah, a quadrillion dollars in *valuation*, but there aren't actually a quadrillion dollars for those investors to collect.

How much like '29 it all seems, when seen that way... sigh.

I want to draw your attention, David, to a smart friend of mine at Friend's University, blogging at In Medias Res. Russell Fox there has a fascinating perspective, comparing what Sweden did with its most recent banking crisis with what might have to happen here, all the while acknowledging that Sweden is not the United States, and therefore the cleanup will never be as simple as it was there.

Rob said...
This comment has been removed by the author.
Rob said...

Whoops: Try this link for Russell Fox's blog.

zorgon the malevolent said...

Yay! John McCain has a new plan to solve this financial mess!

We're told at the White House Senator McCain offered an alternative plan that would include fewer regulations and more corporate tax breaks for businesses, kind of a private solution.

Less regulation...more corporate tax breaks... That should do the trick. With less regulation, I'm sure this banking crisis will get solved in no time.

Meanwhile, the bank where I have my checking and savings accounts has just failed and been seized by federal regulators.

zorgon the malevolent said...

Brin:
The claim that all these derivatives should cancel each other out flatly contradicts observed reality.

This is the same claim made by the Nobel prize winning economists Merton and Scholes when they designed Long Term Capital Management's supposed "risk free" trading model in 1994. By using counter-hedging strategies which purportedly guaranteed to eliminate risk from stock trading, LTCM placed huge bets on the global stock market.

After several years of record profits, LTCM went bankrupt in 1997 with more than one trillion dollars of paper losses. An emergency meeting of the Federal Reserve Board and the nation's largest banks was organized to liquidate LTCM and prevent its losses from melting down the world economy.

The story is related in the book When Genius Failed: The Rise and Fall Of Long Term Capital Management by Roger Lowenstein.

Claims that financial instruments can be designed such that their losses cancel one another out fail to pass the straight face test. Observed reality, as demonstrated by Nassim Nicholas Taleb's "black swans," shows that conditions can occur in the real world where such allegedly loss-free financial instruments can blow up and go bankrupt.

In the real world, economic theory bears only a passing resemblance to reality. Although it involves mathematics, economics is not a true science, like physics or chemistry. Economics bears the same relationship to a genuine science like physics that alchemy bears to a genuine science like chemistry.

Robert said...

When did this become a poorly-written piece of fiction?

From Huffington Post:
ABC News reported that, following the meeting, Paulson "walked into the room where Democrats were caucusing...at the White House and pleaded with them 'please don't blow this up.'" But this story isn't incomplete, according to sources.

Democrats stayed talking in the Roosevelt room and Paulson approached them. After his comment, Speaker Pelosi and Rep. Barney Frank shot back that the real problem was with House Republicans. Paulson replied, "I know, I know," as he got down on one knee to lighten the mood. Pelosi joked back, "I didn't know you were a Catholic."

------

I am almost starting to feel bad for Paulson. I get this odd vibe that he honestly believes this plan is the best way of saving the economy... and McShame is busy being Mr. Maverick and f##king everything over.

Gut feeling? He's going to ditch the debate and claim that Obama is an elitist who put himself and his ego before the country because Obama didn't skip it as well.

Rob H.

David Brin said...

To Ostriches, the emphasis has got to be "You railed against "government" and cheered when Bushites appointed to head every department, knownothing hatchet men dedicated to preventing govt from working.

"This is what happens. The foxes raid the coop and keep killing chickens even after their bellies gorge.

" If you are patriotic, learn to appreciate your own government and its laws! Sure, argue for changes, but live by them till they change!"

I hate to say this, but my credibility ought to be good. I got into real estate trusts five years ago. Got out 18 months ago and got into foreign funds, doing well off the falling dollar. Six months ago I started edging out of THOSE and into money markets and safe bonds... though I still have a fair amount of foreign. The dollar will fall more.

And my bank is one of the stodgy safe ones.

My point? Even I am scared. This sucks. And I hope we don't see tumbrels rolling.

David Brin said...

Oh, Obama could reschedule. But only half of McC's aim is to duck a debate. He wants it rescheduled to October 2 so that Palin won't have to debate at all.

zorgon the malevolent said...

SInce the entire world seems to be falling apart, time for more good news:

An experiment performed at the Physikalisch-Technische Bundesanstalt (PTB) in Germany has uncovered that a spin-torque switching of a nanomagnet is as fast as what is permitted according to the fundamental laws of physics’ limit. This method of switching, also named ballistic switching, could allow for increased speeds in future non-volatile magnetic memories.
Link.

Japanese scientists working hard on a space elevator.
Link.

Gut instinct for numerical values plays surprising role in abstract math abilities.
Link.

The "secret weapon" used in Iraq is almost certainly UAV droves with microwave "sense through walls" imaging.
Link.

Excellent 2007 op ed by psychologist Richard Nibett in the NYTimes laying out the peer reviewed evidence from scientific journals which debunks the failed and foolish hereditarian IQ hypothesis touted by people like Charles Murray (who is a political scientist, by the way, and has no expertise in population genetics or applied psychology).

The hereditarians begin with the assertion that 60 percent to 80 percent of variation in I.Q. is genetically determined. However, most estimates of heritability have been based almost exclusively on studies of middle-class groups. For the poor, a group that includes a substantial proportion of minorities, heritability of I.Q. is very low, in the range of 10 percent to 20 percent, according to recent research by Eric Turkheimer at the University of Virginia. This means that for the poor, improvements in environment have great potential to bring about increases in I.Q.

Link to Nisbett's 2007 op ed piece.

Link to Turkheim's research paper here.

Link to a peer=reviewed journal article discussing the Flynn Effect, whereby IQ scores constantly rise over time -- yet another piece of evidence debunking the claim that IQ represents a fixed and invariant measure of Spearman's g which is largerly hereditary in nature.

I look forward to travc debunking these peer-reviewed scientific journal article with his usual magisterial argument, consisting of "That's crap." Ah, the sweet sound of no-neck anti-intellectual yahooism.

And now here's some good news in the sense that it proves how sophisticated even very small brains can be. Bad news of a sort for AI proponents, therefore:
Wasps can remember each other after a busy week apart, according to new research. It's a level of social memory never seen before in insects, which were long thought to be too small-brained for such a feat.
Link.

Hilarious Glenn Greenwald article detailing the dementia of right-wing pundits uddenly indignant with "the expansion of executive power" implied by the Wall Street bailout...the same right-wing pundits who have enthusiastically cheerled and applauded the monstrously unconstitutional expansion of executive power over the last 8 years:
Link.

Britain cracks down on sex with women forced in prostitution by sex traffickers. About time
LInk.

Pursuant to the ACLU's FOIA request, the war criminals hiding the White House have been forced to release photographs of their torture victims.
Link.

Particularly innovative idea for renewing America's infrastructure from Felix Rohatyn:
Link.

Someone finally accurately diagnoses the start of the current insanity -- the maladministration of the senile criminal Ronald Reagan, the Cruel Man With the Kindly Smile who spouted mindless hatred and advocated ruinous dereregulation and toxic theocracy with a winning smile:
Link.

Economists unanimous: McCain advisor Phil Gramm most tto blame for the current Wall Street crisis.
Link.

Obama now tied in North Caroline, ahead in West Virginia. Obama continues to make inroads into the formerly solid Republican south.
Link.

Scientists discover why chemotherapy works for some cancer patients and not others, opening the door to potentially less toxic chemotherapy targeted at each individual patient's physiology.
Link.

Researchers successfully suppress ghrelin, the "hunger hormonone." Genuinely effective diet pill in the offing?
LInk.

Rob said...

Dang. WaMu is gone. Bound to happen, I suppose, but I was snarking with one of their branch tellers about an incomprehensible cashier's check policy. The computer won't let them issue a cashier's check or a money order any longer without the name of the buyer emblazoned on the check. Since I was trying to produce a negotiable instrument for a neighbor friend who needs money, in order to gift it to him anonymously, it wouldn't do.

I said, "Who made this policy?" She said, "The back office people did it." And then I said, "These would be the same people who are about to go into receivership?"

Yeah. I had to apologize to her.

And now, dang... And my brother-in-law is a builder in the Phoenix area!

Stefan Jones said...

*Sigh*

At lot of the right-of-center folks who hang out at a gaming blog I frequent are tut-tutting about how PC do-gooders caused this crisis because they forced banks to issue mortgages to minorities.

I posted the 2004 REPUBLICAN PARTY PLATFORM which has several paragraphs lauding the ownership society and calling for barriers to be lowered to allow minorities to get homes. Oh, and how the party could help by eliminating regulations so more homes could be built, and helping people get homes without down payments.

All there in black and white:

http://www.presidency.ucsb.edu/showplatforms.php?platindex=R2004

What do you call an ostrich whose head is so full of crap that it can't pull it out of its hole?

tintinaus said...

Zorg some great links (as usual) but a couple were busted.

The space lift article gave me a couple of OUCH moments.

1: Using the lift to dump nuclear waste? I am sure as a pro nuclear guy, you wouldn't be countenancing that.

2: It is thought the concept of the lift was first envisioned by the great sci-fi writer Arthur C Clarke, in his 1979 book The Fountains of Paradise. Damn, would have hurt the guy to crack open the book he mensions. Clarke explains exactly who and when the idea first came about.

Not your fault of course but I hate sloppy journalism

Rob said...

Stefan, that's been the line of my Republican and conservative friends as well. Blaming Obama for being a 22 year old when those programs first began to have teeth.

As to what to call them, I suggest "Americans" is a good label, because shouting epithets will accomplish nothing for at least a couple of weeks. :-)

zorgon the malevolent said...

What do you call an ostrich whose head is so full of crap that it can't pull it out of its hole? - Stefan Jones

Jerry Pournelle. He's making the exact same argument over at Chaos Manor. Naturally, he's voting for John McCain, because McCain won't precipitate a financial crisis like this by loaning money to all those illegal immigrant Mexican gardeners who have no business owning a home. According to Pournelle, that's the root cause of all this -- banks loaned mortgage money to too many low-income illegal immigrant Mexican gardeners.

Investment banks gambling on crazy derivates like CDSs? According to Pournelle, not an issue. Lawbreaking financial chicanery by Enron-like hedge fund? According to Pournelle, not an issue. Too much office space and condo housing built by specualtors and flippers? According to Pournelle, not an issue? Too many empty strip malls and shopping centers built on spec by real estate speculators who investments went belly-up when $4-a-gallon gasoline hit? According to Pournelle, not an issue. Deregulation of the financial markets pusused aggressively by the senile sociopath Reagan, his proxy Bush 41, and the current drunk-driving C student in the Oval Office? According to Pournelle, not an issue.

