Saturday, February 28, 2009
In the softball unit back in tenth grade gym (1959 for me), we played a “one strike” (or "one swing") rule. You foul off a ball at the plate, you’re out. That rule allowed me to pitch a shutout one Friday morning (it got around the school).
Apparently, the whole subprime mess was predicated on giving ordinary citizens a “one strike and you’re out” rule. That’s the thesis of an article by David von Drehle in the March 9, 2009 issue of Time (p 22, called “House of Cards”). He goes on with some “real life case histories” as lurid as those from a book on HIV. Imagine what we did. We indebted people for twice as much as they could normally qualify for, with balloons or boosting rates in five years or negative amortization (and booked the values of the loans as “real”). We pretended we could create wealth on balance sheets that debtors were responsible for, without creating real wealth (like solar panels, windmills, roads, mass transit, rural broadband).
The next article, by Stephen Gandel, “One Bad Bond”, goes to explain how CDO’s work, and with “CDO-squareds” and “Jupiter High Grade V” created mixed products whose mathematical values would fall rapidly with only a few defaults in the lowest tranches. All of this with only 8% of mortgages in default!
It’s said that Geithner’s Treasury Department won’t be able to even appraise Jupiter (much less appraise the planet!). But, you could set up a hierarchal database on a mainframe computer (IBM’s old IMS-DB database is a good tool), put all the mortgages in Jupiter on it, link them into their tranches, and then walk the hierarchy and calculate the value. A good mainframe programmer can do that (yes, Treasury, call me and hire me, I’ll show you how).
Justin Fox, in “Nationalized Nonsense” goes on to say that we have already practically nationalized the big banks, and Adam Zagorin and Michael Weisskopf go “Inside the Breakdown At the SEC” which surely failed to protect our money.
And now we read that the GDP in 2008 shrank at a shocking 6+ percent (annualized) in the last quarter, and the rate of shrinkage seems to be increasing, again, like a retroviral epidemic.
We did this to ourselves. I wondered why, in quasi-retirement, I got unsolicited phone calls to “manage” offices of people selling mortgages or financial products – when I had no experience doing so. The first of these calls occurred two days after 9/11 (while I was still working in IT). I thought this had something to do with my book and websites – that some people wanted to divert me, or use me to make them “feel good”.
We have gone on a frenzy of greed and self-deception that seems beyond belief. It spread all over the world; Europe seems even worse off than the U.S. now. What do we have, a whole generation that doesn’t know the difference between right and wrong?
“Greed is good”. Gordon Gekko said that right after the 1987 crash!
Friday, February 27, 2009
Robert Lerman has an interesting op-ed on p A25 of the Friday Feb 27, 2009 Washington Times, “Renters a key to housing market: The costs rise as home prices keep declining,” link here.
Lerman argues that in some cities HUD rent subsidies would go further if applied to home purchase. This might stop the home prices slide in some cities without additional taxpayer investment and restore home ownership, particularly to families. On the other hand, it does encourage consumers to take on some debt again, and perhaps at some additional risk. Are renters still second class citizens after all this? Often they have been displaced by investment owner default, too.
Thursday, February 26, 2009
Delegate Eleanor Holmes Norton (D-DC) has introduced legislation in the House of Representatives to give Washington DC one voting member in the House. The bill is HR 157, 111th Congress, with govtrack link here. Also go to “DC Vote” coverage here.
The corresponding bill on the Senate is S. 160, introduced by Joseph Lieberman (I-CT).
Nevertheless, there is a big fight over the measure, particularly from Republicans in the Senate, especially 2008 presidential candidate John McCain. The constitutional arguments, which could well wind up on court, deal with the fact that the District is not a “state”. Theoretically, the argument could be solved by retroceding the City (or most of it, outside of the major federal buildings) to the state of Maryland, giving the state a second major city almost the size of Baltimore. (No, "Tall Man" on the Metro, this did not come from The Onion!) Such proposals have been floated informally ever since the 1960s (when "home rule" was a popular political buzzword). However, the Washington Post reported at around 11 AM today that the Senate had killed a proposal to effect such retrocession, by a 67-30 vote. Mary Beth Sheridan has the story, here.
Earlier, the Post carried a story on the first page of the Metro section, p B1, by Mary Beth Sheridan and Michael Ruane, “Foes Fight D.C. Vote Measure in Senate: Amendments to Repeal Gun Control, Cede City to Md. Are Proposed.”
The weapons measure would confound the District’s attempt to regulate home gun possession after the outright handgun ban was declared unconstitutional last year by the Supreme Court on Second Amendment grounds.
The other major idea would be full DC statehood, which would likely add two Democratic Senators to the Senate. There is hardly any doubt that the historical objection to direct DC representation has a lot to do with racial history. The City's license plates still read "Taxation Without Representation", a major buzzword of the American Revolution.
High school civics and government teachers ought to look into the DC vote situation carefully. There's a lot of substance here.
Wednesday, February 25, 2009
Bob Ryan, a meteorologist for NBC-Washington (Channel 4 in Washington DC) offers a three-part series on climate change and global warming on the NBC4 website. The link is here.
He divides the presentation into three parts and offers many colorful graphs. He starts with his own philosophical discussion of science, which is almost “Rosenfelsian”. He goes on to lay out the observations.
