Monday, December 28, 2009

Civil unrest in Iran

In case you haven't already, it's definitely worth it to check out the Iran coverage over on Sullivan. Of course, all the videos, Tweets, etc. are very fragmentary and amount to unconfirmed reports, but you can still get a feel for the atmosphere over there. There's so much energy in those crowds, and confidence.

Now I'm just really curious as to what's going to happen. I don't know much about Iranian politics or anything. I don't know what the likely scenarios are as far as an end game for all this. But one thing that seems certain is that the protests won't just fade away. Something's gotta give. I guess at some point the generals will pick a winner...

Anyway, watch this haunting video. What you're hearing is the sound of thousands of people shouting slogans from their windows and rooftops:



How the hell does the Iranian government get out of this? They're in so deep..

Friday, December 25, 2009

NBA notes

  • Ugh. What a terrible effort by the Lakers. And Kobe whining because he wasn't getting the calls he wanted wasn't very fun to watch, either.
  • Apparently, Stan Van Gundy thinks there shouldn't be NBA games on Christmas, because it prevents the players from spending time with their family. I can't abide this whining. I mean, think of it: these people are paid millions of dollars to play friggin' basketball--the least they can do is work on a holiday. And guess what: there are millions of people who do work on Christmas Day, but who don't get millions of dollars for it. And what about the troops overseas? Not only are they working during Christmas, but they're away from home; and not only are they away from home, but they are in actual life-threatening danger; and not only are they in life threatening danger, but they're doing all this for practically nothing. So, spare me, Stan, and go play some fucking basketball. Lots of people would give their right arm to be in your position--you should just be thankful for that.
  • How old do you have to be for it to be meaningful in any way that the Knicks are good? I'm always hearing about how "good for basketball" it is when the Knicks are good, and how classic and legendary and important Madison Square Garden is. But the Knicks never won a ring in the 90s when I was growing up--they were just standard issue Eastern Conference Jordan fodder. And in the 80s they didn't do anything either. And if you asked me to name a great Knick (besides Ewing, who wasn't even that earth-shatteringly great--nowhere near Olajuwan, for example)--I don't think I could. So I don't get what's so special about the Knicks.

Merry Christmas!


...and go Lakers! I hope it's a good game..

Tuesday, December 22, 2009

Decade in review: Shitty Events of the Aughts

The list is unranked. (Edit: on my machine the HTML is kind of wonky, such that the table is placed too low on the page. Apologies if you're seeing the same.)





































No. Shitty event Cultural corollary Explanation
1 Terrorists destroy the World Trade Center towers on 9/11/2001 Flag pins

It is worth noting that, for all the awfulness of the 9/11 attacks, their effects on the nation as a whole were primarily psychological. Strictly speaking, the destruction of two buildings in downtown New York hardly constituted an existentially threateneing attack--in a nation of 300 million, a mere 3,000 were killed, and America's infrastructure and capabilities were completely intact. Compared to a country that is actually attacked in a sustained conventional war--e.g., Britain during the blitz, or Iraq during the most recent invasion--the damage done was insignificant.


Of course, the real felt threat of the attacks was that it demonstrated that another attack could come anywhere, any time. And it could be worse--it could, for example, involve a biological or nuclear weapon. Americans for the first time in memory felt physically unsafe--and, it seemed, not very prepared for this feeling.


There didn't seem to be a protocol for what to do in a crisis like this--there was no tradition, for example, of the stiff upper-lip, "Keep Calm and Carry On" attitude as in Britain. So we seemed to be making up our own protocols on the fly.


The most prominent and emblematic of these was, of course, the flag pin, which quickly became a ubiquitous accessary on news people and politicians everywhere. Though I think the initial sentiment behind it was a fairly benign one--establishing some sense of underlying national unity in a crisis--it was not long before it curdled into a cynical symbol of heavyhanded jingoism, one more politico-cultural bludgeon at the disposal of the pro-war right.