No, according to Jerry Pournelle, this current financial meltdown is all the fault of those pesky illegal immigrant Mexican gardeners who got mortgages when they shouldn't have.

Of course much of the efforts to get out of this situation are misguided. But the most misguided of all is the notion that massive government action can make it possible for great many people who otherwise could not own a house will be able to afford one if the government gets in the act. It was the enormous expansion of Fannie Mae and Freddie Mac's ability to consolidate the mortgages they held into packages, sell those packages using their quasi-government status as a guarantee, and use the proceeds to make even more mortgage loans. This was a formula for disaster.

If a person cannot afford to pay back a loan, then government guarantees to the lender will induce the lender to loan the money anyway. That will put one more buyer in the market. Sellers will accordingly raise prices, and qualified buyers who would have been willing to buy at the lower price find they can't do so on their current incomes. Mortgage companies are hesitant to loan the addition sums -- which often went to Jumbo status. But comes now Fannie Mae and Freddie Mac to say "Sure you can! We'll help you do it! Let your customers join the American dream." And the companies make the marginal loans. Salespeople get the idea. Go push those no-down no-principal payment no-income-verification loans until we have the spectacle of a $25,000 a year illegal immigrant put into a $475,000 house with no down payment. And of course the price of the house goes up, so that people who might have been able to buy it will be unable to do so; and since builders make more from high priced houses rather than "affordable housing", they build the more expensive houses.
- Jerry Pournelle, Chaos Manor, 20 September 2008

Link.

zorgon the malevolent said...

Fix of that broken link to new instructure investment by Felix Rohatyn.
Link.

Fix of the Glenn Greenwald article link.
Link.

Q: What is a liberal?
A: A conservative who's been ripped off by Wall Street.

zorgon the malevolent said...

No, that first corrected link actually goes to a fascinating article about why diamonds may be responsible for the origin of life on earth.

Here's the Felix Rohatyn infrastructure article.
Link.

Travc said...

Zorg said:
I look forward to travc debunking these peer-reviewed scientific journal article with his usual magisterial argument, consisting of "That's crap." Ah, the sweet sound of no-neck anti-intellectual yahooism.

What the fuck? I'm trained as an evolutionary biologist (one generation from Dobzhansky) who has spent quite a bit of time studying and debating non-genetic modes of inheritance. How the hell could you misunderstand anything I've ever said so badly as to call it "no-neck anti-intellectual yahooism"? What the fuck are you smoking!?! I'm used to getting called an elitist and arrogant, but I think you are the first person ever to call me "anti-intellectual".

Seriously, when have I ever argued that IQ is some sort of incredible metric much less mostly genetically determined? You seem to think that anyone who acknowledges that IQ is an informative metric correlated with many other measures must be some sort... Well I have no fucking idea what you are thinking because it makes absolutely no sense! Either you are blinded by some IQ = absolute evil bullshit or you don't understand basic statistics. I'm going to take the charitable position and assume it is the former. But you are way out of line taking an absurd strawman of my entirely non-controversial acknowledgment of reality as an excuse to throw even more absurdly general insults at me.
--

Sorry everyone else... nothing to see here. Move along ;)

Tony Fisk said...

What do you call an ostrich whose head is so full of crap that it can't pull it out of its hole?

The Ostrich Ouroboros?

(They would probably consider themselves immune from attack in that pose...)

How did they respond to the 2004 party platform?

zorgon the malevolent said...

travc:
Thank you for lowering the level of discourse with foul-mouthed epithets. I hardly need open my mouth to win a debate with you now. As expected, in addition to spewing out obscenities and calling names, you provided zero (0) peer-reviewed scientific journal articles to rebut those I cited.

Ladies and gentlement, pay close attention to travc. He's a living breathing example of how not to debate.

Travc's response to my citation of the current scientific literature supporting my claims that heritarian claims for IQ systematically contradict observed evidence has been...four-letter words.

Ask yourselves: which argument in this debate has more substantive logic and evidence to back up its claims about IQ heritability? Which debater reveals himself as a foul-mouth kook devoid of arguments or documented facts to support his position?

Study the evidence, folks. Decide for yourselves.

David Brin said...

In fairness, Z, you did seem to put words in his mouth. That, in turn, can make a guy mad enough to snarl epithets.

Travc said...

I don't want to try Dr Brin's patience (or others) with this... so I'll make this my final rebuttal.

Zorg...
Thank you for lowering the level of discourse with foul-mouthed epithets.
Your welcome. Sadly the rhetorical slap in the face didn't seem to work. You still miss the entire point.

I don't disagree with the research!
You are stuck on a completely absurd misunderstanding of what I was saying about IQ all those threads ago. I made no claims about the heredity (or informative value) that need defending!

Stop sticking my name on a strawman.
Admit you misunderstood me (hell you can blame me for not making it clear enough for you) and let it go.

Oh, and if you ever have a question about actually measuring the heredity of some trait, feel free to ask. Not something I've done for a while, but I think I can still manage :p

BTW: Zorg, compare the epithets I hurl to the ones you leveled at me. Really.
You:no-neck anti-intellectual yahooism
Me:What the fuck are you smoking!?!
I win on vulgarity, but you are being far more offensive here.

David Brin said...

Google this:

Lionheart Enron ransom Kali Katzouraki

An unusual perspective, poorly linked, though...

David McCabe said...

Your search - Lionheart Enron ransom Kali Katzouraki - did not match any documents.

Travc said...

I'm guessing the Lionheart Enron ransom Kali Katzouraki letter you are referring to is this.

Travc said...

It appears McCain pulled the trigger (very coyly) on a revolt by the hardline conservative Republicans in the House to scuttle the bailout plan.
Here is a TPM post

The Repub 'plan' is an even worse joke than Paulson's original plan IMO. The half-serious part is the government forces all mortgages to be insured paid for by the holder. No clue how that would help unless the insurance was way under-prices (so effectively just another top-down bailout giveaway)... and even then it makes sense only if you cock your head the right way and squint at it. Even better, it calls for more deregulation!

The whole meeting with Bush idea was McCain's according to the WH (Parino). That worked well... Maybe he really really doesn't want to debate tonight ;) (No, I don't think this is really about avoiding the debate, but maybe a bonus.)

On an up side, the Dems are starting to talk about scrapping the entire Paulson plan and starting over from a different (more bottom-up I hope) approach. They will still try to pass the current patched-Paulson plan, but if a majority of Repubs don't get behind it too then it probably won't even be put to a vote.

Marino said...

Re: The new rightwing mantra, the financial mess has been caused by either affirmative action, lending to minorities, Clinton, or by the unchecked greed of the common people


It has even surfaced in an Italian e-journal of economics I sometimes read,and now both Ann Coulter and Victor Hanson have joined the line (courtesy of my not-ostrich rightwing friends)with Pournelle (pity, I had fun with Footfall and Moties):


http://townhall.com/columnists/AnnCoulter/2008/09/24/they_gave_your_mortgage_to_a_less_qualified_minority

and

http://www.realclearpolitics.com/articles/2008/09/dr_frankensteins_wall_street.html

expecially this part

But Americans forgot that historically nearly four in 10 of us aren't ever ready, or able, to sacrifice for a down payment, monthly mortgage bills, home maintenance and yearly taxes -- and so should stick to renting.

"able to sacrifice" for the nickel-and-dimed rates as insult to injury... btw, Hanson makes some reasonable points but the overall tone is "G. Gekko's praise of greed is not good for you of the unwashed herd", and they blame Dems as élitists

William_Shatner said...

rob said...
Oh, and every source I can find puts the world economy at between $48 trillion and $66 trillion, making William_Shatner's quadrillion-plus figures kind of laughable.


Well that is the point, isn't it. The world economy is about $60 trillion from the estimates I've read. And yes, the Derivatives market is at about $1.2 Thousand Trillion. I'm not making that up, and it was at a mere $500 Trillion last year -- which is the value David Brin was pointing to.

This is why the pundits on the media look scared and are actually reporting.

>> Sometimes you don't get a reply, because to answer something for about the thousandth time just wears everyone out.

William_Shatner said...

Zorgon, back me up on this, will you. I'm not making up the "ludicrous" figure about Derivatives. Yes, about $1.14 Quadrillion. Although why this would be an estimate when a decimal point could bankrupt half the nations on earth is beyond me. You were the first to bring up these insane numbers, and I remember that I called them "crazy numbers." But, as usual, if you find a point made by Zorgon to be outlandish -- it's probably because you haven't studied enough. I suspect being right too often, and a little too smart has made you cranky. Those long posts don't get read thoroughly, so you add more detail in later -- that can be frustrating.

Here are some links backing up the Quadrillion in Derivatives figure:
http://www.inteldaily.com/?c=139&a=8301
http://ezinearticles.com/?$1.14-Quadrillion-in-Derivatives---What-it-Means-For-Gold&id=1255539
http://www.sandiegoreader.com/news/2008/sep/17/city-light-1/
http://www.dailyreckoning.com.au/glass-steagall-act-banks/2008/09/25/
http://www.goldoz.com.au/139.0.html

zorgon the malevolent said...
Brin:
The claim that all these derivatives should cancel each other out flatly contradicts observed reality.

>> I totally agree. The problem with the insanely large number -- even if it is exactly offset by counter-bets, is that nothing can happen that cleanly. The entire bailout plan, is the margin of error of less than 1% of this figure.

As Denninger at MarketWatch described it -- this is the "Great DeLevering" -- the problem as these companies fall into the pit of hell, is that they aren't coming clean. If there could be an honest accounting of these companies and their Derivatives-- you might be able to zero them out. But they only come clean as they go bankrupt. It would take perhaps a million work hours to unravel this (while it gains interest). So in practical terms, just by wiggling a little, the pile of imaginary derivatives is crushing corporations left and right. One or two companies will get a haircut off the top and become insanely wealthy because you cannot cleanly zero out a Quadrillion dollars -- you can't even count it by Millions. Everyone in the US could be friends to a billionaire.

William_Shatner said...

Zorg and Travc,

You guys are getting upset over details. Kiss and make up -- you guys are too valuable to waste your time convincing each other about minutia when we've got a lot of stupid politicians who think they can bail out this mess on wall street. They need that money for AFTER in inevitably fails. Paper cash doesn't put out a fire.