Some detailed points: on Earth, 80% of the “greenhouse” effect comes from water vapor. Commercial airlines appear to add water vapor to the upper atmosphere. (He doesn’t mention that after 9/11, when airlines were shut down for four days, global nighttime temperatures fell by 2 degrees F). But the rest is mostly from carbon dioxide and, to some extend, methane and hydrocarbons. He compares Earth to Venus whose atmosphere is almost entirely Carbon Dioxide. (He doesn’t mention Titan, discussed Monday, which actually has a “reverse greenhouse effect”).
Much as Al Gore did in his “Inconvenient Truth” film and book, Ryan presents evidence that overall climate is warming, even though over shorter periods of time there is a great deal of uncertainty about weather.
The three parts each have attracted numerous comments.
Last December 1, Doug Hill, from ABC’s WJLA station in Washington, along with Adam Caskey, did a presentation on television meteorology at Wakefield High School in Arlington. Hill declined to speculate on global warming after a question from the audience, and indicated that the issue had been highly politicized (as if by the political Left). I see that I put the account of this event on my "drama blog" on Dec. 1, 2008, link here.
Picture: NASA JPL picture from the surface of Titan, from Wikipedia, stated as in public domain. Temperature, about -280 F.
Tuesday, February 24, 2009
Martin Baccardax, has an important suggestion on CNBC this morning “Here’s How to Fix This Mess”, the banking crisis, that is. He offers a proverb in Latin, Omnes viae Romam ducunt,” All Roads lead to Rome. Baccardax wants to let financial institutions suspend the FAS 157 rule. The link for his CNBC article is here.
FAS 157 is a rule from FASB, the Financial Accounting Standards Board, called the “Fair Value Measurements” rule. FASB’s link is here.
A key provision seems to be this: “This Statement emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.”
Imagine you have a car loan, and that your car has dropped in value when you drove it off the dealer’s lot. (It does.) Then imagine that your car finance company calls and demands that you make up the difference in cash right now, or the car will be repossessed. It doesn’t work that way with consumers, but it does with banks. That’s what Baccardax wants to see changed.
Financial institutions and life insurance companies run end-of-month batch accounting jobs to match their balance sheets to FASB rules. I remember computer jobs like that when I was working for a life company.
Baccardax relates FAS 157 to Rick Santelli’s “rant.” He says that the current housing plan effectively penalizes people who are current on their mortgages but whose houses are underwater. Baccardax blames FASB for the corruption of “moral hazard” in our financial system. This sounds like a debate we have heard before about "mark-to-market accounting".
So, why not suspend FAS 157. Can Geithner decide to do this himself?
Update: March 11, 2009
Reuters has a copy of the speech by Fed Chairman Ben Bernanke to the Council of Foreign Relations, "Financial Reform to Reduce Systemic Risk," link here. (I'll check later to see if the speech is within the public domain; it should be). Bernanke is hinting at revising some of the "mark to market" accounting rules.
The article by Annys Shin and Lori Montgomery on p A6 of The Washington Post is "Bernanke's Vision for Change: Fed Chief Calls for More Financial Oversight, Overhaul of Rules", link here.
I have a review of Ben Stein's comments on Larry King Live March 2, 2009 on my TV blog here.
Update: March 13, 2009
Floyd Norris has a New York Times "High & Low Finance" column (p B1) "Problem for Bankers? The Rules" about mark to market here. The article says that Rule 157 is not what requires mark to market; that came earlier. But Rule 157 further restricts how banks can value their assets.
Proposals include sliding scales and various disclosure levels that could complicated automated batch computer systems that the government is likely to write to regularly compute assets.
The banks want Congress to establish a new body to issue accounting regulations. How would this work overseas? The banks believe that the regulations helped bring on the crisis, although they may have been intended more to prevent Enron and WorldComm like situations in other kinds of companies.
Monday, February 23, 2009
Even in these troubled times, thought about exploring nearby worlds, at least with more unmanned probes and robots (“Wall-E”) for life goes on, and in our solar system, the two best chances are Europa, a moon of Jupiter, and Titan, the star of Saturn’s system.
Remember that the film “2010” (based on Arthur C. Clarke’s sequel) turned a leprous Jupiter into something like a brown dwarf and Europa into a real planet, with a chance to evolve – with earthlings told to leave Europa alone. The evidence is strong that it has a substantial water ocean underneath an ice crust, and that tital forces from Jupiter, along with volcanic activity, could mix things up enough for life like our simplest bacteria to form.
Titan, on the other hand, has a bizarre “reverse greenhouse” effect with an atmosphere that blocks out distant sunlight, and a surface temperature not much warmer than -300 F. Huygens pictures show a surface that looks like a desert, but in fact it seems that most of the surface is an ice, covered with organic sooty compounds called thiolins (Carl Sagan’s term). There may actually be an ocean underneath the ice, and then a further ice layer. That could lead to some interesting tectonics or water volcanoes, and there are Lake Superior-sized seas on Titan composed of ethane, methane or mixtures after “thunderstorms”. There could be some chemical process that demonstrates “life as we don’t know it.”
All of this is summarized today in a story by Joel Achenbach, p A6, of the Monday Feb. 23 Washington Post, Science Page, link here.
There are pictures online of Titan and Europa (and Mars, Venus, the Moon, etc) taken by NASA missions and they appear to have a “free copyright license” – effectively public domain. Most of the commons warnings that I find refer to accidentally using pictures of people in them. But right now, there’s not much risk of finding “people” on Titan – unless they’re angels.
Picture: Titan "Courtesy NASA/JPL-Caltech.". NASA Photojounral source online is here.
"Titan" is the fictitious company on NBC's soap "Days of our Lives".