The "death" of the flag pin came during the 2008 presidential campaign, when Barack Obama was criticized for not wearing the pin. Eventually the controversy fizzled when Obama began wearing the pin, but sporadically. By that time though terrorism had faded into the background, with the economic crisis at the forefront of everyone's mind.


So the flag pin saga tracked, I think, the rise and fall of the post-9/11 "everything is different" mindset--the psychological effect of those attacks.

2 United States invades Iraq on false pretenses B.O.B, by Outkast

Maybe this Pitchfork article puts it best:


"B.O.B." is not just the song of the decade-- it is the decade. Appropriately, the contemporary hip-hop act most in tune with the Afro-Futurist philosophies of Sun Ra, George Clinton, and Afrika Bambaataa, wound up effectively crafting a fast-forwarded highlight-reel prophecy of what the next 10 years held in store. The title-- aka "Bombs Over Baghdad", a phrase that sounded oddly anachronistic in 2000, sadly ubiquitous two and a half years later-- is only the start of it. In "B.O.B"'s booty-bass blitzkrieg, we hear an obliteration of the boundaries separating hip-hop, metal, and electro, setting the stage for a decade of dance/rock crossovers. We hear a bloodthirsty gospel choir inaugurating a presidential administration of warmongering evangelicals. We hear André 3000 and Big Boi fire off a synapse-bursting stream of ripped-from-the-headlines buzzwords ("Cure for cancer/ Cure for AIDS"), personal anecdotes ("Got a son on the way by the name of Bamboo") and product placements ("Yo quiero Taco Bell") that read like the world's first Twitter feed. We hear four minutes of utter fucking chaos yielding to a joyously optimistic denouement (a point reinforced by the Stankonia cover's re-imagination of the American flag, which anticipates a White House set to be painted black).


In a lot of ways, I think, the Iraq War was the real crux of the Aughts--the American establishment's "original sin", as Frank Rich once put it, that revealed its character as utterly wanting, and its fealty to core liberal democratic principles a fiction. If 9/11 was the question posed, the Iraq War was the answer given: an answer that had nothing to do with the question, that was based on false evidence, that was, as Obama would put it during the campaign, "dumb".


The Iraq War revealed so much: the failure of the mainstream press to hold those in power accountable; the willingness of the Bush administration to dispense misinformation to achieve its political ends; the utter incompetence of the Bush administration; the spread of torture techniques throughout the military; the failure of the Democrats to stand up to jingoism and demogoguery; the failure of the Democratic establishment in general to identify the war as a mistake at the time. It is no coincidence that the current president was the only serious contender in the primary who was against the Iraq War from the beginning--the war had tainted everybody else.


The narrative arc of the Aughts--the crisis, the fall, the attempt at redemption--has, as its central event, the Iraq War. It's tentacles reach into everything, into both parties, into the past and the future. The war, after all, had been prefigured, since before 9/11--since before Bush took office, when the neocons ran think tanks instead of US foreign policy. Saddam Hussein was on the minds of top officials in the White House from literally the first days that the towers came down. The false evidence that was eventually used by Colin Powell to make the case for the war was extracted using the same torture techniques that would spread to Guantanamo and back to Iraq at Abu-Ghraib. The incompetence of Bush's war plan forshadowed the incompetance that would be on display years later in the handling of the Katrina aftermath. And, finally, the Iraq War begat the political career of one Barack Obama, who would bring--or try to bring, at any rate--the conflict to a close.