>>I will settle the IQ debate as well; If IQ was not inherited, you would have more monkeys that could balance a check book. Since people are on average, smarter than monkeys, while the quality of parents is somewhat variable, this means they are getting the benefit of starting off with good genes.

Nurture makes a difference, because George Bush came from Smart and Evil parents, he seems to have either only inherited the Evil on the extra X chromosome. Or, the nurture event of being coked out might have done it.

Since we don't want a lot of little Bush's around for testing, we can look at other animals; Dogs can be taught not to pee on the rug. So, with the right parents, maybe Bush might have not stolen from us for Saudi Arabia and just about everyone else with a checkbook passed in front of his nose.

Robert said...

Not to go off on a tangent or anything (okay, yes, it is...) but I was wondering if anyone has links to new "safer" nuclear reactor technologies. I know about pebble bed reactors and how they're nominally safe (so long as there's water available, and I think the graphite contains the radioactivity so it's no more dangerous than that from coal reactors) but I'm certain there's other technologies out there and can't find them through the clutter that is Google. ^^;;

BTW, the HTML method of creating links is quite easy. You type this: [a href="http://theurl"] and end with [/a]. Except, of course, replace the brackets with less-than/greater-than signs. ^^

This even allows extra-long URLs not to get parsed by the system.

------

Back to politics... I think McCain is throwing the game. He's tossing a last gasp roll of the dice even though there's only a 1 in 36 chance of getting the roll he needs and then will claim that he lost because he sacrificed for the country, instead of being "egotistical" like Obama.

He won't be in the debate tonight. If he does? Then all of his posturing earlier is for naught. He'll insist that Obama debate him at Palin's time, and refuse to let Palin get savaged in a debate by Biden (and it's not Biden who'd savage her... it's the moderators and her own ineptitude when it comes to cold questions).

Rob H.

zorgon the malevolent said...

Since we all know that google is a giant corporate scam because its search function is chronically broken and doesn't actually work, despite the endless paeans and rapturous praise from tech journalists and other ignorant toadies, it was easy to predict that David Brin's suggested search terms would yield no result.

Since google search is hopelessly b0rked, you have to fix it yourself. To do that, throw out any search keywords likely to be misspelled and add a global search keyword specifically related to the topic.

In this case, we have to throw out "Katzouraki" and, since the topic du jour is bailouts, add the global search term "bailout."

Doing a google search on "bailout ransom Lionheart Kali" produces this result. Scroll down for Kali Kadzraki's letter. As expected, the oddball foreign name was misspelled in Dr. Brin's original search suggestion. Typos abound in the real world, especially in weird foreign names, a problem with which google's b0rked search cannot deal.

Kadzraki's letter comments on E pluribus hokum: or, When the gamblers bail out the casino," which is arguably even better than Kadzraki's letter.

These kinds of escapades with google search remind us of how horribly broken google search really is, and why Sergey and Larry keep spinning off worthless new side projects instead of improving google's basic search function. They can't improve it. Google's basic search function is crap. It doesn't work because they've hit the wall and gone as far as algorithms can take them. To do better, google would have to solve some serious hard AI problems, which no one has succeeded in solving in 50 years, and which show no sign of ever being solvable.

Prediction: in the future, humans will be employed as components of google search (probably at a premium price) to solve the hard AI problem of searching by meaning. Metadata tags don't work and can't work. Search algorithms like page rank fail even more badly.

Shorter version of Paulson's bailout plan.

The meeting [to deal with the implosion of Enron], recounted to me by Paul O’Neill, Mr. Bush’s first Treasury secretary, and several other participants, was something of a showdown. Everyone came armed for battle, none more than Mr. Greenspan and Mr. O’Neill, who railed that day like a pair of blue-suited Jeremiahs. Their colloquy on economic policy and corporate practice, which began when they were senior officials in the Ford administration, had evolved over three decades.

To the surprise of many younger men in the room, the duo opened by reminiscing about a bygone era when the value of a company’s stock was assessed by how strong a dividend was paid. It was a standard that demanded tough, tangible choices. Everything, of course, came out of the same pot of cash, from executive compensation and capital improvements to the dividend — which could be spent by a shareholder or reinvested in more company stock as a show of support.

In contrast to dividends, Mr. Greenspan intoned, “Earnings are a very dubious measure” of corporate health. “Asset values are, after all, just based on a forecast,” he said, and a chief executive can “craft” an earnings statement in misleading ways.

Speaking with a hard-edged frankness rarely heard in public — and seeing that those assembled were not sharing his outrage — Mr. Greenspan slapped the table. “There’s been too much gaming of the system,” he thundered. “Capitalism is not working! There’s been a corrupting of the system of capitalism.”

Mr. O’Neill, for his part, pushed to alter the threshold for action against chief executives from “recklessness” — where a difficult finding of willful malfeasance would be necessary for action against a corporate chief — to negligence. That is, if a company went south, the boss could face a hard-eyed appraisal from government auditors and be subject to heavy fines and other penalties. By matching upside rewards with downside consequences — a bracing idea for the corner office — Messrs. O’Neill and Greenspan hoped fear would compel the titans of business to enforce financial discipline, full public disclosure and probity down the corporate ranks.

But they were in the minority. Mr. Pitt, the S.E.C. chairman, voiced concern that creation of a new entity to assess negligence by corporate honchos might draw power away from his agency. Lawrence Lindsey said, “There’s always the option of doing nothing,” that the markets are “already discounting the stocks in companies that show accounting irregularities.”

An article about the meeting appeared a few days later in The Wall Street Journal. The next day, Mr. O’Neill was in Florida addressing chief executives of America’s top 20 financial services companies. They piled on. One told the Treasury secretary that he’d “rather resign” than be held accountable for “what’s going on in my company.” A phalanx of outraged financial industry chiefs, many of them large Republican contributors, called the White House. Real reform was a political dead letter.

Link.

Bill Gross says the bailout will require at least 500 billion more in addition to the 700 billion.
Link.

This Wall Street money manager claims the total bill run between 2 and 3 trillion.
Link.

At this point, no one really knows.

It's gettin' so a businessman can't expect no return from a fixed fight. Now if you can't trust a fix, what can you trust? For a good return you gotta go bettin' on chance, and then you're back with anarchy. Right back inna jungle. On account of the breakdown of ethics. That's why ethics is important. It's the grease makes us get along, what separates us from the animals, beasts a burden, beasts a prey. Ethics. -- Johnny Casper, from Joel and Ethan Coen's film "Miller's Crossing," 1990

William_Shatner said...

From; The Market Ticker

"Banks and other institutions have been hiding the truth, they have claimed "protection" against events that is in fact not present (the other guy doesn't have any money to pay) and leverage in the system remains excessive. Then, when the correct bets made (being short those institutions) are paying off, Chris Cox comes in and literally destroys them on purpose.
As a result The Fed is literally holding up every bank in the nation but this is not because of a "loss of confidence"; it is because everyone involved is lying, including The Fed and Treasury.
Art Cashin, who has been on the floor of the stock exchange for a very long time, said that The Fed would cut today except that it would take pressure off our officials.
In other words Ben Bernanke is blackmailing Congress by spreading gasoline all over the floor of the US Financial System and then holding a lit match and chortling that if Congress doesn't do as he demands he will drop it.

...

There is massive stress in the credit markets because of this intentional mismanagement.
We can and must fix it but spending taxpayer money will not do so.
The Democrats claim they have the votes to pass the original bill. Then pass it Democrats. Bush will sign it.
The Democrats will NOT pass it without The Republicans because they are afraid that the plan won't work (and in this they are correct) and refuse to put their heads on the chopping block if they spend $700 billion or more and the economy collapses anyway. They demand that Republicans march into the furnace with them.
Republicans are wise to say NO.
The solution is simple, it is elegant, and it will work.
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Do it now.
2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.
3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.
"


>> I'll admit that Denninger is way above my head in his market understanding. But I think he is talking about my idea of creating a pocket Universe for the Derivatives to blow up and be resolved in. The main problem is DISHONESTY in the financial markets, and companies that are valued based upon fantasy money in the Derivatives market -- if that is a valid interpretation.

This is kind of like my idea of surrounding offshore banks with our Navy and taking all the money nobody claims and using that to pay for a lot of the looting of nations that has gone on. Because that is what the US has been doing as a proxy power for the Elite--but We The People have not benefitted. These elite who start wars to line their pockets WOULD DO ANYTHING TO MAINTAIN THEIR POWER. This is the greatest threat to peace on the planet.

>> @Robert. I think you are right about McCain throwing the game. But I actually think he is afraid of two things and this speaks well of the McCain we all liked before 2000 when BushCo got their hooks into him; 1) This economy is falling apart and he realizes he isn't young enough or smart enough to deal with it. 2) Palin was forced on him by the Rabid Christianists, and he is afraid for his country if he were to leave her in charge -- which is really likely if you notice how much his eye is twitching (a stroke maybe?). McCain can't actually LOOK like he doesn't want to win. I suspect that Bush/Rove got some dirt on him because he really has a weakness for the ladies. If people don't realize that the Republicans are run like the mob these days, they are a bit naive.

>> @Everyone. I urge you to prepare for interruptions in goods and services. They news media is reporting a bit more accurately these days but they seem to have been distracted by the sub-prime market which is NOT the problem -- just the thing that was being bet on. Likely we will go into a global economic melt down. I'd say a 90% chance -- especially if Paulson gets his $700 Billion.

If the Republicans win the election, we will likely have troops patrolling the streets in 6 months.

There are only two roads to go on from here; Save the wealthy and pay for it by escalating the resource wars. Let the Uber Rich who played with Derivatives go under, and pick up the pieces -- then compete on a Green Economy. The "save the wealthy" crowd got behind Bush and his wars, they've been spreading disinfo about the environment and how bad things are getting. They are the ones supporting fanatics on both sides, because they can manage civil wars better than an angry rabble wanting to change the fixed elections.

In November we shall see which direction our country is going to head in -- but I'm afraid it will be too late by mid October.

Tony Fisk said...

Prediction: in the future, humans will be employed as components of google search (probably at a premium price) to solve the hard AI problem of searching by meaning.

You should try Sean McMullen's 'Mirrorsun' novels, where humans are impressed into the service of the calculor, (and humanity is dominated by alien dolphins... except for the 'ostriches'!)