Friday, February 20, 2009
Moral Hazard: Brother's Keeper? What happens if we nationalize banks? Put on those sticky stress test pads
Well, we’re all hearing about “moral hazard” now. Rick Santelli went on a rant (video here) “the president is encouraging bad behavior. Do you want to pay your neighbor’s mortgage”?
Am I my brother’s keeper? The New Testament says so, and a lot of religious morality (in any faith) deals with “rules” or values that deal with problems that are beyond the control of the individual in the normal sense of things.
The obvious application with Obama’s housing rescue plan is, if your neighbor forecloses, your own house goes down in value. That’s true. And it’s too bad if your neighbor took on debt in a way that you personally think is reckless, even if it was legal and encouraged by Wall Street.
Yup, 92% of American mortgages are performing properly, and its amazing that the 8% that don’t could take down an entire financial system.
Except that it is more complicated. Overseas, we see a similar pattern, especially in Britain and Spain. But what’s worse is that in many other ways, American consumers were living beyond their means, depending on slave labor overseas.
Rather than help Americans (and Western countries) build more robust infrastructures, Wall Street went on a binge, rewarding traders and salesmen for short-term gains of selling unsound instruments, and then Wall Street securitized and pretended to “insure” them. Until the money ran out.
One comment on my review (Feb. 12, 2009) on the TV blog of CNBC’s movie “House of Cards” explains it this way: “Mortgage originators took advantage of the troubles at Fannie & Freddie to start looking for entities that were willing to buy and securitize the loans that Fannie/Freddie wouldn't touch--in other words, Wall Street. Wall Street apparently was willing to buy subprime loans with no questions asked because they made them so much money.” No, Suze Orman wouldn’t approve of this behavior.
It’s getting really scary today for banks. According to CNBC, Ben Bernanke has already hinted at bank nationalization by speaking in contraposition. Look here (“Bernanke's Slip May Have Caused Bank Share Tumble”)
Then today there is “Coming Attraction: Bank Nationalization?” here with, again, a contrapositional denial, with bank executives claiming they have been reassured this would not happen.
Still, the electrocardiographic stress tests on banks have yet to be administered, and it looks like some "executive" chests are going to get shaved for all the Holter monitoring that will follow. It is sounding like several trillion more dollars of junk is going to show up, more or less like finding half of the heart muscle gone.
There are at least questions down the run about sacrosanct assumptions and promises, about FDIC insurance, pension guaranty insurance (what happens to pensions of nationalize banks – does PGBC take them over – does somebody know??). An individualistic society assumes that individually responsible decisions will be rewarded and the culprits punished. But we all live subsidized lives, and the whole idea of “personal responsibility” and “personal sovereignty” or autonomy seems at risk if the whole money system itself is. I’m wondering what we can count on.
Wednesday, February 18, 2009
Howard Davidowitz (a consultant to the retail industry with this site) warns that “"Worst Is Yet to Come:" Americans' Standard of Living Permanently Changed” as Americans and westerners switch from consumerism to “survival mode” including some increasing savings. Yahoo! offers a telling interview of Davidowitz with Aaron Task on Tech Ticker. The Yahoo! link, on its strike page today, is here. Watch the four minute video. Parents will not be able to afford non-public education, which may not be bad; but consumers will not be able to borrow to consume as they did.
The only way to improve standards of living again is to produce real wealth, and do is sustainably. That starts with building an infrastructure for plug-in electric car battery transfers. And it also starts with local solar and wind power, even on individual homes. It also means building an “Energy Internet”. We should have been doing this instead of inventing financial instruments to lure people into buying homes and cars they could not afford.
ING, the last major company of my “career”, has posted a loss for the entire year 2008 loss of 171 million Euros. The press release is here. ING recently received $13 billion more in bailout money from the Dutch government. Forbes has an interesting perspective by Vidya Ram, “ING Safe but Not Sound”, link here. ING has the reputation of being a very progressive place to work (for example, domestic partnership). It has not been able to escape the damage from the collapsing housing and financial markets, and seems, like almost all other large global institutions, to have competed by going along with the herd. Nobody escaped.
CNBC's video of the ING earnings is here. Numbers were "slightly better" than expected, despite the doom and gloom.
Today President Obama offered his temperate plan to help up to 9 million mortgage holders against falling home prices. The CNN story by Tamy Luhby is "Obama: Aid 9 million homeowners; Wide-ranging $75 billion plan will use government money to subsidize rates and insure servicers against falling home prices," link here. Obama, in a speech, warned that the plan would not help investors who had tried to make easy money by flipping houses (like that one character on Dr. Phil who was in debt by several million at age 23, with a wife and baby), or consumers who had been reckless. In many case, loans would be brought down to current value, with the government making up the difference. In some cases, the plan will pay loan servicers and mortgage holders for what they should do anyway (so much for "moral hazard"). Lenders may now feel incentivized to talk to borrowers before the borrowers actually become delinquent. Fannie Mae and Freddie Mac would get "help". Obama wants legislation to allow bankruptcy judges to reduce mortgage balances.
The Feb. 19, 2009 New York Times, p A16, has a graphic that explains the mortgage relief program here. The title is "The New Housing Plan: President Obama's housing plan is expected to help as many as seven million to nine million homeowners by making it easier for them to either refinance their mortgages or renegotiate payments".
Picture: Rain on the snow. Winter starts to ease.