3 United States tortures detainees in violation of the Geneva Conventions and US law 24 America's shift to a torture state did not happen in a vaccuum: at some point, it became an acceptable mainstream moral position to support the use of torture in dire circumstances. Out of this mindset was Jack Bauer born--or maybe, out of 24 was America's pro-torture mindset born.
4 Domestic abuses of power by the federal government: illegal wire taps, politicization of the Department of Justice, interference with various regulatory agencies Dick Cheney shoots a man in the face, and the man apologizes to Cheney

In the heyday of Republican power, the Bush administration seemingly got away with anything, whether it was conducting unconstitutional surveillance on millions of Americans, using Justice Department lawyers to settle political scores, or censoring reports by the EPA to make them more industry-friendly. Not only was there no legal consequences of any of these actions, but the mainstream press--and the US Congress--seemed uninterested in holding anyone accountable for these transgressions.


We all knew we were really through the looking glass when, one day in February 2006, we were informed that Dick Cheney had indeed shot a man in the face with a shot gun. For a delerious day or two as confused accounts trickled in and Cheney exhibited odd, guilty-seeming behavior we thought the whole Bush ediface would finally come crumbling down in the craziest scandal ever. But in the end it turned out to be a common hunting accident--and the victims bizarre apology to Cheney for "all the trouble" confirmed the invincibility of the Bush-Rove-Cheney political machine.

5 New Orleans is destroyed by Hurricane Katrina "George Bush doesn't care about black people."

Katrina was the moment when the establishment realized that Emperor Bush had no clothes--when the idea that the Bush administration was incompetent and reckless finally made its way into the canon of conventional wisdom. The failure of an adequate response to the disaster was not in question whatsoever. In those heartstopping few days after the hurricane struck, the nation shook its collective head in wonder at how there could be people going thirsty and dead bodies lying uncollected in the streets in an American city.


Meanwhile, Bush dithered in his response--and it quickly became clear that he had staffed FEMA with a bunch of unqualified cronies. His legendary assessment of FEMA director (and former horse pageant judge) Michael Brown's performance marked the moment at which his administration descended into farce.


That outward sign of this state of affairs was when, at some MTV related event, Kanye West went off-script and uttered, next to a memorably flummoxed Mike Meyers, "George Bush doesn't care about black people." Now, let me say that I don't think George W. Bush was or is any kind of racist, and that I don't think Kanye West is a very important figure in the grand scheme of things. But this little moment was significant because West's comment gained traction, as opposed to bouncing off Bush without incident. Bush was no longer the teflon president he once was.


Katrina marked the beginning of a long downward slide in Bush's approval rating that ended at a record low 22% by the time he left office.

Lamar Odom is a really weird guy

Monday, December 21, 2009

American pantheism

I'd go so far as to confer "must-read" status on Ross Douthat's latest column, which uses Avatar as a jumping off point for the kind of elevated discussion that you don't often find in a newspaper op-ed piece, and offers some pretty cutting observations:
Today there are other forces that expand pantheism’s American appeal. We pine for what we’ve left behind, and divinizing the natural world is an obvious way to express unease about our hyper-technological society. The threat of global warming, meanwhile, has lent the cult of Nature qualities that every successful religion needs — a crusading spirit, a rigorous set of ‘thou shalt nots,” and a piping-hot apocalypse.
Go ahead and read the whole thing.

Sunday, December 20, 2009

Like you do

I'm a sucker for caricatures. I'm even more of a sucker for caricaturists who find the time to do Eddie Izzard from Dressed To Kill:

American gibberish!

Just yesterday at a party I was mentioning that one thing I've always wanted to hear was someone who didn't know a lick of English putting together a string of English gibberish. And now today I see a video that features exactly that: specifically, it's an Italian doing American gibberish.

Enjoy!

Thursday, December 17, 2009

Only a little arsenic

There's a big feature in the NYT comparing tap water safety all around the country. It seems that San Francisco County is doing pretty good, with the worst of it being just 3 chemicals that are within the legal limit, but above what's considered healthy. However, those 3 are doozies: arsenic, lead, and radon (although how bad can radon be for you? It's inert, right?).

Monday, December 14, 2009

Not batshit, but then, not really serious either

I got momentarily excited by Conor Friedersdorf's insistence that I read one Jim Manzi's "manifesto of sorts" that lays out a "framework for understanding the challenges that America faces". I was promised that his would be a "serious voice" that moves us beyond "bromides about liberty and tyranny" that you typically hear from the right these days.