William_Shatner said...

People were having a hard time because the letter was signed;
Kali Kadzaraki
Houston, Texas


I think I've stated on occasion that our struggle with terrorism was pretty much a "Castle Building" exercise. And so has Brin.

The Emperor has no clothes, but we are told we are liars because he wears tassels on his nipples.

And this was a good letter -- because there is no real enemy, just kings and Knights to Ransom.

Only as Zorgon has said -- this is more aptly described as Gamblers bailing out the Casino.

But I cannot get across to you enough that this is actually paying the minstrels for another song on the titanic, while the upper class get on the Life Boats. The Castle will not get built larger, and the Casino cannot keep ripping off Gamblers, because this ship is going under.

Enough said.

What we should be doing, is not seeing how clever we can be -- but talking about WHAT WE CAN DO ABOUT THIS. Because congress is burning the deck chairs trying to see if their bailout will help them ram the iceberg. The iceberg is going to win, folks.

Rob said...

@William_Shatner

Fair enough, I see where you're coming from now. Thanks for the clarification; it confused me a moment when I thought about the number of dollars "actually out there".

I think I'll go fill my gas cans, now, finish stocking up on a year's supply of seed wheat and dried carrots, and prepare to shiver in the dark.

William_Shatner said...

@Zorgon
These kinds of escapades with google search remind us of how horribly broken google search really is, and why Sergey and Larry keep spinning off worthless new side projects instead of improving google's basic search function. They can't improve it. Google's basic search function is crap. It doesn't work because they've hit the wall and gone as far as algorithms can take them.

Well, this is a fundamental problem with a database that has a googleplex of records. Most of the internet is cached on Google's servers. You enter a query, and each word you enter, is looked through a database in the gigabytes. It wasn't that long ago that these databases over a gigabyte, were very rare. Banks don't keep records for very long, because 20 million customers with a thousand bits of data for the customer and another few thousand for transactions -- well, they split up these databases or they have to trim them.

When you index word for databases over a terrabyte, a good trick is called a "bitmap index." You record that the word "HOPE" was in so many records by having an off or on bit. There is no "gray scale" on this type of system for "sounds like Hope." If you go for a phonetic search, you have to first determine the 100 most likely spellings of each search term, and then do a separate search on every index with every combination of each word that could be misspelled.

So, Google might have an advanced search function for "sounds like" but to do it for every casual search would totally B0rk their system. Until there are quantum computers -- you can forget anyone bothering to fix the alternative spelling issue -- it isn't worth it.

Just try shorter bits of the name, and search for alternate ways of spelling the one funny word -- that is just a fact of life.

William_Shatner said...

Sorry, I meant to say a "terrabyte" index.

TerraData, Sybase, Oracle and the like were a few of the companies that could handle an 8 terrabyte database about 9 years ago.

Numbers are just getting too big these days for a race that fell out of some trees.

William_Shatner said...

Rob said...

@William_Shatner

Fair enough, I see where you're coming from now. Thanks for the clarification; it confused me a moment when I thought about the number of dollars "actually out there".

I think I'll go fill my gas cans, now, finish stocking up on a year's supply of seed wheat and dried carrots, and prepare to shiver in the dark.


Rob, I think all the really smart people here, have the hardest time communicating. The more complex the idea -- the easier it is to mis-communicate. I recognize I'm worse than anyone -- and this is why I'm pretty sure that Zorgon is so frustrated.

I had to trade my genius for sanity a number of years ago, so I can recognize the alienation it brings.

We should all try taking a vow of silence for a week, and just grunt like the apes. They seem to be never misunderstood, but of course, they don't seem to need to say much beyond; "Give me your banana and bend over."

A Chimp cannot conceive of creating imaginary bananas that outnumber all the bananas ever created.

>> But seriously, filling up gas tanks is a good idea. I recommend everyone go to Urbansurvival.com -- because, beyond the corny sounding name, George Ure is a pretty smart guy (for a Libertarian), and he has red the tea leaves.

That's why I'm saying; Watch out for October 7.

George was listing all the powers that BushCo has taken while in power, and various little details that taken individually may be of concern, but taken all together should be a underpants ruining thought.

William_Shatner said...

I'm very sad to hear that Jerry Pournelle has joined the asshats that want to blame the people.

>> On the upside -- in 3 months, NONE of us will have to argue who's fault this is. There is no possible way, that average borrowers of mortgages can create a Quadrillion dollar fantasy vortex in the Derivatives market.

>> In the meantime, Coulter and the rest will do their best to get the Liberals fighting the Conservatives, or someone fighting immigrants -- whoever that they can blame, besides the people on Wall Street and the wealthiest do-nothing regulators in the history of mankind.

>> OK, I've got to get off this -- either everyone is on the same page or they aren't.

>> To cheer everyone up, I provide you with the funniest link all day -- did I mention I live in this Red state and this is actually the county I live in? WAFFLE HOUSE WEDDING

Imagine trying to get these folks to vote for Obama. These people have adapted to our future. This is Ostrich with a "Git Er Done" t-shirt.

William_Shatner said...

>> One more thing,...

Following Robert's idea that McCain is throwing it now,.. is the NEXT BIG LIE.

The Republicans want to force the Democrats to put their name on the bailout, so that they can play hot potato. The Dems suspect the bail out won't work and the Repugs KNOW it won't work.

Please, oh please, oh please -- if you don't do anything else, read these two blogs today; George Ure
Market Watch

Rob said...

The work of getting the Waffle House Wedding set to vote for Obama does not consist of convincing them that Obama is a better choice.

It's convincing them to vote in the first place.

michelle oxley said...

Think before you vituperate, Zorgon the Worthless. You owe Dr. Brin your soapbox.

Robert said...

Well, looks like I was wrong. McCain has deemed to be at the first Debate. And if I were a betting man, I'd be willing to say McCain and Obama will tie, neither one having a decisive advantage over the other. McCain will look fairly strong on foreign issues while Obama will look strong when it comes to economic issues (and the economy will be talked about, as our economic issues are having an effect on the rest of the world's economy).

This might not be a bad thing, mind you. Historically, with two exceptions, the winner of the first debate often loses the election. Unless we see McCain gaffe so badly that his polls drop through the floor, leading to a Reagan-style sweep of the states in 1984, any victory by Obama will be turned against him.

BTW, I have the perfect argument against elitist comments. "Recently we sent hundreds of young men and women to China to compete in the Olympics. 110 metals were won by the elite among our athletes, competing with the elite of the world. We didn't send Joe Average to be in the Olympics. We sent our very best. So I gladly accept your claims that I am elite. I would gladly stand beside our Olympic metal winners."

Hey, it even has foreign connotations! Too bad none of us have connections with Obama to suggest he use something like it... ^^;;

Rob H.

zorgon the malevolent said...

Yeah, Michelle, remember, I'm the important issue here...not the fact that

"According to one GOP lawmaker, some House Republicans are saying privately that they'd rather "let the markets crash" than sign on to a massive bailout.

"For the sake of the altar of the free market system, do you accept a Great Depression?" the member asked."


Link.

But, hey! If society collapses, we might get, like, cool pimpmobiles, like in Escape From New York. Or maybe a telepathic dog, like in A Boy And His Dog.

Link.

But nobody suggested The Postman. Awww...man! I guess it didn't have pimpmobiles or telepathic dogs.

Hey, what about Mad Max? They had cool hockey masks and razor boomerangs! And we could make The Lord Humungous president. Oh..wait... We already did that. Twice.

David said...


BARACK OBAMA AND JOE BIDEN’S PLAN FOR SCIENCE AND INNOVATION (PDF 11 pages)

Jester said...

Stefan Jones -

Thanks for the link to the 2004 Republican Platform, but you should have quoted the money shot from that historical document.

"The most significant barrier to homeownership is the down payment. We support efforts to reduce that barrier, like the American Dream Downpayment Act and Zero Downpayment Mortgages."

William_Shatner said...

BTW, I have the perfect argument against elitist comments. "Recently we sent hundreds of young men and women to China to compete in the Olympics. 110 metals were won by the elite among our athletes, competing with the elite of the world. We didn't send Joe Average to be in the Olympics. We sent our very best. So I gladly accept your claims that I am elite. I would gladly stand beside our Olympic metal winners."

>> Robert, we have a real problem with our naming conventions. The alternative for "Elite" is "The Powers That Be" the "Illuminati" or then we devolve into trying to point to a massive group of carpetbaggers and say; "Donald Trump but not Warren Buffet" -- you spend half your time defending your choice and explaining away the exceptions.

@Zorgon,
You act like the bailout would make any effect, except to help cushion the blow for the uber wealthy involved. Look, I'd rather have a bank that got bought out by China fail, than linger, and take all the profits from a recovery.

Life doesn't have to be like Mad Max -- because the best survival tactic has always been to get to know your neighbor and cooperate. One person trying to make it on their won is a struggle. Specialization gives society advantages.

We've just had some really large parasites for a long time and we think that these "investors" are providing a service. Beyond Venture Capitalists (also nicknamed Vampire Capitalists), individual investors start companies. Do stock markets? If you have to get a predatory loan to start a business from a bank -- what are your chances of success?

The main problem with startups is paying back loans and lawyers to defend them from predators.

We have a very entrepreneurial country -- but the regulations that we get, are far more likely from a Multinational, trying to erect barriers of entry than from some interest in defending the public. Regulation is neither good nor bad, so we can't be lazy and pick a side and stick with it.

I have been thinking about this collapse since 2000 -- so I am far from being a "rosy picture" person. But the upside is, we may cure ourselves of the dead wood and parasites. Do you think most people in this country will be harmed by spending time (which will be the cheapest commodity), growing vegetables and feeding chickens? We won't need health clubs and chiropractors in a few years.

There will be a lot of looting at first, and foreclosures. But say a good portion of the country is out of work and can't pay a mortgage -- what happens? The government either grants squatters rights or has to fight 20 million people.

I've lived in a cabin for 4 years of my life that I helped build. I had to carry my water to drink and washed clothes in a stream. It is damn tough work. Of course, 300 million people cannot survive this way anymore. But most people in America are sick of the rat race. We traded ownership and peace of mind, for a few gadgets and rent-to-own. Meanwhile, both parents work and pay a fortune for someone else to take care of their kids.

It is stressful.

So a more contemplative and brow-sweat life should be good medicine for most people.