Tuesday, February 17, 2009
Holmes Osborne has a provocative article “Some Junk Bonds Look Safer than Stocks” on “The Street”, reprinted from “Real Money” (which seems to require subscription). The link on "Street" is here.
Osborne goes into a fictitious bankruptcy, and equates (I think) junk bonds to “junior debt” that would get more of the pie if the judge gives the underlying assets more value (which means that the “senior debt” doesn’t wipe them out first). Junk, he thinks, makes more sense if the underlying asset is a car factory that could make hybrid vehicles or electrics some day than it if is a bank with a lot of credit card receivables. Makes sense to me. But then, the stock out to come back some day, shouldn't it? It seems like a matter of time and scale. Go read about "senior debt" and "preferred stock" on Wikipedia.
Is this the time to bring back “Mike Milken” from the 80s? Then, “junk bonds” were his discovery and present to the world. He actually recovered his life and eventually did good things.
Of course, conservative investors, especially those closer to or in retirement, have to pay attention to what any mutual funds they have actually hold.
What would Jim Cramer say?
Sunday, February 15, 2009
Barron's calls for massive help for homeowners as condition for TARP; forget "moral hazard"; Cramer gives Obama's first "English theme" an "F"
Barron’s, on Saturday Feb. 14, offers a front page editorial “The Barron’s Plan” A keystone proposal is that the offering of TARP money to a bank should be conditioned on its offering to cut the principal owed on what it says is $850 billion on subprime mortgages by 25%. Presumably, this would help a lot with “upsidedown mortgages”, negative equity or increases in principle owed because of previous negative interest rate tricks.
The article takes the position that practicality is much more important than trying to assess “moral hazard” or insisting on “justice”. As Donald Trump (who calls the current mess a depression) said on “The Apprentice,” “Life is not fair.”
The link for the article is here. However, the full text requires a subscription (or else purchase or library viewing of the print version, often available at 7-11’s and other newsstands).
The New York Times, in a front page article by Nelson D. Schwartz, “Job Losses Pose a Threat to Stability Worldwide,” link here. Most of the job losses overseas are indirect results of worldwide business depression and loss of export markets. This could lead to protectionism, or to calls for more authoritarian government, just as in the past.
Truthdig has a column by Chris Hedges Feb. 16 "Bad News From America’s Top Spy", link here. Alternet, in reprinting it, frames it with these scare headlines: "U.S. Intel Chief's Shocking Warning: Wall Street's Disaster Has Spawned Our Greatest Terrorist Threat: The Director of National Intelligence argued that Wall Street, rather than Islamic jihad, has produced our most dangerous terrorist".
I think that in a general way, there is a lot of criticism of the Economic Stimulus legislation, HR 1, which President Obama will sign on Tuesday in Denver, as containing too much pork and too much spending that really won't generate jobs rebuilding real wealth and infrastructure. Jim Cramer gave the legislation an "F" in his video blog recently.
Here's another thought in this particular posting of some assorted potpourri. We're all talking about behaving sustainably. But you have to have innovation and creativity to have sustainability. Just think of the examples in nature. Stay tuned.
Saturday, February 14, 2009
Illegal alien trespassing in Southwest tests property rights, perhaps weapons laws; how does the Constitution protect illegal aliens?
The Washington Times, on Friday Jan. 13, ran a story by Jerry Seper about the nuances of the debate over the rights of illegal aliens. One of sixteen illegal aliens (Gerardo Gonzalez) is being allowed to sue an Arizona rancher Roger Barnett, along with some family members and the sheriff of Cochise County, AZ, for detaining Gonzalez at gun point after apprehending him trespassing and migrating through his ranch property . The story maintains that the plaintiff had been convicted of a drug offense in 1993 and deported. Cochise County in the southeast county of Arizona, bordering Arizona and New Mexico. The ranch, near Douglas, appears to be near the Mexican border. The linked story (here) has an AP photo of the defendant.
Ranchers are maintaining that they are defending valid property rights, and the case seems logically in argumentation related to the issues of homeowners in Washington DC who challenged DC’s gun law, for example. Ranchers also maintain that the capability of self-defense acts as a deterrent, where others say they are taking the law into their own hands, which used to be common practice in the West (look at the recent film “Appaloosa”).
The newspaper article says that the suit is brought by the Mexican American Legal Defense Fund, or MALDEF. The closest story that I could find on its website is “Arizona Supreme Court rejects appeal of vigilante rancher who attacked U.S. citizens on Arizona border” but that seems to refer to a different incident, link here, from Sept. 23, 2008, here. Another press release for this case will probably appear soon.
There will, of course, be questions about how the Constitution applies to people who do not have the legal right to be here.
Friday, February 13, 2009
Student in CO suspended for mock rifle in car: debate on "zero tolerance" and common sense in schools
A student, Marie Morrow, will be suspended (or “expelled”) for at least one day by Cherokee Trail High School in Aurora, CO, in order to comply with a state law that mandates expulsion of any student found with weapons or facsimiles on school property, even in a locked car.
The student is in honors academically and is drill team commander for the Young Marines, and the instrument was a ceremonial copy that cannot fire rounds. Nevertheless, the law requires her removal from school.
The story appears today on the front page of The Washington Times, Feb. 13, 2009. The title is “School gun case sparks cries for ‘common sense’; Student in hot water for mock fifles”, link here.
Reportedly, the legislature is considering revising the law.
But across the nation, states have passed zero-tolerance laws for potentially dangerous material being even in locked cars of students or teachers on school property. In the spring of 2005, when I was substituting, a teacher was arrested at a Fairfax County VA high school on a day that I was there when someone reported a weapon (actually not loaded) locked in his trunk.