Anyway, I read the thing, and was unimpressed. Far too high-level and vague to be of any use to anyone, it strikes me more as a formulation of right-wing conventional wisdom and political narrative than any real attempt to deal with substantive issues or engage the opposition in an intellectually honest way. He passes comment on things like the bailout of Wall Street and the nationalization of GM without any sort of discussion of what the consequences would have been if those actions had not been taken; he pooh-poohs cap-and-trade as "economically extravagant" (which is something of a non sequitor, I might add) without addressing the costs of not regulating carbon output; he utterly fails to address military spending as a component of the government's precarious long-term financial position; he urges the repeal of fiscal stimulus without offering an alternative approach to alleviating America's 10% unemployment rate; he offers no way forward on health care reform.

If his goal with this essay was to engage in a productive way on any of these fronts, I'd say he failed. If you're going to dismiss cap-and-trade, for example, you have to at least address why you think it's a bad policy--whether that means a critique of the way the policy will be implemented, or empirical skepticism about the dangers of global warming, or whatever. But Manzi offers no such arguments; just blank, high-level assertions that seemed to be backed by nothing other than implicit conservative conventional wisdom.

In any case, here are a few specific things that I think Manzi either mischaracterizes or doesn't address:
  • He mainly frames America's politics as a tension between Great Society liberal welfare statism and Reagan-era economic deregulation, but I think this picture is no longer accurate today. In the first place, it's not the case that today's liberals are fighting to undo the Reagan revolution: Reagan won that war, and liberals conceded long ago. To see this, just check out what marginal tax rates were like before and after Reagan took office:

    During the Great Society era top marginal rates were up around 80%; by the time Reagan took office they had already been coming down quite a bit, but part of Reagan's legacy is that that level of taxation is permanently off the table. Of course, taxation is more than just the top marginal income tax bracket--but I find this to be a useful barometer for the overall level of taxation a population is willing to bear. Keep in mind that accompanying this were decreases in the capital gains tax and, at the state levels, significant rolling back of property taxes, following the Prop. 13 "tax revolt" in California. No serious liberals today propose we fully reverse these cuts and return to Great Society levels of taxation, and even the mainstream Democratic establishment favors pro-market policies such as free trade and economic incentives such as cap-and-trade rather than direct government regulation and intervention. We live in a supply-side America.

    Secondly, not only is the conflict that Manzi sets up already resolved, but he misses the crucial point that the fiscal sins that have occurred since Reagan have been largely perpetrated by the Republican party and (too many) centrist Democrats. I don't want to make this too partisan a point, so maybe I'll just say this: since Clinton took office, we've seen the California-fication of the federal government, where de facto supermajority requirements in Congress--the Senate specifically--make it impossible to implement tough decisions (like increasing taxes or cutting entitlements), and yet still allow politically popular spending initiatives to go through (like Medicare Part D and the Bush tax cut). By the time the financial crisis hit, and Bush was forced to pass a stimulus bill and a Wall Steet bailout (yes, Bush did both those things; Obama then passed a second, far larger stimulus bill), the US found itself badly overextended, and with mounting health care costs to boot.