I just hope this isn't framed as being caused by Social Programs or lending to the poor. The FHA and other programs lend to the poor and don't have a high default rate. And we've spend a tiny fraction of our money on helping the poor vs. subsidies to the wealthy and weapons systems. S&L Bailout and the Trillion going out this year are part of that subsidy to the wealthy, and you can't ignore that just because it is off balance sheet.

WE could have given everybody free health care and college education for that.

>> Anyway, the bailout is BAD -- it won't shore up anything. Not until there is honesty and regulation FIRST. Nobody is going to trust our markets until that happens.

Doug S. said...

Happy Petrov Day!

Stefan Jones said...

Oh, this is good . . . . Palin as a Disney comedy character:

Walt Disney's "Ice Mom"

David Brin said...

http://daggatt.blogspot.com/2008/09/bailout.html

Travc said...

This is a bit tangential... but

Zorg,
Don't harsh on Google. Page-rank works amazingly well. A fuzzy match would be nice and is conceivable, but still a bit too computationally nasty even for the Google farms. They do have people working on new search algos... but it is, as you noted, a hard problem.

And I use a lot of the 'worthless new side projects'... so not so worthless IMO.

BTW: First line of Google's Mission Statement:
"Google's mission is to organize the world's information and make it universally accessible and useful."
Not 'mission accomplished' (it never will be), but they seem to be making pretty good progress.

Tony Fisk said...

The debate online:

http://news.bbc.co.uk/2/hi/americas/7632311.stm

Justin Webb's comments are amusing (not impressed with American moderators!)

Travc said...

So did Obama point out that the biggest single step the US can take to better foreign relations and reassure our allies is not vote for another Republican? He should have.

zorgon the malevolent said...

Well, okay, now we're getting to the root of this whole financial crisis. The root cause of this whole thing is that the banks employed too many Hispanics.
Link.

See?

Jerry Pournelle was right! The whole problem is those damn Hispanics. Not only are they buying houses they can't afford, they're getting hired in banks and running 'em into the ground. It's all those damn Mexicans' fault.

Corrupt CEOs? Nahhh. Risky hedge funds? Nahhh. Deregulation? Nahhhh. It's those damn Hispanics, they're the ones who caused this whole mess.

"NO COUNTRY FOR OLD MEN. The stark unreality of this campaign is starting to get to me. (..)
"I thought five-plus years of covering this kind of gibberish had inured me to it, but here it is only September of a Presidential election year and every time I step even into the foot-washing pool of the political scene I feel as if I have been fatally poisoned. The degeneracy of political discourse in the internet age has been my subject, but I feel as if it is getting away from me, screaming beyond my capacity to keep up. Is it really so much worse than it has been, or am I getting soft?

Link.

Meanwhile, blogger Fabius Maximus has some graphs up that'll scare the spit out of ya. Still think this whole mess is just about overpriced houses?
Link.

Of course, it's not like knowledgeable economists didn't see this coming. Everybody just ignored 'em.

But the hell with that! It's time to PAR-TAY!!!

Financial Sector Fetes Lawmakers Making Bailout Decisions

WASHINGTON, DC – Some 258 parties, a number of them hosted by lobbyists for the finance, insurance, and real estate industries, have been thrown for members of the U.S. House Financial Services Committee this year, according to an investigation by the Sunlight Foundation’s Party Time project. Members of the House committee, along with the Senate Banking Committee, are considering the $700 billion bailout legislation for the financial sector proposed by the administration.

Link.

Yeah, baby! I want me some a that good fun! Do they have, like, naked hookers 'n champagne baptisms? Oh man, I so have to see pictures of these parties. It's gonna be awesome.

Whoa yeah! Let's party like it's 1929!

michelle oxley said...

@Zorgon's Not-so-super ego,

"I'm the important issue here" -- everybody dreams.

Nastiness isn't virtuous. A lesson you and McCain both should take to heart.

The debate:

McCain's inhumanity reared its ugly face precisely because this election is his last chance.

Not Obama's.

opit said...

Maybe the grownups need to get out of the way.
http://www.katu.com/news/28432984.html
Unbelievable.
Digg is hardly the only game in town. Netscape tried a copycat in Propeller, but I find people are more interested in being noticed than sharing reliable novelty. The above link came from Clipmarks. It and StumbleUpon are sources I value.
Google/Blogger is acting up so I'll sign manually.
Opit's Linkfest

zorgon the malevolent said...

"Nastiness isn't virtuos." - Michelle Oxley

So why are you spending all your time being nasty, Michelle?

Pot, meet kettle.

zorgon the malevolent said...

It's now being suggested that Eliot Spitzer's editorial in the Washington Post, accusing the current maladministration of colluding with predatory lenders, triggered Spitzer's demise.

Link.

Supposedly the White House got scared that Spitzer was amassing evidence against them and sent the DOJ to take Spitzer out.

Anyone else have any info to confirm or deny?

Robert said...

It's interesting seeing the back-and-forth with pundits concerning the debate. Initial polling results suggest that people are equal in believing Obama won it or that it was a tie, while only a small portion of people believe McCain prevailed. However, initial opinions often are transformed by what the media spins the story to mean.

Looking at the groundwork Obama's campaign created, with an emphasis that McCain would be in strong ground and is a masterful debater, the fact Obama held his own will thus become the perception Obama won. And in many ways, he did. He defused McCain's claims that Obama isn't up to par on the foreign stage. McCain's own (somewhat minor) gaffes on naming foreign leaders and in claiming Pakistan was a failed state when Musharraf seized control will not likely play a large part in this, but will likely weaken McCain in small ways that in turn makes Obama look stronger.

For all that McCain claims he is bipartisan and all that, it was Obama who looked bipartisan. He agreed with McCain on several points. While the more rabid supporters of Obama (over at DKos) see this as a failing and feel Obama should have gone for the jugular, I see it as a precise moment of politi-jitsu. The man who claims to be bipartisan and to reach across the aisle was persnickety, dismissive, and refused to even look at his opponent. The man dismissed as a liberal who doesn't reach across the aisle was calm, collected, and extended a hand to McCain several times. So. Who is partisan again? ^^

The biggest moment of politi-jitsu though might be when McCain claimed Obama liberal in his voting, and Obama quipped back "that is just me voting against President Bush's policies." This may very well defuse any claims that Obama is exceedingly liberal and move him instead into the "loyal opposition" territory... someone who fought to lessen the Bush policies that hurt the country. Meanwhile, claims that McCain voted for Bush 90% of the time went uncontested.

Another particularly strong moment was when Obama turned on the gas burner on Iraq and stated that McCain was wrong about Iraq. Note, this is after agreeing with several of McCain's points. This empowered this one point. McCain was wrong... and Obama, who was reaching out so often across the aisle, felt so strongly about it he had to call McCain on it and drive it home three times.

Three is a number of power. There is a lot of superstition surrounding it. For Obama to emphasize this one point and say three times in succession that McCain was wrong... that is going to sit in the minds of Americans. They're going to dwell on that, especially as Obama didn't keep saying McCain was wrong about everything else.

I believe over the long term, more and more pundits and media types will paint this out as ultimately an Obama victory.

(As an aside I do have to wonder if Palin's recent bumblings are deliberate. Let's completely lower expectations of the gal from Alaska who can't even say "caricature" and during the debate that McCain tried so hard to delay, have her slam it home and knock Biden out with one clean punch. But then again, I'm a fiction writer. I see angles and plotpoints where there is actually just real life and nothing unusual.)

Obama went into the debate with a decent lead. I suspect he will lengthen his lead as a result of this debate. And if McCain is unable to drive home the kill in the next two debates and if Obama doesn't stumble bad... then I believe that as Robert Shrum of Huffington Post said: We now know who the next President will be.

Robert A. Howard, Tangents Reviews

Robert said...

Small aside: did John McCain say "horseshit" on the air during the debate? (4 minutes, 25 seconds in, 'til 4 minutes 35 seconds)

Some at DKos believe it was horseshit. More recent comments suggest it was "course not" instead. Keith Olbermann seemed to think it was the latter. Still, just the viral message of McCain swearing on the air could further bring forth the view of him as a "grumpy old man" when he was trying to come forth as anything but.

Rob H.

Brian Claymore said...

Robert,

The more advanced reactors are indeed far less likely to experience a radiological release. The Evolutionary Power Reactor (EPR) from Areva and the Economic Simplified Boiling Water Reactor (ESBWR) by GE are two examples of modern reactor designs. There are more advanced designs beyond this such as the Pebble Bed Modular Reactor (PBMR) and the Molten Salt Reactor (MSR) which address additional issues.

The key to modern nuclear safety in the design are the concepts of (1) defense in depth, and (2) passive safety.

Defense in depth is distinct from redundancy in that there are multiple layers of protection. For instance, for there to be radiological release in a standard PWR, the following sequence must occur:

1) A breach in the fuel cladding (or fuel melting) allowing the escape of fission products from the fuel.
2) Failure of the pressure vessel through a major break or melting due to overheating.
3) Breach of containment, a several meter thick structure of reinforced concrete.

The first two occurred partially in the Three Mile Island incident. The last, and most difficult condition, did not. The Chernobyl reactor did not have such a containment and the accident there was a violent prompt supercriticality excursion (that is impossible in any current US nuclear reactor) resulting in a massive release of energy that destroyed the structure.

The concept of passive safety dramatically increases the chance of radiological release. A chief criticism of current deployed US nuclear reactors is that the safety systems are complicated and require active input such as electricity from diesel generators. Traditionally, the way to reduce risk has been to use redundancy.

The passive safety concept uses natural forces such as gravity, pressure gradients, and natural convection to achieve the same result. These safety mechanisms will deploy without any operator or outside intervention. Coupled with massive redundancy, this concept is now dominant in all modern designs and has dramatically improved safety.

Take the example of the Areva EPR. The emergency safety are four separate emergency cooling reservoirs each capable of cooling an overheated reactor. Two layered areas for cooling within containment. A double layered containment building capable of withstanding the head-on impact of a jet fighter. Finally, in the worst case scenario, such a design has a ceramic core catcher to hold the molten fuel in the worst case scenario.

Using probabilistic risk assessment, the estimated core-melt accident frequency is about once every 500,000 years. Note this does not require radiological release, which is even far less likely.

The EPR is a good example of the safety mechanisms of a modern nuclear reactor design. While there is still room for improvement, the majority of the safety issues have been resolved in the design process. Future designs such as the PBMR are even safer because there is no physical way for the reactor fuel to melt under any scenario.

