Further to your highlighting Helene Meisler’s comments and graph on NYSE margin debt, for several years I too have tracked this number and have found that when combined with VIX as a measure of investor complacency, it is a useful tool for raising orange and red flags around market tops.
The fundamental ‘thesis’ of combining margin debt and investor complacency in one index (margin debt divided by VIX) is that a combination of high investor leverage and high investor complacency is a toxic mix indeed. As you know, margin debt figures are reported with a one month lag, so to try the make the indicator more timely, I estimate margin debt one month in advance.
Thus, for March 2012, I estimate NYSE margin debt could be in the range of $300-$305b. Dividing 300-305 by 13.66 (the VIX low in March so far, on Mar 16th) yields an indicator value of 21.96 to 22.33. On the basis of historical experience, I treat any indicator value above 20 as an orange flag and any indicator above 22 as a red flag. Thus the estimated March figure of approx. 22 is enough to prompt me to “head to the hills” i.e. seek refuge in high cash reserves.
Stated another way one might say that NYSE margin debt above $300b is a worry in and of itself but when combined with high levels of investor complacency as measured by a low VIX, the danger signal is magnified and intensified.
Showing posts with label US. Show all posts
Showing posts with label US. Show all posts
Tuesday, March 27, 2012
Thursday, March 1, 2012
Looking for a fight (guest post)
The following was sent to me by my uncle Stan Virden.
Regrettably, the attached NYT account is pretty accurate. When the U.S. Navy won the battle of Manila Bay (1 May 1898), imagining that this had ended Spanish control of the Philippines, our leaders did not realize that the local hero, General Emilio Aguinaldo, had already achieved that end. He proclaimed Philippine independence from the window of his home in Cavite, across the bay from Manila, on 12 June. This Declaration of Independence was ratified by the Malolos Congress on 21 September 1898. Meanwhile, the U.S. had established a military government in August, which initiated a bit of a row that lasted for some years.
Members of my family have worked and lived in the Philippines off and on since 1905. As a boy I followed the Asiatic Fleet back and forth between the Philippines and China (1937-40), as a naval officer I was stationed there (1962-64) and subsequently visited a few times on board ships. The country and its circumstances have always held my interest. Currently, through PLAN USA, I still contribute to support of a rural Filipina school girl. The country is rich in history, scenery, and natural resources, occupied by cheerful and interesting folk speaking some 30 languages and governed by haphazard political administration that has made sensible development a very slow and awkward process. The domination of Chinese, then Spanish, then American, then Japanese occupiers has had a great deal to do with this cultural failing. With WWII freshly underway, my father and his naval friends of recent Asian experience felt certain that Filipinos would rally to the Rising Sun. They were astonished that the reverse was largely true, and that throughout the war these people were our fervent, brave, and able allies.
European colonization of non-European territory was well underway by the 16th Century. In the 18th Century the U.S. rose as a by-product of this activity. Initially we ourselves had no incentive to cross oceans for colonization. We had a broad continent, thinly inhabited by those who arrived here some 14 millennia past, and we assumed a natural right to take it over, whatever the objections of others. In reading the following it struck me that the rise of U.S. overseas land-grab initiatives in the early 20th Century must have been a postscript to the completion of this “Manifest Destiny.” Our momentum simply kept us going, spurred on by the high spirits of our brief war with Spain. That war, as we now know, was fought under a false vengeance over the explosion in Cuba of the U.S. battleship MAINE, thought to have been sabotaged by Spanish forces. Later forensics showed the explosion to have been caused by careless attention to safety in handling coal dust. But history turns on small pivots.
Whatever you think of Rep. Ron Paul (whom I am not necessarily endorsing), he may, in echoing George Washington, have it right about our continuing tendency to get involved overseas in other peoples’ squabbles. Perhaps we had little choice about WWI, WWII, and Korea. But I ponder the possibilities had we not gone to war with Spain and also become involved in China at that time. Perhaps there would have been less incentive for Japan, our ally in WWI, to come after us later on. We were indeed reluctant to get into WWI, but strategically adrift in accepting an indecisive armistice in place of a full-fledged victory, followed by stringent German reparations. Had we used the Marshall Plan philosophy in Germany post-WWI, would we have averted the conditions that gave rise to National Socialism and Hitler’s mad attempt to become the new Napoleon Plus? Might a healthy and friendly post-WWI Germany have lessened the incentive to form the WWII Axis? If so, how might the history of 1939-45, and 45-91 been different? And suppose, post WWII, we had not supported European attempts to regain and control their former colonies, often nations created by gluing together disparate tribes? Was it really our business to do this, and was our fearful “Domino Theory” really justified?