It might be possible in some states that it would be illegal for a student or teacher to possess pornography (even) in a locked vehicle on campus, on the theory that it could be distributed, even if not intended to. I was once approached by a security guard because some pages of a gay newspaper (“personals”) could be seen on the back seat of my car where parked, even though locked. I hadn’t thought about it. That raises interesting questions.
I can imagine some other questions about teacher responsibility. What if a teacher (even a substitute) goes to a bar and sees a student he or she knows to be underage drinking. This has happened to me at least once. Does anyone know about school policies regarding such situations?
It is possible to imagine laws about Internet content posted off-duty and off-campus by teachers and students. This has already been discussed here in conjunction with the growing issue of cyberbullying and the legal debate on school responsibility for what happens off campus. But one problem is that one can maintain that if a particular piece of content believed by some to be inappropriate is published in a public space, it is, in some sense, vicariously “present” on school property and could be regulated. (The content could be blocked from school computers but students could have seen it and been influenced by it.) I was involved in one such problem in Oct. 2005 (discussed on my main blog July 27, 2007).
Thursday, February 12, 2009
Once in a while, this column does cover public health issues, and the recent salmonella scare at the Georgia peanut products factory certainly fits the concern. Feb. 10, 2009 Jennifer Merritt posted a column “Coping with the Peanut Butter Salmonella Scare,” on the Wall Street Journal online, link here. That story in turn links to a WSJ copy of an AP story about the Food and Drug Administration’ finding that the company knew that the product was tainted and quibbled over the ethics of what it had to do, making up pseudo-excuses.
That certainly could become as scary an incident as any other public health threat, such as H5N1 or HIV, the idea that someone or some company could practice “deliberate negligence.” It should be pondered.
There is another recent important public health story. Tillie Fong has an article in the Rocky Mountain News (Denver) Feb. 7 about the Lutheran Medical Center’s treatment of a case of Marburg virus (related to Ebola virus). Marburg virus was the subject of the first chapter of Richard Preston’s 1994 book “The Hot Zone”, and it also appears in Laurie Garrett, Coming Plague: Newly Emerging Diseases in a World Out of Balance . Marburg and Ebola have generally been thought to be transmissible by body fluids and blood, but are much more transmissible than HIV and Preston maintains that a simian variety is actually casually transmissible (the Ebola Reston 1989 incident). At Fort Detrick, MD they are “level 4” biohazards, among the deadliest known.
Today, there were also multiple media reports on significant research breakthroughs on the internals of the common cold virus.
Also, a special federal court ruled that there is no compelling scientific evidence that would show that MMR vaccines cause autism. The plaintiffs (parents of kids with autism) will not collect damages. The government has always maintained that almost mandatory vaccination is important to create "herd immunity" and protect the public as a whole.
Wednesday, February 11, 2009
Tony Blankley has an op-ed on p A21 of The Washington Times, “Bring Back the Draft.” Actually, it is excerpted from the book “American Grit: What It will Take to Survive and Win in the 21st Century” from Regnery Publishing Company. There’s more to say about the origin, too. It’s the second of three excerpts run in the newspaper, and Regnery is a well known and controversial publisher of “Conservative” books (associated with Eagle Publishing). (I’m reminded of H. Ross Perot’s “Eagles don’t flock.”) The author is a vice president of Edelman, a public relations firm in Washington.
The Amazon link for the book makes it look as though introducing a universal military draft is one of the three main arguments in the book.
The link to the op-ed is here.
Blankley, in the excerpt, goes against Pentagon statements and claims that the military actually needs the draft again (and I guess we can get into discussion about stop-loss -- itself the topic of a major movie from Paramount last year -- and the “backdoor draft”). He is also skeptical of President Obama’s desire to offer strong carrots (but no sticks) for national service. Here’s an interesting quote: “Yes, national service would be a costly endeavor and would undoubtedly provoke libertarian outrage from a number of eighteen-year-olds who've become estranged from the very idea of a citizen's obligation to his country. “ It’s interesting that he uses the word “libertarian” in this sentence. (Great work on a high school English vocabulary test, maybe.)
The extract doesn’t mention how the draft would jive with ending (or not ending) “don’t ask don’t tell” for gays in the military. In time, I’ll have to check out the book and see if it does.
The Washington Times, and for that matter conservative “movement” as a whole has tended not to favor bringing back the draft. The 2008 Republican Party platform emphatically supported the all-volunteer military (but keeping don’t-ask-don’t-tell). The Democrats (like Charles Rangel and Carl Levin ) have been much more vocal about this, especially since 9/11. Charles Moskos, the Northwestern University sociology professor who helped author “don’t ask don’t tell” but who has since come out in favor of ending it, wrote pieces in favor of conscription shortly after 9/11.
This whole idea of an obligation to serve used to be at the center of our moral debates when I was growing up. Now, it’s off in a corner, out of sight from many people. One of the underlying concerns is karma, and depending on the invisible sacrifices of others.
On Thursday, Feb. 12, the Part 3 op-ed was "Yes, we need censorship: Like colonels, censors helped us win WWII".
Tuesday, February 10, 2009
Washington station WJLA reported at noon today (Feb. 10) that Obama’s new Secretary of Education Arne Duncan visited Wakefield High School in Arlington in order to provide students with some real life contact with civics and government. All of this happens on the same day that the station reports that DC Chancellor Michelle Rhee (discussed yesterday in the context of her reassuring op-ed) that a worsening economy may reduce teacher compensation.