    So the narrative is not Great Society social cohesian vs. Reagan supply side economics forever dueling for our national soul; it's more like, Reagan wins, then the Republicans totally lose their bearings and abandon conservative fiscal principles while in power, and then meanwhile leverage an increasingly disfunctional Senate to obstruct any Democratic reforms from coming through.
  • Manzi shows here he doesn't understand the rationale for stimulus spending:
    Only about 5% of the money appropriated is intended to fund things like roads and bridges. The legislation is instead dominated by outright social ­spending: increases in food-stamp benefits and unemployment ­benefits; various direct and special-­purpose spending relabeled as tax credits for ­renewable-energy programs; increased funding for the Department of Health and Human Services; and increased school-based financial ­assistance, housing ­assistance, and other direct benefits.
    The point of stimulus spending is to increase overall demand in the economy. You can do this by building roads and bridges, yes, but you can do it just as well by, say, lining the pockets of a poor person with some cash that he will be certain to spend in the near future (like, say, on food). What matters is the stimulative effect of the spending, not on whether the spending happens to be on infrastructure or more welfarish services.
  • More:
    All told, finance, insurance, real estate, automobiles, energy, and health care account for about one-third of the U.S. economy. Reconfiguring these industries to conform to political calculations, and not market-driven decisions, is likely to transform American economic life. And the fiscal consequences of the spending involved will be enormous. The federal budget deficit for 2009 was about 11% of gross domestic product, which is far higher than any the United States has experienced since World War II. This deficit spending is the real stimulus. Something like 10% of all the economic demand in the United States is supported by government borrowing from the future, which is essential to propping up the current "recovery."
    Gah. Where to begin. First: "This deficit spending is the real stimulus." That. Is. The. Point. The whole point of fiscal stimulus during a liquidity trap (i.e., when the Fed's interest rate is at 0% and cannot be lowered any further) is that the government's deficit spending props up demand until the economy gets going again. It's no big secret that stimulus spending is deficit spending. Second: nobody is reconfiguring the real-estate industry. Nobody--and it's a shame, really--is reconfiguring the finance industry. As for energy, cap-and-trade is a market solution--no different in principle than a carbon tax. Health care you can make more of a case for, obviously, but it's also true that a) the government already accounts for a high percentage of medical spending in the US, since we have, you know, socialized medicine for everyone over the age of 65, and b) the whole aim of the current health care reforms is that they will reduce the deficit over the course of a ten year time frame. Third: in economic terms, there's no difference between a recovery and a recovery with scare quotes around it--a recovery is a recovery, a job is a job. Conservatives seem to have this thing where a recovery fueled by government spending is somehow "artificial", or that jobs created by the government aren't real "jobs" (make-work, I think the term is they use). But this isn't a meaningful distinction at all (that said, I think you really can call the current recovery a "recovery", not because it is propped up by government deficit spending, but because it's a jobless recovery--asset prices are coming back up--yay Adobe stock--but unemployment remains sky-high at 10%--boo human misery).
  • Here Manzi makes some proposals without giving an ounce of thought as to their consequences:
    we must unwind some recent errors that fail to take account of these circumstances. Most obviously, government ownership of industrial assets is almost a guarantee that the painful decisions required for international competitiveness will not be made. When it comes to the auto industry, for instance, we need to take the loss and move on. As soon as possible, the government should announce a structured program to sell off the equity it holds in GM. Similarly, the federal government should relinquish direct control of banks and insurance companies. Moreover, one virtue of the slow rollout of spending under the stimulus bill is that most of it can be stopped — and should be.
    Look. If these were normal times, and GM was going under, you know what? I'd be as solemn as the next guy in saying that it should die a natural death. But these aren't normal times; these are perverse times. Here is what I think happens with folks like Manzi: in normal times, we get accustomed to the idea that markets, among other things, give you information: if the price of apples goes up, that tells you something about the supply and/or demand for apples. If a business goes under, that tells you something about the quality of its products and/or the efficiency of its processes. If an individual or company goes into debt, that tells you something about the financial decisions about that individual or company. In other words, though the market may cause pain--for example, the slow death of the American auto industry--the pain is justifiable, and in the long run it's better for everyone to suffer the pain now and move on so that the overall economy can continue to perform at a high level. And I'm more or less fine with all that. But the thing is, all that's only true in normal times, when markets are functioning. But when the financial crisis and recession hit, markets stopped functioning properly. Prices no longer reflected value; they reflected the fact that everyone was selling in a panic at the same time. Companies started failing, not because their products were of low quality or inefficiently made, but because they could not get the credit they needed to keep their business running. Saving, in normal times a virtue, suddenly became a collective vice, as the force of everyone pulling back spending caused demand to drop and the recession--and unemployment--and the condition of everyone's pocketbooks--to worsen. As Paul Krugman likes to say, we're through the looking glass--markets are no longer giving us good information about the real world.