The bottom line is this. Modern reactor designs have extremely low risks and are good at producing large quantities of very low emission, reliable, and inexpensive baseload electricity that powers the base of the economy. While there are still issues of spent nuclear fuel, the volume is relatively small and we have a long time to deploy solutions to that issue. Compared to the risks of coal and natural gas, nuclear power's two primary competitors, the risks and impacts are far lower.

Anonymous said...

"On the other hand, Obama is being advised by Warren Buffett who over five years ago warned against derivatives, which he called “financial weapons of mass destruction.” "

The last phrase is a link to a PDF file (as indicated by hovering over it), but it is not clearly marked as such. Please mark links to PDF files clearly; you had been doing so for a while, but apparently have stopped.

Travc said...

Brian Claymore,
Thanks for that info (and nice googleable terms).

You did leave 2 major safety issues out though.

- The facility must actually be built as designed and to proper spec. 'Building within a building' containment is a good design, but if both buildings are constructed using, for example improper concrete, it may not matter the design is good. (Remember the root technical problem in "The China Syndrome" was improperly inspected welds... fiction, but very plausible fiction.)

- Additionally, we have waste storage and/or transport. Most reactors are designed under the assumption that the waste will eventually be moved off site, but we know that isn't how those facilities are being used.
Designing in permanent storage is an option, but not a solved one from a technical or political angle.
Actually moving waste to external permanent storage facilities poses a lot of risks (even with those kick-ass casks), and also has technical and many many political challenges left unsolved.

Don't get me wrong, I'm not knee-jerk anti-nuclear. I'm not pro-nuclear at this point yet either.

David McCabe said...

Please don't clutter your prose with "PDF" sigils. Get a software stack that can view PDFs seamlessly, Anonymous. Or keep watching the status bar.

David Brin said...

Warren Buffet is admirable in dozens of ways. His will leaves everything to a foundation, which automatically makes him a fine fellow. Only then he says "why waste money and overhead making it my OWN foundation, paying for glossy headquarters and letterhead and BS, just to flaunt my name?" He looked around for one that seems well-run -- and decided to leave it all to the Gates Foundation. Doubling it.

Put him in charge of this thing, and you can bet the taxpayer will get some of their money back. He is the greatest ever at buying value low and selling high.

The Debate

I recorded it so the whole family could watch. But I cheated and watched the 1st half hour and the last. And yes, as usual, I raged at the democratic candidate!

"What!!? You doofus! You should have said _______!!!!"

Above all:

1) "You seek to distance yourself from your party, Senator McCain... and there are four or five topics in which you do have a bit of a maverick background. For example, if you became president, I believe you would attack wasteful earmarks. Well, guess what? When I am president, YOU will attack wasteful earmarks! In fact, I plan to put you in charge of that project. And the people will be 18 billion dollars better off for it.

"Unfortunately, you've only been a "maverick" in a few small areas. For the most part, you've supported this atrocious presidency. You are surrounded by a campaign staff made up of all the usual suspects, part of the lobbying revolving door Republican establishment. If you can't clean house of these guys -- like Phil Gramm, who took all the regulations off of the derivative markets -- then how can we believe your vow to clean up Washington?"


2) "in 2000 we were the unquestioned leader of the world. Popular, respected, unmatchable by any measure of strength, economic, military and the breadth of our alliances. That is WHY our enemies felt they had to attack us in such a sneaky way.

"Today, five nations are vastly stronger than they were in 2000, and one is incredibly weaker. Brazil has boomed, hurrah. China? Well.... But the other three are Russia, Iran and Saudi Arabia. And the fallen giant is us.

"Why haven't we been attacked again? Why should anyone try to damage the United States when our leaders are doing such a great job of it, themselves?

"You can't distance yourself from that, John, or rename the Republican brand as "Washington."

====

The crux: I believe Obama won the debate, but not in the way some think. McCain was actually very strong and even his ascerbic discourtesy and inability to find humor or meet his opponent's eyes probably didn't hurt him much. Obama was good, but not really excellent. He certainly let McCain get away with I-love-Israel-more-than-you-do.

But no, Obama won because of the reason why the polls are close, despite it being a year ripe for a republican shellacking. The reason is that 20% of the middle of the country felt they just didn't know BHO. He's a bit scary and unfamiliar, and people needed some exposure to see him not as a stranger, but as "The Democrat."

If I am right, then more of these people will start to see BHO as a reasonable fellow and leader of the side whose turn it (clearly) is.

Big C said...

Dr. Brin said:
The crux: I believe Obama won the debate, but not in the way some think. McCain was actually very strong and even his ascerbic discourtesy and inability to find humor or meet his opponent's eyes probably didn't hurt him much. Obama was good, but not really excellent. He certainly let McCain get away with I-love-Israel-more-than-you-do.

Actually I think McCain's discourtesy did hurt him considerably. See Nate Silver's analysis on FiveThirtyEight.com regarding several polls after the debate. Obama won on almost every metric and the evidence seems to indicate that he came off as more likeable and more sympathetic to voters' concerns. This dovetails into your later point about getting Middle America to feel comfortable with him.

Yes, he did not attack as much as McCain, he left some easy jabs out there, but he did display confidence and comfortableness much better than McCain. Obama has an Icarus-like problem. If he flies too close to the sun and gets too aggressive, he comes off as the "angry, scary black man." But if he flies to low and is too passive, he comes off as another weakling, wimpy Democrat. I thought Obama struck just the right balance of confidence, forcefulness, and agreeableness to appear as a statesmen of better stature than McCain in this debate.

And he did make a point about how the US has lost its global respectability. He didn't specifically highlight how the 5 countries you mention have become stronger, but he did talk about how the US used to attract everyone from around the world in search of the American Dream, and now we're not viewed in the same respect from other countries now. And I think he did specifically mention how the result of the Iraq war is a strengthened and emboldened Iran.

Stefan Jones said...

S.E.C. Concedes Oversight Flaws Fueled Collapse

WASHINGTON — The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down. The S.E.C.’s oversight responsibilities will largely shift to the Federal Reserve, though the commission will continue to oversee the brokerage units of investment banks.

Also Friday, the S.E.C.’s inspector general released a report strongly criticizing the agency’s performance in monitoring Bear Stearns before it collapsed in March. Christopher Cox, the commission chairman, said he agreed that the oversight program was “fundamentally flawed from the beginning.”

“The last six months have made it abundantly clear that voluntary regulation does not work,” he said in a statement. The program “was fundamentally flawed from the beginning, because investment banks could opt in or out of supervision voluntarily. The fact that investment bank holding companies could withdraw from this voluntary supervision at their discretion diminished the perceived mandate” of the program, and “weakened its effectiveness,” he added.

Mr. Cox and other regulators, including Ben S. Bernanke, the Federal Reserve chairman, and Henry M. Paulson Jr., the Treasury secretary, have acknowledged general regulatory failures over the last year. Mr. Cox’s statement on Friday, however, went beyond that by blaming a specific program for the financial crisis — and then ending it.

Jester said...

Urgently recommended reading for those who believe that "Pax Americana" is viable if only it was "done right" -

"The Limits of Power"

Col. Andrew J Bacevich

If you can't bring yourself to spring for the book, watch him interviewed by Bill Moyers at

http://www.pbs.org/moyers/journal/08152008/watch.html

Zorgon, there is a transcript for those without broadband. You will really enjoy what he has to say and how concisely he says it -

http://www.pbs.org/moyers/journal/08152008/transcript1.html

I don't push a lot of links. This is "must read/view" stuff.

"I think there's a tendency on the part of policy makers and probably a tendency on the part of many Americans to think that the problems we face are problems that are out there somewhere, beyond our borders. And that if we can fix those problems, then we'll be able to continue the American way of life as it has long existed. I think it's fundamentally wrong. Our major problems are at home."

"There was a time, seventy, eighty, a hundred years ago, that we Americans sat here in the western hemisphere, and puzzled over why British imperialists went to places like Iraq and Afghanistan. We viewed that sort of imperial adventurism with disdain. But, it's really become part of what we do. Unless a President could ask fundamental questions about our posture in the world, it becomes impossible then, for any American President to engage the American people in some sort of a conversation about how and whether or not to change the way we live."



--------------------

It's time, Dr. Brin, to pull your head out the sand a little bit, in regard to your Ostrich Issues, and give this a good listen.

We don't just need "Grown Ups", we need to give up the notion that we can remake the world through the use - be it prudent or imprudent - of our Military and still remain a country both free and prosperous.

Jester said...

Grrr

http://www.pbs.org/moyers/j

ournal/08152008/transcript1

.html


_____________

http://www.pbs.org/moyers/j

ournal/08152008/watch.html

Travc said...

I think McCain's refusal to look at much less really engage Obama may have been very intentional.

People are complaining that the debate format wasn't very good and the questions weren't sharp... but they are criticizing the wrong person when they criticize the host.

This debate was designed specifically not to be "the normal debate format" where candidates don't engage with each other. McCain pushed for this to be a much more free-form back-and-forth format, and Lehrer, Obama, and the commission thought that was a cool idea. Lehrer even reportedly went so far as to watch the debate episode of West Wing to get ideas.

McCain, Obama, and Lehrer were all on the same page format wise before the debate, but McCain scuttled it by refusing to engage Obama. I don't know if he was trying to put Obama off balance, make Obama look aggressive, or undermine the debate's legitimacy and impact. All seem plausible.

Lehrer did a better job than most people are giving him credit for. His questions were mostly ok, but they were supposed to be a "jumping off point" where the candidates would ask follow-ups of each other. With McCain not participating, the questions seemed a bit too vague and not sharp enough... but that is McCain's fault, not Lehrer's.

Also, some people are hitting Lehrer for 'trying to get McCain and Obama to fight'... well duh! 'Fight' isn't the right word, but he was certainly trying to get McCain and Obama to engage each other because that was the pre-agreed upon format.

Obama adjusted very quickly, but still managed to be more engaged without seeming too aggressive... but that made Lehrer seem like the odd man out.

Anyway, so far I've only seen bits and pieces of this story, mostly on TV. When I find a good writeup I'll post the link. It is based on 'inside baseball' sort of stuff, but really does lead to a very different perspective on some of what went on last night.

zorgon the malevolent said...

