Saturday, November 22, 2008

Money-under-the-mattress investments

Had we all been prescient enough to re-allocate our stock and mutual fund portfolios to positions similar to those of the current lame duck resident at 1600 Pennsylvania Avenue NW Washington, DC 20500 in of 2006, the present stock market free fall would not seem so painful. The Sydney Morning Herald reports:

Going back to his 2006 financial disclosures, Bush had between 2% to 4% of his money in stock and balanced funds.

The rest of was tied up in, as one pundit put it ``money-under-the-mattress investments'': bank checking accounts, certificates of deposit, money-market mutual funds and Treasury bills and notes.

Bush disclosed between $US4.6 million and $US9.7 million in these low-risk investments compared with just $US205,000 in stock and balanced funds.

Mincing no words, the SMH concludes:

While Bush and Cheney appear to have adopted extremely defensive personal finance strategies, their administration's stewardship of the national wealth, particularly in relation to Halliburton, reek of the sort of crony capitalism which would have embarrassed a South American junta.

Friday, November 21, 2008

Priorities, ya know

Ian Welsh has a cynical take on the $700 billion bail out:

... [T]he real job of the bailout was to save Congress's white collar friends. The real goal of not passing a bill that gives auto companies 25 billion, a fraction of the 700 billion given to Wall Street so they could give themselves 70 billion of bonuses, is to destroy a major union.

Priorities, ya know.

Disastrously long stretch

Paul Krugman notes a parallel between 2008 and 1932:

The interregnum of 1932-1933, the long stretch between the election and the actual transfer of power, was disastrous for the U.S. economy, at least in part because the outgoing administration had no credibility, the incoming administration had no authority and the ideological chasm between the two sides was too great to allow concerted action. And the same thing is happening now.

Krugman suggests things are QUITE a bit worse at this point, than at a comparable juncture in 1932:

we’re in the midst of the worst stock market crash since the Great Depression: the Standard & Poor’s 500-stock index has now fallen more than 50 percent from its peak. Other indicators are arguably even more disturbing: unemployment claims are surging, manufacturing production is plunging, interest rates on corporate bonds — which reflect investor fears of default — are soaring, which will almost surely lead to a sharp fall in business spending. The prospects for the economy look much grimmer now than they did as little as a week or two ago.

...What’s really troubling, however, is the possibility that some of the damage being done right now will be irreversible. I’m concerned, in particular, about the two D’s: deflation and Detroit.

But nothing is happening on the policy front that is remotely commensurate with the scale of the economic crisis. And it’s scary to think how much more can go wrong before Inauguration Day.

Tuesday, November 18, 2008

Impose ever-increasing minimum speed limits and then employ lots of extra morgue attendants

Money Week editor John Stepek has some unkind things to say about Ben Bernanke. Stepek says these unkind things quite well.

I wouldn’t want to put Bernanke in charge of road safety. His idea of efficient traffic management would be to impose ever-increasing minimum speed limits and then employ lots of extra morgue attendants and road sweepers in the hope that the carnage from multiple pile-ups could be cleaned up more quickly and so avoid traffic jams.

Monday, November 17, 2008

Working definition of Clinton Derangement Syndrome

Eric Boehlert considers Maureen Dowd's ill-considered hissy-fit in Sundays NYT and draws some conclusions that suggest to me a likely direction in which the beltway pundit courtiers may be headed in their decision as to whether to coronate president-elect Obama or begin conspiring to have him overthrown, even perhaps, before he is sworn in to office.

[I]t's been less than 72 hours since reports first surfaced that the new Obama administration could include Hillary Clinton as Secretary of State, and within those 72 hours the press, and especially the pundit class, has managed to embarrass itself multiple times.

My hunch is that the emotional, and often irrational response, is because some in the press are furious that Clinton has not been sufficiently vanquished and humiliated in the wake of Obama's victory. For many in the press, that seemed to be the whole point of the election cycle.

Here, for me, is the key ... source of Dowd's complaint:

There are Obama aides and supporters who are upset that The One who won on change has ushered in déjà vu all over again. The man who vowed to deliver us from 28 years of Bushes and Clintons has been stocking up on Clintonites.

Think back to the campaign and try to recall a single instance during his 20-plus months on the trail when Barack Obama ever promised to rid the country of the Clintons. I remember plenty of references from Obama about doing away with the failures of Bush. But Clinton? I can't recall a single example and my guess is that's because that's not how Obama felt.

And now, some in the press are furious that Obama's non-existent promise has been broken. They're furious that Obama has made clear, yet again, that he respects and admires Hillary Clinton. They're beside themselves that Clinton may soon be viewed as a very important player on the national and international stage. They can't stand the idea of her succeeding.

And that is the working definition of Clinton Derangement Syndrome.

Will Clinton Derangement Syndrome help to push preemptive assaults on the Obama administrations attempts to deal with ongoing crises which threaten the world as we know it (global warming, fossil fuel dependency and its implications for for agriculture production and resource wars, being far more threatening to humanity than the breakdown of the world wide financial systems which will likely attract the most attention)?

Specializing in silly tales driven by overblown evidence

Bob Somersby continues his ever-vigilant watch upon the beltway pundit corps and also issues a warning that those celebrating 2008 as a turning-point election might be premature in their festivities.

Some Democrats—and some pundits—seem to think that Campaign 08 is a turning-point. We think liberals and Dems should perhaps be a bit more sober in their long-term projections.

But that’s if you want to be sound in your thinking. Most of the Washington pundit corps bows to a different set of longings. They’re the nation’s only “D-plus elite”—the dumbest of our professional cohorts. In our view, they’ve been eager to showcase their D-plus culture in the two weeks since Obama’s healthy win.