    And so you can't just cut GM off. Because, even if GM deserves to die, surely other car manufacturers with factories in the US like Toyota and Honda don't deserve to die, too. And yet that's exactly what could have happened if GM went under, because of a "supply shock"--the companies that sell parts to GM would have gone under, and the assembly lines of the other companies they sell to would have ground to a halt--which, in the midst of the worse recession since 1928, could have led to scary results indeed. And you can't just unilaterally sever the government's stake in the big financial entities like AIG--because this could trigger a panic and another financial meltdown.

    Finally, you can't just revoke the stimulus. Or, if you do, you better tell a damn good story as to where the demand is going to come from that's going to lift this economy back up and bring unemployment back down. Everyone agrees that normally, with a non-zero interest rate, you would lower that rate and induce spending and investment that way. But we're at 0%, and can't cut the interest rate. So rather than inducing demand, we're straightforwardly creating it via federal deficit spending. The spending will roll out over the next couple of years, but, that's okay, because unemployment will remain high for at least that long. So you think this is a bad idea? You think the underlying economic principles are unsound? You think perhaps that stimulus won't have a significant impact, or maybe, alternatively, that the costs of a higher deficit outweight the benefits of stimulus? Fine. But tell us what your argument is.
  • ...


Well, this post is getting out of hand--I think you all get the picture. But let me be quick to reiterate: I don't think Manzi's essay is lacking because I disagree with its conclusions. I think it's lacking because it doesn't offer any arguments against opposing views or explain in any discernible way the rationale for its own views. Hopefully, either Manzi or someone of his ilk will get around to making a case that we can all sink our teeth into.

More on the dubious benefit of financial innovation

Via Yglesias.

Monkeys! Dogs! Elephants! Holy shit!

Sunday, December 13, 2009

Milo's Last Show: A Parable (Pt. 1)

It was a few weeks ago that I first saw the boy Milo, as I was hurrying to my reporting assignment at the United Confederation of Planets headquarters in New York. He was easily the most pathetic creature I'd ever seen: not older than ten years old, a face rounded by baby-fat, and a cowed posture that hinted at many years of abuse, if not physical than at least verbal. To make matters worse, we was bound literally by a leash, which seemed uncomfortably snug around his neck. Incensed, I marched straight up to the leash-holder, a burly Italian-looking man with a whimsically large handlebar mustache. The two were standing on a busy street corner, both passing out fliers.

"Just what the hell is this all about?" I said. The anger faded from my voice slightly as I noted that the top of my head came up no further than the rough man's chin.

"Wha?" The bushy eyebrows above his watery eyes arched up as best they could--he looked wounded. "What ees what about, eh? You come to our show?" He handed me the flier:

The Amazing Baldini Presents: the Human Puppet!
THRILL as his every move is predicted!
FRET as you realize that you, too, are no less bound!
$25 at the door; $20 if you bring this flier

I crumpled it up and put it in my pocket. "Why do you have him on a leash like this? Are you his father? Look, it's digging into his throat." I looked down at the boy but he turned away.

"Wha? No, no, no, thees ees Milo, we do tha show. He has no family--I take him from the streets. Here, look." He loosened the leash on Milo. "I'm sorry Milo--you should have said something." Milo didn't speak.

"Look--just, forget about it, " I said, and turned to walk away.

"Hey Mister!" shouted the burly man after me. I turned around. "You an' me--we no different from Milo. We are on a leash. We jus' never met the man who hold the leash." Rolling my eyes, I once again turned around and walked away.