Duncan reportedly discussed the economy with students, who must be edgy about how they will fare with student loans and college tuitions, as well as increasing fees for AP tests and the like. (There was no link yet for the report on the visit). I suppose he could have talked about the ethical pitfalls that led to the financial collapse -- extreme capitalism run amok, with the untoward short-term incentives given to millions of individuals as in David Callahan's "The Cheating Culture."
I subbed at Wakefield from 2004-2005 and that’s another chapter of my life experience, with some troubling results, that I’ve discussed on these blogs before.
Wakefield is located in the southern part of Arlington, the least prosperous part and Wakefield is now the school most in need of work (possibly to benefit from economic stimulus money). Washington-Lee, from which I graduated in 1961 when it was one of the top public high schools in the nation, now has a new building (and is still expanding); Yorktown, in the most prosperous area, opening around 1960 and had major additions sometime around 2000.
The New York Times today reports that Timothy Geithner has won an intra-administration political battle softening investors from the consequences of the “stress test” associated with bank bailouts, in a front page article by Stephen Labaton and Edmund L. Andrews, link here. The article also discusses the stagnation in the markets for securities related even to mortgages that are performing because the underlying equity values have fallen, an issue mentioned by President Obama in his press conference last night.
Perhaps the sleeper economic story, however, appeared in The New York Times on Monday (Feb. 9), Business, Bill Vlasic “Running on Fumes No More: In Silicon Valley, Mapping a Global Plan for Car Changing Stations,” link here. The underlying issue is getting car buyers over the hump on going all electric: range, and the fear of getting stranded. Apparently, entrepreneurs are getting serious about offering recharged batteries at service stations, and providing the infrastructure for electric car owners to exchange them and for stations to recharge them. Would this require a lot of economic stimulus money now?
Monday, February 09, 2009
District of Columbia school chancellor Michelle Rhee has an op-ed on page A17 of The Washington Post today, Monday, February 10. She titles it “Teaching, the Toughest Job”, link here.
Rhee is giving her side of the story over the criticism of her handling of ineffective teachers. She says that no teacher is forced to give up tenure, and that she will protect teachers from arbitrary firings. She will reimburse teachers for out of pocket expenses for supplies, often a subject of the sacrifices of teaching in many districts
She is critical of a few teachers who abused absence policies, or who were lazy in the classroom, reading the paper while allowing discipline issues to fester, say during individual classwork exercises. That can be a problem with subs – they are often given worksheets to hand out to keep students busy (or tests) and then ignore students who don’t do they work. I probably was guilty of that, sometimes.
Sunday, February 08, 2009
Insurance company financial strength requirements: may vary among states, may complicate things for consumers
Insurance companies, especially in the life insurance industry but probably also in casualty, have been lobbying their home state governments for “relief” from some accounting standards rules. This is happening after NAIC rejected their request for accounting changes. Policyholders, same consumer advocates, could be exposed to the whims of politics in their home states
The Washington Post story appears on the Business Section this morning “Regulators Reconsidering Insurer Relief: Rules for Companies Could Vary From State to State”, by David S. Hilzenrath, link here.
The story mentions the Consumer Federation of America (CFA), whose last press release on the NAIC issue was in Dec. 2008, here.
The Center for Economic Justice (CEJ) has a page on the insurance regulation and insurer financial standards issue here.
There would be a concern that tight standards of financial strength would cause insurers to become pickier about accepting customers, or to tighten underwriting standards to reduce the risk of anti-selection or of hard-to-estimate risks, as well as to walk away from insuring properties in disaster prone areas. The possibility of losses to crime might become a more sensitive issue in this economy and out-of-control crime exposure in some areas.
Update: March 2, 2009
Leslie Scism has an important Wall Street Journal analysis today "Annuity Math Anxiety: Consumers wonder if they are exposed to more risk as some insurers get regulatory relief in calculating their reserves", link here.
Saturday, February 07, 2009
The sudden spike in unemployment associated with the economic crisis is hitting men more than women. There are 11.6 unemployed people in America, up 4.1 million since the start of 2008. But since the start of the recession in 2008, 82% of the new job losses have occurred with men.
That’s because the jobs involving heavy personal contact (nursing, teachers, etc), jobs that can’t be offshored or eliminated easily, are disproportionately held by women, as they always had been. Of course, there has been some change. Recently, the percentage of male nurses has increased, for example.
There is a New York Times story by Catherine Rampbell, “As Layoffs Surge, Women May Pass Men in Job Force: 82% of cuts hit masses; A continuing recession is posing a challenge to gender roles,” link here.
That would mean a lot more sharing of roles in the home and child care, but that has been going on for many years anyway.
Whites have 6.9% unemployment, blacks have 12.6%, according to a CNN report aired Saturday morning. Asians have unemployment comparable to Caucasians (I didn’t get the number from the broadcast). The historical trend of racial disparity in unemployment certainly has continued during this recession aka depression.
Barack Obama, in his radio address (on "The White House Blog"), said today. Let's put Americans to work doing the work America needs done.”
Friday, February 06, 2009
The Washington DC Area Metro may have to consider severe service cuts, including conceivably shutting down at 10 PM every night, according to a Metro section story Friday February 6 in the Washington Post, p B1. The story “Reduced Rail Hours Among Possible Cuts: Apprehension on Metro Proposal” is by Lena H. Suna and this is the link.