I have no wish to sound either like an isolationist or an inchoate 60s anti-war protester, and I have no personal regrets over my own career as a naval officer. I’m proud of the contributions my family has made over several centuries to the development and defense of our country. But is it not time for us to take lessons from the past 500 years, to relax a bit under a refurbished umbrella of a strong economy and an unbeatable national security structure (neither of which is currently in very good shape), and to mind our own business? After all, the legendarily neutral Swiss, who strictly train and arm all their citizens and who carry on trade with anyone, manage very well to do just that.
The inescapable conclusion apparent to me is that a strict focus on adherence to our own Declaration of Independence and Constitution (the why and the how of our republic), a firm adherence to non-interference by our government in the affairs of other countries (unless we are attacked), the energetic practice of open trade, and the consistent maintenance of a rock-hard national defense structure would give us leave to create lasting prosperity with few citizens so poor as to require public assistance. Perhaps this is dreaming, but are not dreams the wellspring of better things to come?
Regrettably, the attached NYT account is pretty accurate. When the U.S. Navy won the battle of Manila Bay (1 May 1898), imagining that this had ended Spanish control of the Philippines, our leaders did not realize that the local hero, General Emilio Aguinaldo, had already achieved that end. He proclaimed Philippine independence from the window of his home in Cavite, across the bay from Manila, on 12 June. This Declaration of Independence was ratified by the Malolos Congress on 21 September 1898. Meanwhile, the U.S. had established a military government in August, which initiated a bit of a row that lasted for some years.
Members of my family have worked and lived in the Philippines off and on since 1905. As a boy I followed the Asiatic Fleet back and forth between the Philippines and China (1937-40), as a naval officer I was stationed there (1962-64) and subsequently visited a few times on board ships. The country and its circumstances have always held my interest. Currently, through PLAN USA, I still contribute to support of a rural Filipina school girl. The country is rich in history, scenery, and natural resources, occupied by cheerful and interesting folk speaking some 30 languages and governed by haphazard political administration that has made sensible development a very slow and awkward process. The domination of Chinese, then Spanish, then American, then Japanese occupiers has had a great deal to do with this cultural failing. With WWII freshly underway, my father and his naval friends of recent Asian experience felt certain that Filipinos would rally to the Rising Sun. They were astonished that the reverse was largely true, and that throughout the war these people were our fervent, brave, and able allies.
European colonization of non-European territory was well underway by the 16th Century. In the 18th Century the U.S. rose as a by-product of this activity. Initially we ourselves had no incentive to cross oceans for colonization. We had a broad continent, thinly inhabited by those who arrived here some 14 millennia past, and we assumed a natural right to take it over, whatever the objections of others. In reading the following it struck me that the rise of U.S. overseas land-grab initiatives in the early 20th Century must have been a postscript to the completion of this “Manifest Destiny.” Our momentum simply kept us going, spurred on by the high spirits of our brief war with Spain. That war, as we now know, was fought under a false vengeance over the explosion in Cuba of the U.S. battleship MAINE, thought to have been sabotaged by Spanish forces. Later forensics showed the explosion to have been caused by careless attention to safety in handling coal dust. But history turns on small pivots.
Whatever you think of Rep. Ron Paul (whom I am not necessarily endorsing), he may, in echoing George Washington, have it right about our continuing tendency to get involved overseas in other peoples’ squabbles. Perhaps we had little choice about WWI, WWII, and Korea. But I ponder the possibilities had we not gone to war with Spain and also become involved in China at that time. Perhaps there would have been less incentive for Japan, our ally in WWI, to come after us later on. We were indeed reluctant to get into WWI, but strategically adrift in accepting an indecisive armistice in place of a full-fledged victory, followed by stringent German reparations. Had we used the Marshall Plan philosophy in Germany post-WWI, would we have averted the conditions that gave rise to National Socialism and Hitler’s mad attempt to become the new Napoleon Plus? Might a healthy and friendly post-WWI Germany have lessened the incentive to form the WWII Axis? If so, how might the history of 1939-45, and 45-91 been different? And suppose, post WWII, we had not supported European attempts to regain and control their former colonies, often nations created by gluing together disparate tribes? Was it really our business to do this, and was our fearful “Domino Theory” really justified?