"You come see tha show! You'll see!" he shouted. Breaking into a jog, I made my way quickly to UCP headquarters, putting the disturbing scene behind me and readying myself for two hours of mind-numbing bureaucratic double-talk.

Late night dorm room conversation time: free will

Seeing these silly posts about free will make me all antsy, because Alex and I totally have it all figured out. It's a pretty sweet package that includes: a conception of time that resolves all time travel paradoxes; a scientific account of free will and how it's compatible with determinism; and cameos by the halting problem, 12 Monkeys, and Being. It blows these childish "we all behave as though we had free will" musings (which don't even involve time travel at all) out of the friggin' water.

Pshh.

Financial "innovation"


I just finished reading Panic by Micheal Lewis, which is a collection of pieces that track financial panics starting with the 1987 stock market crash and leading all the way up through to today's housing bubble crisis.

I'll have more to say on it later, but one pattern that seemed to repeat itself involves the dubious activity of "financial innovation"--i.e., Wall Street geniuses inventing some complex new financial instrument that supposedly squeezes more efficiency out of investments, creating greater returns--but in reality just does a good job of hiding risk, fueling a speculative bubble. Here is how the pattern plays out:

1. Some Wall Street geniuses invent some new financial instrument.

2. The instrument is so complex that no one can accurately and independently assess its level of risk--and so they take the Wall Street geniuses' word for it that the financial instrument really does offer better returns for the same amount of risk--that it is a true "innovation". I mean, they're geniuses, right? Look how much math they know!

3. As people buy into the financial instrument, its value increases, creating a cycle of self-validation: the higher it rises, the more solid the "evidence" that the geniuses' theory was right, which leads to more investors hopping on board, which raises the value of the financial instrument higher, and so on.

4. The financial instruments take off on what is in reality a speculative bubble, but what is thought to be the fruits of true financial innovation. Everyone gets richer and richer, and increases their leverage to get richer still ("leverage" means borrowing money to invest, so that you can make even more money. For example, suppose I knew that a horse was a sure thing in a race, but I only had $100. If the payout is 2x, the most I could gross would be $200. But if I borrowed $1 million from my rich uncle, I could gross $2 million, pay back the loan, and go home with a cool $1 million. Of course, if I bet on the wrong horse, then I'm horribly screwed: I go home with a whopping debt of $1 million owed to my uncle).

5. Eventually the risk hidden in the financial instrument (the risk that nobody could see because the financial instrument's complexity obscured it) rears its ugly head, and investors get wiped out. But everyone is now so overleveraged, that the demise of the financial instrument causes a domino effect, where everyone suddenly finds themselves in extreme debt (like the debt I owed to my uncle when my horse lost) that they cannot pay, and all their creditors are suddenly not going to get the money back that they lent out. Markets threaten to seize up as no one can raise money to pay off their debts, because there are no buyers, because everyone is selling at the same time. Eventually, Wall Street is bailed out and upbraided by Senators with spectacles slid half-way down their noses, new financial regulations are solemnly put into place, a few CEOs are fired, and Wall Street returns to business as usual.

6. Go to step 1.

Or at least, something like that. But the real point is that what is happening is a kind of manufactured uncertainty is introduced into the market, which becomes the vehicle for a classic speculative bubble--and when the bubble pops, it threatens to take everything down with it.

But this is particularly troubling, because the whole justification of the financial sector is that, supposedly, it does a better job of any system yet conceived of directing capital to the most useful and efficient places--which benefits us all, by giving the world cheaper goods, new inventions, and steady employment. Fair enough. But if Wall Street is spending its energies chasing mirages and throwing huge amounts of capital into one bubble after the next, then it's not doing a good job at all of allocating resources: it's just kind of arbitrarily sloshing them around. So it's like: what's the point?