There will be board next meetings next week and a public comment opportunity, but cuts could happen this summer, to close an $173 million gap, about $80 million in service cuts.
But many observers believe that the threat is a political ploy to urge governments (even economic stimulus money) to be available, or to goad riders to agree to another fare increase before summer of 2010, breaking a promise in a previous agreement.
In terms of welfare of the area, the proposals make no sense. There is not enough parking in Washington DC, even on nights and weekends, even in paid lots (and there seem to be few 24 hour lots) and bars, restaurants and theaters would be hurt. For example, most people use Metro to get to Landmark E-Street theaters downtown, which feature leading independent movies and are often packed on weekend nights, even during economic recession. It’s true that cities in the South and Midwest, even those with some transit (like Atlanta) seem less dependent on Metro for business than does Washington. Baltimore (also having a subway and light rail) seems less dependent.
The WJLA (Channel 7) story is much blunter "With Budget Shortfall Looming, Metro Considers Service Cuts" link here.
The DC Examiner has a similar story by Kytja Weir, "Metro looks to close $154M budget gap, may stop bus routes, late-night rail" link here. The Examiner reports that the total deficit has been reduced to "only" $154 million.
And Jim Iovino of NBC-Washington writes in a story called "Metro Closing Doors?" Iovino writes "One behalf of WMATA riders everywhere, let's hope there's a light at the end of the tunnel, and that the light's on the front of a late-night train" and he also specifically warns that Metro service is essential to reduce driving while drinking.
New York City’s transit system is open 24 hours. Effectively any resident in any of the boroughs can get home by transit at any time, given enough stamina, where that is not true for residents of nearby New Jersey. That was an issue for me in the 1970s. I recall the political battles to keep the fare at 35 cents; it was traumatic when it went up to 50 cents on Sept. 1, 1975. It’s much more now. (But there have been some crippling strikes.)
We need healthy public transit. In Europe it’s never a question. To allow cuts to happen now would go back on Obama’s “yes we can”.
Even in DC it should run 24 hours. Why not have an innovation to let the same Smart Cards work on all transit systems (New York, Philadelphia, Baltimore, Washington, LA, SF Bart, Chicago, Minneapolis Light Rail, Atlanta, Miami, Chicago, Dallas Light Rail) and have an IT system to pay the right city’s system?
Thursday, February 05, 2009
President Barack Obama has an op-ed on p A17 of The Washington Post, Thursday, Feb. 5, 2009, link here. It is titled “The Action Americans Need.” The president warns that we could easily lose five million more jobs quickly, increasing unemployment officially by something like almost 3% more and easily go over 10% unemployment, even as officially measured.
He warns that financial manipulation and tax incentives alone, even if separately well reasoned, will not save the economy. There must be a focus on sustainability and real wealth, particularly in the area of renewable and low-carbon (or no-carbon) energy and infrastructure. This sort of investment does not always return quick profits the way financial manipulations sometimes appear to, and they require some sense of generativity, even among those without their own children. Even people who believe that they have individually behaved sensibly and conservatively have to face the fact that ‘we are our brother’s keepers.”
The Post writes at the end of the article in italics, dispassionately, “The writer is president of the United States.” The page shares op-eds with E. J. Dionne, Jr., David S. Broder, Anne Applebaum, and “baseball fan” George F. Will. The president looks like an ordinary American here. Or perhaps not quite. The company he keeps on the page is pretty professional. I also thought, unlike an inaugural speech or State of the Union message, this op-ed is a privately "owned" item of intellectual property, legally protected by copyright, not part of the public domain.
On the facing page, A16, the Post has an important editorial itself, “The Senate Balks: Why President Obama should heed calls for a more focused stimulus package,” link here.
That’s noteworthy because on my main blog today (see my Profile) I wrote a posting about the closure of the “gossip girl” site Juicy Campus, itself sounding silly, but a warning sign that the economy may not support the advertising infrastructure (particularly without keeping the pressure on broadband) necessary to keep the “free entry” for speech and debate that we have become accustomed to.
Wednesday, February 04, 2009
Today, AlterNet offered an alarming piece by Chris Hedges (Feb. 2, 2009), “It’s Not Going to Be OK,” which I tracked back to the TruthDig source here.
I used to reflect a thought in my own brain when hardship threatens, “It won’t be so bad, or will it?” Hedges writes, early in the article, quite bluntly: “At no period in American history has our democracy been in such peril or has the possibility of totalitarianism been as real. Our way of life is over. Our profligate consumption is finished. Our children will never have the standard of living we had.” Yup, three strikes against “generativity.”
He also warns of a perilous political crisis, and then goes on to discuss “inverted totalitarianism,” a term used by Sheldon Wolin in a May 2003 article in The Nation (here. Of course, that would seem to imply that we are already well into our political crisis, launched by the Bush Administration in the wake of 9/11.
All the bailouts and economic stimulus passages that Obama can conjure can’t stop the unraveling of democratic capitalism, he suggests. Somewhere else today, I saw an ad claiming that entitlement obligations amount to $486000 per household in this Nation. You can put the pieces together. “You can’t keep kicking the can down the road.”
He mentions some other left wing writers, including especially Noam Chomsky, whose books (with pictures of the Twin Towers burning) I used to see at a newsstand in Minneapolis on Hennepin Ave before going into the Saloon.
Indeed, the democratization of speech, that grew out of the Internet and the success of search engines, should be the antidote to “inverted totalitarianism.” But look at the effect of all the talk about “online reputation” and now even bloggers insurance. Think how that could allow the Internet to be used to channel people back into social conformity.