This ABC post-debate roundup features both Tom Friedman and George Will shredding McCain's debate performance last night. Will was supposed to be the conservative who'd rebut Friedman's liberal perspective, but instead Will wound up agreeing that McCain is an inadequate candidate. Both characterized some of McCain's claims during the debate as "howlers" and neither seem to judge him acceptable as a future president.
Link.

This seems unprecedented. I can't think of any time in the last 28 years when a solidly right-wing Repub wound up agreeing with a liberal that the Repub candidate for president basically wasn't cutting it.

Nate Silver at fivethirtyeight.com points out:
The CBS poll of undecideds has more confirmatory detail. Obama went from a +18 on "understanding your needs and problems" before the debate to a +56 (!) afterward. And he went from a -9 on "prepared to be president" to a +21.
Link.

Provocative comment from a primate scientist at Talking Points Memo:
I think people really are missing the point about McCain's failure to look at Obama. McCain was afraid of Obama. It was really clear--look at how much McCain blinked in the first half hour. I study monkey behavior--low ranking monkeys don't look at high ranking monkeys. In a physical, instinctive sense, Obama owned McCain tonight and I think the instant polling reflects that.
Link.

Andrew Sullivan on the debate:
The more it sinks in, the more I think Obama actually knocked it out of the park last night. He is, in some ways, the inverse McCain. McCain is all drama and explosions but then ... the air smells like damp, finished fireworks smoke. Obama seems calm and cautious but then ... you realize he cleaned your clock.
A few more morning after thoughts: the body language matters. McCain couldn't look at Obama as if he is offended by even having to share a stage with him. But Obama engaged him directly several times. Check the photo below. Even when shaking hands, McCain looks away. This is, in fact, a sign of insecurity.
The presidential factor:
Even Obama's critics will concede that he was McCain's equal last night. For a lot of undecided voters, the big question has always been whether this new and odd-looking guy could look like an American president, whether he passes Middle America's gut-check on how a president Obama feels in their psyches. I think Obama passed that test, as Reagan did in 1980 and as Kennedy did in 1960. We forget now how both those iconic presidents were regarded as iffy and perhaps not ready for prime time as candidates.
Lastly: the relating to ordinary folks. It has been Obama's greatest weakness. Yet he was far more focused on economic anxiety than McCain last night.

Link.

Eugene Robinson on the debate:
Here’s the politically incorrect way of phrasing one of the central questions about tonight’s presidential debate: Did John McCain come across as too much of a grumpy old man?
That might not be a nice question, but it’s an important one. Americans like to vote for the nice guy, not the grumbling prophet of doom. Throughout the 90-minute debate, McCain seemed contemptuous of Obama. He wouldn’t look at him. He tried to belittle him whenever possible—how many times did he work “Senator Obama just doesn’t understand” into his answers? His body language was closed, defensive, tense. McCain certainly succeeded in proving that he can be aggressive, but the aggression came with a smirk and a sneer.

Link.

Tom Shales on the debate:
John McCain wore the more presidential tie—that much can be said for him—but Barack Obama displayed the more presidential temperament, or the kind of demeanor people presumably would want in a president, when the two candidates met at the University of Mississippi last night for their first debate of the campaign.
Both men seemed well equipped in terms of facts and figures—especially, as one would expect, dollar figures—and neither made an outrageous blunder, although McCain did misidentify the new president of Pakistan. More critically, he came across as condescending and even rude to his opponent, a bit of bad behavior especially evident because Obama may have overdone the fair-minded bit in many of his remarks and answers.
Imperiously enough, McCain—who had threatened not to show up for the debate because of America’s financial crisis—seemed determined to avoid even looking at Obama as the debate went on, although they did shake hands at the beginning and end. Many of McCain’s answers were preceded with belittling references to Obama as if he were talking to a college freshman way out of his depth: “I’m afraid Senator Obama doesn’t understand the difference between a tactic and a strategy,” was one typical remark.

Link.

Unsigned L.A. Times op ed:
If they traded points on substance, the two men clashed more viscerally on style and on their approaches to one another. Indeed, for all the talk of race and gender in this year's historic campaign, Friday's much-anticipated contest was more vividly a contest of generations. It was a debate, mostly civil though occasionally cranky, between a tough old man and a polished young one. McCain revealed more of himself in that arena, wincing and grimacing during the split-screen shots while Obama was speaking.
That dynamic threaded its way through the emotional highlights of the event. Time and again, McCain, who is 72 and would be the oldest man ever elected to a first term, condescended to Obama, who is 47 and one of the youngest ever to win his party's nomination. "He doesn't understand," McCain said repeatedly. Discussing Obama's willingness to engage in talks with Iran without preconditions, McCain said: "It isn't just naive. It's dangerous."
Obama declined to be belittled. Although McCain refused to address him directly -- despite encouragement from moderator Jim Lehrer -- Obama looked at and spoke to McCain. Obama often credited McCain on issues -- a grace that was not reciprocated -- but he did not accept the role of junior candidate.

Link.

Maureen Farrell at Forbes:
One thing stood out tonight: Obama has a new New Deal he's proposing: adding social services and plans to change the US energy policy and energy dependence. McCain solely spelled out cuts. A few weeks ago McCain's attacks on Obama saying that he's bloating the government might have resonated, not this week when Washington is willing to socialize Wall Street.
Link.

zorgon the malevolent said...

Couple of weirdly wonderful science stories, then more political craziness:

Astronomers detect mysterious "dark flow" beyond the visible universe.
Link.

Analysis of 17th century Damascus sword shows its remarkable flexibility and strength due to (!) carbon nanotubes.
Link.

And now...the abject lunacy continues! America has gone off its meds and busted out of its straightjacket and nowwwww... Heeeeeeeeere's the Republicans!

Words of wisdom from February 2007: "Hands off hedge funds"
Link.
No doubt this guy is McCain's pick for Treasury secretary if McCain gets elected...

Fareed Zakaria has joined the growing chorus of pundits calling on Palin to step down. He describes her as "clueless" and "incoherent" and "unready."
Link.

The growing alarm at Palin's lack of qualifications appears to be bipartisan. Republican pundit also Kathleen Parker calls on Palin to step down -- after first enthusing over her, most unwisely as it turns out:
Link.

Memorable comment on Palin's most recent interview with Katie Couric:
"I’m still in shock over how terrible the Palin/Couric interview was. “Train wreck” is being charitable – it was more like a train derailing on a bridge, tumbling a thousand feet into a canyon and landing on a pile of old dynamite and gas drums. And then a jumbo jet crashed into the flaming wreckage. Followed by an earthquake that caused the whole mess to slide off a cliff into the sea, where the few miraculous survivors were eaten by sharks."
Link.

Brutal assessment of Palin's candidacy and what it tells us about our current debased political climate:
Link.

I'm going to try to get someone to record the vice presidential debate for me. It bids fair to be the funniest thing since the Marx Brothers' "Horse Feathers."

Turns out Jerry Pournelle wasn't alone in blaming this whole financial mess on poor minorities (who just happen to vote overwhelmingly Democrat). Looks like blaming minorities is the new Republican meme: this financial meltdown is all due to black people:
Link 1

Link 2

"...[conservatives] who attempt to explain why [the financial crisis] is liberals’ fault just end up proving Mark Twain’s maxim that it is better to keep your mouth shut and have people suspect you are a fool than to open your mouth and prove it.
Kevin Hassett takes the honors in this category with, sorry to be blunt, a laughably stupid explanation: “Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools.”

Link.

Or maybe it's not just blacks, maybe the gays are to blame for the financial meltdown:
Link.

Or maybe hispanic illegal immigrants are to blame:
Link.

In any case, it's all the fault of those vile dope-smoking left-wing-voting weirdo minorities. (I'm still surprised they haven't tried to blame the Jews yet. Maybe that's too politically incorrect nowadays. But surely there are some other favorite Repub lynch-mob targets left to accuse... Wiccans? Vegans? Atheists? Sure, that'd work, God is punishing America with the subprime crisis for tolerating atheists in our midst! That gives us the solution: we can solve our financial crisis by burning atheists at the stake...)

Unfortunately for Jerry Pournelle and all the rest of the far right kooks, a comprehensive study of minority loans proves that loans made to minorities are actually more reliable and made up less of the subprime problem loans than any other type of loan:
Link.

So far, we've seen the Repubs try to blame gays and blacks and hispanics for this financial meltdown caused by the Repubs' own greed and fiscal irresponsibility. I'm waiting for the next shoe to fall: lesbians. Somehow, they'll find a way to blame lesbians for the subprime meltdown. Maybe the bank loan officers got all turned on by those hot lesbian babes and tried to hit on 'em but the lesbians turned 'em down, and this wrecked the loan officers' marriages and distracted them from checking loan applicants' qualifications properly.

Sure, I bet with a little work that one could fly too.

Speaking of which, home mortgages represent only a small part of the problem in this financial crisis. Commercial properties become just as overvalued as individual homes, and far more money got sunk into shady bogus deals to prop up wildly overvalued office space and strip malls than ever got poured into home mortgages.

In fact, Lehman Brothers was not done in by its home mortgage portfolio. Lehman collapsed because of its mountain of bad commercial real estate loans.

Here's the former CFO of Lehman Brothers specifically identifying commercial real estate loans gone bad as the trigger that brought Lehman down:

"Nobody thought this was a possibility. In other downturns, market conditions improved. The firm had a history of coming out on the other side and doing well. But the harsh reality of this environment is that asset prices were declining at a shockingly fast pace, so the firm ran out of time. Raising money to address declining prices wasn't going to work. (..)
The commercial real estate portfolio really was the albatross of [Lehman Brothers]."

Link.

Meanwhile, over on Little Green Footballs, the best they've been able to come up with against Obama is that he's a secret closet Marxist. I am not kidding:

In this “user-generated” section of Obama’s web site people are encouraged to explain which issues are important to them, why they support Barack Obama and to post an inspirational quote or two from historic figures. Many of these people actually quoted Che Guevara, the Butcher of La Cabaña himself. Here is just one example.

But the story doesn’t end there. I decided to search Obama’s web site and see who else his supporters draw inspiration from. Here’s a partial list of the people that Obama’s followers think so highly of that they quote them on his official web site (I have been posting them on my blog every day for more than a week) Many of these historical figures make Guevara look like a boy scout:

Karl Marx

Ho Chi Minh

Mao Tse-Tung

Vladimir Lenin

Leon Trotsky

Joseph Stalin

Fidel Castro

Subcommandante Marcos

Link.