(By the way, it's worth noting that Matt Yglesias has often pivoted off the inevitability of Wall Street hijinks to make an argument for more redistribution: basically, the grand deal is made that we'll allow Wall Street (and the investor class in general) to be sickeningly rich and we'll suffer its panics when they come and we'll bail it out if need be, but in return, we get to levy high taxes on the rich that pay for universal health care, child care, and education. I think it's pretty reasonable.)

(Photo lifted from this article, which it turns out is definitely worth reading if you found this post at all interesting.)

Friday, December 11, 2009

Motion to reinforce stereotypes passes unanimously

The real interest rate on your ING account

If you're an ING customer like me, chances are that you were first drawn to the bank by their absurdly high savings account interest rates (upwards of 4%), but are now disappointed with the paltry 1.3% now being offered.

However, it's good to remember that in order to arrive at the true interest rate, you have to remember to subtract inflation. For example, if you are getting an interest rate of 4% but inflation is also at 4%, then you're really just breaking even--your pile of cash is maintaining the same value over time.

Currently, we're in a period of negative inflation, or deflation, which this month is in October was -0.18%, which means that the true returns on the ING savings account is was 1.3-(-.18)=1.48%. Indeed, if ING's rate were still up around 4%, you would be getting a ridiculous no-risk return of like 5.5%.

Of course, remember that inflation is a rough estimate: it's just an index that tracks a basket of consumer goods. So mileage will vary depending on what you spend your money on. But still, it's worth taking into account when frowning at ING's latest low savings account interest rate.

Monday, December 7, 2009

Thursday, December 3, 2009

I can't believe it

Ever play Joe Montana Talking Football on Sega CD? I did. And I also remember how, inexplicably, "Fake FG" was the best offensive play to run. And how the announcer was continuously shocked throughout the game. "They line up for a field goal on first down and I can't believe it....Fake."

Cheney's dishonor


Over the last couple of days there has been a lot of indignant commentary like this:

The former vice president, the man who imported torture into the American constitutional system, failed to capture bin Laden, invaded a country under false pretenses, allowed the Afghanistan campaign to disintegrate, and added $5 trillion to the next generation's debt burden, is attacking a sitting president on a day he announces a critical military strategy in front of his troops.

It is, again, a breathtaking piece of dishonor from this bitter, angry man.

What's puzzling about it is that I don't quite understand why the mere act of "attacking a sitting president" should be considered so dishonorable. People seem to think there's some unwritten rule that says that former Presidents and Vice Presidents shouldn't weigh in on partisan political issues, but even if this is an unwritten rule, I fail to see what the benefit of it is, or why it's such a bad thing to break it. Certainly I wouldn't have had any problems if Bill Clinton decided to go into attack-dog mode on George W. Bush when he was president--in fact, I probably would have welcomed it.

Just to be clear, Cheney really is a dishonorable man. But this is the case not because he chooses to criticize the President contra some nicety of beltway decorum, but because he has done and believes in morally reprehensible things.

Wednesday, December 2, 2009

Ron Artest: "I've Killed a Man"

That, at any rate, is my best attempt at a Ron Artest Onion headline. The article would have to contain at least one instance of Artest referring to himself in the third person, and maybe include some speculation as to what kind of fine David Stern might impose ($25,000, say).

Yahoo, Verizon, and others profit by handing over your information to the government

Yahoo and Verizon are trying to block a Freedom of Information Act request as to how much they charge the government for wiretaps and such.

Tuesday, December 1, 2009

The public option: tastes like water!


Ezra Klein has a must-read post that succinctly describes the current state of the public option, as well as how it got to be the watered-down non-factor that it is.

Did you know that even if it passes and is implemented, it will only even be available to 10% of Americans--and that it would draw all its revenue from customer fees, and not the public coffers? A pretty far cry from a government takeover of the health insurance industry, and yet that is what the opposition's rhetoric would have you believe.

Theft!

I'm trying out Modern Family (ep. 2), but the subplot where the father steals his son's bicycle to teach him a lesson is lifted directly from an episode of This American Life!