The foolishness has various faces. Some big pundits have marched to war, insisting we’re still a “center-right nation.” Other pundits have happily clowned as they picture the GOP’s demise. In our view, this overpaid cohort’s D-plus culture has been visible on various sides. They specialize in silly tales, driven by overblown “evidence.” Analysis isn’t their thing.

This is a deeply unimpressive elite. Their culture seems to be built around riding to hounds, lovely food and the dance. As we ponder Obama’s win, we’ll consider their D-plus work all week. As always, we’re especially sad when the emerging progressive/liberal world seems determined to ape their dumb culture.

Stay tuned as Bob continues to call these drivers of our national discourse out on their shallowness, vapidity, and perpetual transmission of GOP talking points into the consciousness of American thought, exposing as fraudulent such fairy tales as: the center-rightness leanings of the American people and Ross Perot "took big chunks of votes from Bush and Dole" in 1992 and 1996

Those with authority generally weren't humble or meek

Talk To Action has this riveting personal account of one man's 26 years as a member of an Assembly of God Church. I have considerable problems with the self-proclaimed "born again" 43rd POTUS at every intersection of being saved and making a major mistake:

Being saved had a lot of advantages. If someone made a major mistake, they could write it off: God had willed it. Or they could blame it on Satan, too. It depended on the circumstance, but there was always an excuse or reason. Former criminals or outright liars were often guests at the church, telling us lurid stories of their pasts in testimony. We always looked forward to that.

GWB took take his presidency as a sacred call to do the deity's will. Thus, he could do no wrong, and would not countenance the presence of any who expressed contrary opinions.

My Assembly of God was a church plagued by teenage pregnancy, alcoholism, drug abuse, promiscuity, strict social castes, and outright mental illness. It had every problem that existed in every other organization of people. It was full of sniping, backbiting, toadying, and gossip. Only the members refused to see the problems and speak about them or seek real remedies. They would just pray and hope or pretend a problem or abuse didn't exist. Besides, we were all headed to Heaven, so what did a few minor indiscretions here on earth matter, anyway? This was just the practice run. Those that had authority in the church generally weren't humble or meek. They were confident they'd been saved and God worked through them; they weren't much for saying they were sorry.

That confidence continues to fester amongst many of the corporate-political class crossovers. Here's a prime example that won't melt down any time soon.

America's most dangerous enemies

At FiredogLake, Chris Hedges the FDL Book Salon interview with Andrew Bacevich on Bacevich's new book,
The Limits of Power
. Below are a few of Hedges' introductory remarks.

Barack Obama and those around him embrace, as does John McCain, the folly of the “war on terror.” The Obama administration may want to shift the emphasis of this war to Afghanistan rather than Iraq, but this is a difference in strategy not policy. By clinging to Iraq and expanding the war in Afghanistan the poison will continue in deadly doses. Bacevich warns us that these wars of occupation are doomed to failure. We cannot afford them.

The “war on terror” is an absurd war against a tactic. It posits the idea of perpetual, or what is now called “generational,” war. It has no discernable end. There is no way to define victory. It is, in metaphysical terms, a war against evil, and evil, as Bacevich writes, will always be with us. The most destructive evils, however, are not those that are externalized. The most destructive are those that are internal. These hidden evils, often defined as virtues, are unleashed by our hubris, self-delusion and ignorance. Evil masquerading as good is evil in its deadliest form.

America’s most dangerous enemies are
not, in the end, Islamic radicals but those who promote the perverted ideology of national security that, as Bacevich writes, is “our surrogate religion.” If we continue to believe that we can expand our wars and go deeper into debt to maintain an unsustainable level of consumption, we will dynamite the foundations of our society.

Complex systems collapse quite rapidly

Here's a fascinating article from The Oil Drum: Australia & New Zealand which chronicles the failure of a complex computer system and draws on analogies to sand castles, academic studies of complex systems, and the world wide financial sector meltdown. Here's the description of the computer system meltdown:

Our internal network here has been having problems ... I was reminded that the speed of collapse in a network is often a function of the natural frequency (speed) of the network, while the breadth of failure depends on a number of factors, including load and the degree of interdependence within the network.

The problem was eventually traced to a problem with one piece of software on one machine on our intranet.

Our Intranet network could have been built to be reliable, but instead it was built to be "efficient". Far from being a network of fail-safe systems, our network is a network of interdependencies. When the system was loaded, a single failure brought the whole system down.

Our network operates at electronic speeds, and it failed with the same rapidity.

Understanding how this happened is critically important. There are four parts to creating the complete meltdown of a network:

1. Create a network by building connections between systems.
2. When a particular part of the network approaches overload (goes red), recognise that this is happening and use the connections you have created to allow you to switch load to another part of the network.
3. Continue doing this until all areas are red.
4. Now add more load.

In summary: The ability to measure and monitor the system gives us the capacity to avoid small avalanches in individual areas. However, if we keep adding load without adding capacity we overload the entire network and thus make an all-encompassing avalanche inevitable.

If we can’t add capacity, then it would have been better to allow a series of small avalanches.

Read the whole article which goes from computers, to sand castles, to financial systems, to peak oil and beyond.

Sunday, November 16, 2008

NCIS - Political statement perchance?

It's a network TV show I watch - NCIS. Last Tuesday night Special Agent in charge Jethro Gibbs (Mark Harmon) has an agent trainee attached to his crew, and is asked by the Director to evaluate the trainee. The Director explains,

"With the new administration coming in, we want to weed out the ones that are political appointees."

Be still my heart.