The economy's in a meltdown, global warming is out of control, Peak Oil threatens civilization, a health care crisis looms over every man and woman and child in America, and out-of-control culture war and theocracy and deregulation and an attack on science threatens modern western civilization -- but fortunately, the folks at Little Green Footballs have their finger on the important issue of our time...
...Obama's followers are secret aficionados of Karl Marx, Vladimir Lenin, and Ho Chi Minh.

Da, Tovarisch Brin, your secret Marxist-Leninist conspiracy is going according to plan! All hail the great socialist soviet commissariat! Soon, Obama will be elected and we'll all be able to strip off our working clothes and reveal our KGB uniforms in public!

And over on Powerline, that bottomless well of right-wing wisdom penned by John Hinderaker, the magisterial mind who assured us back in 2005: It must be very strange to be President Bush. A man of extraordinary vision and brilliance approaching to genius, he can't get anyone to notice. He is like a great painter or musician who is ahead of his time, and who unveils one masterpiece after another to a reception that, when not bored, is hostile.
And what are those profound right-wing minds at Powerline up to today?

Why, they're giving the same treatment to John McCain! Which, if I were mcCain, would scare the spit out of me, personally. But onward! Cue Powerline:

The reality is that, when he's in form, McCain is deeper than just about anyone.

Correctamundo. McCain is sooooooooooo deep: Monday -- "The economy is strong." Tuesday: "We're in a crisis!" That kind of deep. Sort of like when an LSD freak takes enough acid to start shaving the cat...that kind of "deep."

Yes, folks, I read this wacko far-right sh*t so you don't have to.

As our dying economy convulses through its final mechanical death throes, Paul Krugman asks the same question Dr. Brin has been asking: "WHERE ARE THE GROWNUPS?"

This has to be a bipartisan plan, and not just at the leadership level. Democrats won’t pass the plan without votes from rank-and-file Republicans — and as of Thursday night, those rank-and-file Republicans were balking.
Furthermore, one non-rank-and-file Republican, Senator John McCain, is apparently playing spoiler. Earlier this week, while refusing to say whether he supported the Paulson plan, he claimed not to have had a chance to read it; the plan is all of three pages long. Then he inserted himself into the delicate negotiations over the Congressional plan, insisting on a White House meeting at which he reportedly said little — but during which consensus collapsed.
The bottom line, then, is that there do seem to be some adults in Congress, ready to do something to help us get through this crisis. But the adults are not yet in charge.

Link.

And now, "car sleepers" are the new homeless, courtesy of the subprime meltdown:
Link.

Decades from now, when people want to relive the golden years of this presidency, they won't drag out old rock CDs or pop in DVDs of the populat TV shows during the years 2001-2008...they'll just beat themselves with a ball peen hammer on the forehead 500 times and set themselves on fire. That'll put 'em right back in the moment in the early 2000s.

Jester: thanks for the Bacevich link! He's one of the most astute commentators on America's current imperial overreach and military collapse, along with Lind and van Creveld and the blogger Fabius Maximus and Prem Shankar Jha.

Jester said...

True, Zorg, but I think for some folks (Paging Dr. Brin :) ) Bacevich's 23 years of service and his combat experience in Vietnam will carry more implied wieght than some of the others.

If he'd just made General I could call him the second comming of Smedley Butler.

A calmer more intellectual second comming, but still....

Travc said...

Apparently there is an imminent bailout deal... unless McCain shows up again ;)
TPM Post on it

Basically the Paulson plan with all the Dodd patches. Plus a fig leaf "insurance" thing to let the House Repubs take credit, though no one seems to actually think will do anything other than divert/waste some money.

The initial funding is $350 billion, but congress has to take active action to block further funding... in other words, the pres can veto any move to block. I don't see really how this is any gain, since couldn't congress pass legislation at any time to de-fund anything they want to?

I'm not happy, but probably the least evil politically feasible option... at least if you buy the urgency.

Travc said...

Krugman isn't the place to look for breaking news, but I think he is generally right on the money (no pun intended) and has a good sense of the political limits.

I humbly offer a link to Krugman's blg

zorgon the malevolent said...

Nouriel Rubini's assessment of the non-bailout bailout, from behind his stupid registration wall:

The Treasury plan (even in its current version agreed with Congress) is very poorly conceived and does not contain many of the key elements of a sound and efficient and fair rescue plan. Like in my 10 step HOME plan many other economists and commentators (Charles Calomiris, Raghu Rajan, Kotlikoff and Mehrling, Luigi Zingales, Martin Wolf, Barry Ritholtz, Chris Whalen and twenty others whose views have been featured this week in the RGE Monitor group blogs) have presented ideas that would have minimized the cost to the US taxpayer of a resolution of this financial crisis. It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan.

Specifically, the Treasury plan does not formally provide senior preferred shares for the government in exchange for the government purchase of the toxic/illiquid assets of the financial institutions; so this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the firms; with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money.

Moreover, the plan does not address the need to recapitalize badly undercapitalized financial institutions: this could have been achieved via public injections of preferred shares into these firms; needed matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; suspension of dividends payments; conversion of some of the unsecured debt into equity (a debt for equity swap).

The plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.

Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.


Meanwhile, more fun headed our way real soon now.

Oh well. Homo sapiens was a neat species while it lasted. "Smart primates, foolish choices."

Robert said...

And to go off on a tangent, as I am wont to do, I've a couple of scientific questions for those of you who understand the more-advanced science and mathematics behind it. (I know the basics and the mid-level stuff, but the math is beyond me. Curse you, Calculus II!)

The question is this: the concept behind black holes is that the gravitational mass of a star remnant is so great that it crushes even neutrons. However, there are subatomic particles... thus is there an additional "buffer" layer where the structure of a singularity retains more than a 0-dimensional structure because the very stuff of sub-atomic particles stops further collapse, much like a traditional neutron star?

And at what point does the gravitational mass of the remnant star overcome the resistance of subatomic particles from being crushed further? Is there yet another stage for singularities where subatomic particles are crushed into stringlets or whatever makes up the structure of subatomic particles?

And is there a level of mass so great that even these absolute fundamental building blocks of the universe collapse further?

In short, are there levels of singularity/black hole, with supermassive black holes being compressed further than solar black holes, and potentially even larger black holes?

Finally... can a black hole achieve such mass that it breaks apart? I was watching a Nova program on the supermassive black holes inside galaxies and on galaxy formation and was taken at how corporations seem to work much on the same level, each one gobbling up smaller corporations until finally they are so massive and bloated they fracture under their own weight and inefficiency. We also know that stars can only achieve so much mass before they literally blow themselves apart.

Thus are black holes under the same constraints, with the potentiality of these remnant stars dying because they just got too big?

Final thought: we are told that the creation of the universe was the Big Bang. Before this, the universe was shrunk into a ball that was infinitely dense and infinitely hot... and then detonated. What else do we know of that is infinitely dense and because of the compression infinitely hot?

Singularities.

Are black holes not thus the seeds for new universes?

Does this not in turn suggest that our own universe is in fact created from a black hole in another universe... meaning then that much like yeast buds, universes bud off of each other?

And considering black holes can consume each other... does this mean that when two singularities meet, and each is in and of itself its own universe... that two universes could merge and a universe could suddenly become larger as a result?

Just some non-political food for thought.

Rob H.

Travc said...

Rob, I'm no astrophysicist, but as for subatomic particles and black holes... I think you are mixing metaphors so to speak. The problem with black holes is we don't actually have an apt framework to describe what is going on. We need to unify Quantum (small) and Relativity (massive).

Your musing about the Big Bang is similarly a bit off (no insult intended.) There was no 'before the big bang' as far as our current understanding goes. Inside black holes and before the big bang are both "here be dragons" territory.
--

Zorg, great posts. You really should have a blog.

Nouriel Rubini is about right, but is neglecting the 'back door' capital injection Krugman points out. Yeah, it is totally outrageous that our political system has gotten so dysfunctional that we can't do better than this plan. Fixing that problem, even bigger than the financial one facing us now IMO, is very important but will be a long hard fight.

On the up side, at least this episode gives us a very powerful arrow for our quiver in the fight to return professionalism and a respect for objective reality to governance.
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The science blog Good Math, Bad Math has some posts on the financial mess from a nice perspective IMO.

Economic Disasters and Stupid Evil People

Bad Probability and Economic Disaster; or How Ignoring Bayes Theorem Caused the Mess


How Mortgages Turned into a Trillion Dollar Disaster

David Brin said...

The notion that black holes may be "eggs" that give birth to new universes has been around for a while. One of my stories illustrates the idea at the next level... that each generation of universes thus created might evolve to slightly different "natural constants" like DNA that dtermine whether a universe make more universes well.

I remain convinced that one senator could save us. Just threaten a filibuster unless Warren Buffet picks the securities to buy, and not Paulson. It is a simple position to take, easy to defend. And an easy modification to make. And the result will be that the world's "greatest investor" will have one more chance to buy low and sell high.

Jester said...

Want a real "fix"?

Two percent sales tax on all securities, bonds, CDS's, Stocks, CDO's, and commodoties.

That's right, at time of sale. No capital gains tax. Forget it. Tax the transactions.

All of a sudden, the risk V reward on short term flipping - holding a turd just long enough to convince a sucker to buy it for a small mark-up - changes.

Senator Byron Dogran had the quip of the crisis the other day.

"Never buy anything from a man who's out of breath".

atomicsmith said...

I was under the impression that someone had proved (Stephen Hawking?) that all the mass within an event horizon must be concentrated at a point, i.e. that something existing within an event horizon but not at the center is not stable and will tend towards the singularity. I may be wrong.

Travc said...

Dr Brin
I don't disagree about Buffet, but it would give the GOP a good opportunity to block and kill the whole thing.

As for:
And the result will be that the world's "greatest investor" will have one more chance to buy low and sell high.

Unless I'm really mistaken, the plan actually working to stabilize the financial sector is predicated on "buy high"... hopefully with an eventual "sell high". No one is actually going to admit that though (bluntly at least). We can hope for honesty, but avoiding certain political suicide is understandable.

Genius said...

The fund is something that should always have existed. the Government being a market maker of last resort, buying all sorts of things (such as morgages) when their value is below long term averages and there is a market problem.

So I suggest that even if it is the plan to buy high that would be the wrong strategy. That is the sort of thing that should have been worked through instead of worrying about side issues like tax cut sweeteners and golden parachutes.

Genius said...

which is of course would probably be resolved with the Warren Buffet plan.