The “Left” is certainly being heard. Obama wants to limit CEO’s of banks getting TARP money to $500000 a year, with all bonuses in company stock. That sounds like “rounding errors”. That will get plenty of applause and cheers, and sounds painless to everyone else. Okay, will the “forced “ sacrifices stop with CEO’s? Back in 1972 the People’s Party (Dr. Spock’s creation) wanted to limit all incomes to $50000 a year!
We’re also finding, that even with the new government (“Change”) it’s hard to find cabinet and other appointees that don’t have tax and nanny problems. But we’re also finding out that a lot of “barter” can the taxable – and that should concern the rest of us. It’s possible for government to extend that concept into the family (particularly re-merged households necessitated by the economy) and find a lot more targets.
How did all this happen? Was it too much government or too little? It’s true, the “faith-based” Bushies looked the other way as Wall Street came up with Ponzi schemes to sucker ordinary Americans (especially families seeking larger homes than they could afford) that they could get something for nothing. All along, we kept getting deeper into trouble with our foreign oil dependence and greenhouse gas emissions, investing relatively little into real sustainability. We’re not to the point that sustainability is getting discussed as a concept of resocialization than just economic development. That is dangerous. It may not be OK. Welcome to “The Purification.”
Monday, February 02, 2009
Major DC papers present different slants on federal employee whistleblower protection; it's complicated right now!
The Washington Times this morning reported an effort by a number of groups to ask President Barack Obama to restore the jobs of a number of people who have lost federal jobs for “Whistleblowing”, particularly in Federal Air Marshall Service. Back in 2005, Don Strange had challenged air marshall dress codes (which were said to make them stand out and become potential targets), and George Taylor, who had a severe case of barotitis media from heavy duty. The story, by Audrey Hudson, titled “Whistleblowers seek protection: air marshalls who challenged procedures lost their careers”, has this link in the Feb. 2 paper. The organizations involved in pressuring the president include the Bill of Rights Foundation, the National Taxpayers Union, the National Whistleblowers Center, the Project on Government Oversight, Public Citizen, Public Employees for Environmental Responsibility, the Whistleblower Mentoring Project, and Open the Government. The Washington Times made this a front page story.
The Whistleblowers Center has a letter, representing 269 groups, urging the passing of a 2009 Whistleblower Protection Act (HR 985, govtrack link here; and S. 274 (look up similarly) in the 110th Congress).
The Washington Post has a lead editorial “Wrong Way to Protect: Senators should remove a flawed whistleblower provision from the stimulus package,” on p A12 today. Feb. 2, here. The Post points out that the Senate version from the 110th Congress was weakened, but considers it bad political strategy to mix this desirable end with economic stimulus.
There is a related story on my IT blog Jan. 26 about a Supreme Court decision and a school district whistleblower, blog entry here.
Update: Feb. 5
The Washington Times has an editorial on p A22, Thursday Feb. 5, "Whistle-Blowers are desirable", link here. It mentions the experience of former Minneapolis FBI agent Colleen Rowley in 2002. Then, she issued a blistering report of testimony to Congress, including this question: "If, as you have said, “the prevention of another terrorist attack remains the FBI’s top priority,” why is it that we have not attempted to interview Zacarias Moussaoui, the only suspect in U.S. custody charged with having a direct hand in the horror of 9-11?"
The New York Times Magazine, on Sunday Feb. 1, had a couple of big-vision articles about where “we” are headed that have more interconnectedness than we thought.
David Leonhardt has a long essay “The Big Fix,” on p 22, link here. This time, there is no magic bullet to fix the economy. We don’t have the industrial revolution, semiconductors, the PC, or the Internet just to turn us around as after past recessions. We don’t have Reagan’s supply side economics. We don’t have Jimmy Carter’s Keynsianism. We don’t have job generation for war. Neither Wall Street nor Silicon Valley can pull us out.
In fact, we were creating artificial prosperity by letting Wall Street create phony financial instruments that covered up growing indebtedness, sometimes by violating normal business ethics and accounting rules.
The next big change will be toward sustainability. While there are innovations (green technology and an Energy Internet), the payoff tends to be slower and not satisfying to bean counters. Infrastructure development benefits everyone and enables steady growth later but it doesn't always give the numbers investors and people want to see. (The author compares passenger train travel between the United States and France.)
The tone of the article suggests that the American people – indeed the entire western world – will need a new sense of generativity: a sense of measured consumption and personal gratification, a willingness to invest in vicarious immortality, that future generations decendant from us will have more again. Toward the end of the article there is a lot of discussion about education, which itself is reproductive. Teaching had become a somewhat second class occupation until the efforts at “career switching” became public a few years ago, but it still requires a mentality that one lives on through the accomplishments of those one has taught than one’s own.
There is another interesting piece by Emily Bazelon on p 30, “2 Kids + 0 Husbands – Family”, link here. The piece traces the large increase in “voluntary” single motherhood since 1960, and questions the idea that the kids are always worse off, at least when the mothers are well educated. The women stop dating, it seems, even as they add siblings. They feel empowered to expected older children to look after younger siblings, but that is a “power” that our culture used to say goes along as a perk of marriage (or having children within marriage). They look for unattached men not as romantic partners but as potential as “male role models” for their kids and may find some of the men don’t want to be expected to be seen that way by others.
It’s all interesting to watch if our culture is going to have to accept the idea of a future in other people rather than in visibility now.