I have no wish to sound either like an isolationist or an inchoate 60s anti-war protester, and I have no personal regrets over my own career as a naval officer. I’m proud of the contributions my family has made over several centuries to the development and defense of our country. But is it not time for us to take lessons from the past 500 years, to relax a bit under a refurbished umbrella of a strong economy and an unbeatable national security structure (neither of which is currently in very good shape), and to mind our own business? After all, the legendarily neutral Swiss, who strictly train and arm all their citizens and who carry on trade with anyone, manage very well to do just that.
The inescapable conclusion apparent to me is that a strict focus on adherence to our own Declaration of Independence and Constitution (the why and the how of our republic), a firm adherence to non-interference by our government in the affairs of other countries (unless we are attacked), the energetic practice of open trade, and the consistent maintenance of a rock-hard national defense structure would give us leave to create lasting prosperity with few citizens so poor as to require public assistance. Perhaps this is dreaming, but are not dreams the wellspring of better things to come?
Tuesday, November 22, 2011
taxes
From Bloomberg:
The rate at which the 400 U.S. taxpayers with the highest adjusted gross income actually paid federal income taxes --their so-called effective tax rate -- fell to about 18 percent in 2008 from almost 30 percent in 1995, IRS data show. That’s the tip of the iceberg, since much of their wealth never converts into income on a tax return. ... Billionaires who derive the bulk of their wealth from stock appreciation are using strategies that reap hundreds of millions of dollars from those valuable shares in ways the IRS often doesn’t classify as taxable income, securities filings and tax court records show.
Connecting the dots, Loss of morality
In regard to two recent posts, (how the Republicans lost it by replacing political thought with media populatiry and a rant on how the US has degenerated into a police state)
I have not (yet) gone off on the topic of lack of procecution of any bankers for their huge frauds, or the mortgage forclosure without due process, etc.
These are symptomatic of a lack of morality. Which brings us to this quote from the NYT, from "How China can defeat America"
The author, Yan Xuetong, studied ancient Chinese political theory, from the golden age of such theory-- pre Qin China, when China was a collection of small countries fighting for advantage.
All the schools of politcal thought converged on one insight:
The author further suggests that China replace money worship with traditional morality.
Yan Xuetong, the author of Ancient Chinese Thought, Modern Chinese Power, is a professor of political science and dean of the Institute of Modern International Relations at Tsinghua University.
Oh, America! I tried to teach my son something this weekend, that anything worth doing is hard, requires effort. Morality is hard. Running on sound bites, quick black-and-white judgements and litmus tests, that is not morality. Morality requires deep thinking, considering the other side of the question. Validating the other person's perspective. Thinking is HARD
Maybe we don't do it so well because 20 PERCENT OF THE ADULT POPULATION IS ON PRESCRIPTION MIND-ALTERING DRUGS
I have not (yet) gone off on the topic of lack of procecution of any bankers for their huge frauds, or the mortgage forclosure without due process, etc.
These are symptomatic of a lack of morality. Which brings us to this quote from the NYT, from "How China can defeat America"
The author, Yan Xuetong, studied ancient Chinese political theory, from the golden age of such theory-- pre Qin China, when China was a collection of small countries fighting for advantage.
All the schools of politcal thought converged on one insight:
The key to international influence was political power, and the central attribute of political power was morally informed leadership.
The author further suggests that China replace money worship with traditional morality.
Yan Xuetong, the author of Ancient Chinese Thought, Modern Chinese Power, is a professor of political science and dean of the Institute of Modern International Relations at Tsinghua University.
Oh, America! I tried to teach my son something this weekend, that anything worth doing is hard, requires effort. Morality is hard. Running on sound bites, quick black-and-white judgements and litmus tests, that is not morality. Morality requires deep thinking, considering the other side of the question. Validating the other person's perspective. Thinking is HARD
Maybe we don't do it so well because 20 PERCENT OF THE ADULT POPULATION IS ON PRESCRIPTION MIND-ALTERING DRUGS
Police state
I clipped this photo from The Atlantic.
That is pepper spray the cop is using. A chemical weapon. On people exercising their first amendment rights. How can any true American see this and not feel outrage?
As the Atlantic article points out, this is not a rouge cop. Rather, it is the nature of policing in the US. And this is why I say the US has become a police state.
This is not the country my family has lived in, fought for, built up, from the 1600s on both my mother's and father's side. This is not the land of the free and the home of the brave. Where do I see liberty and justice for all?
More people in jail than the evil of Soviet Russia which my grandfather so proudly fought against, as a admiral in our Navy, and most of them in jail for the crime of being poor and minority.
20:1 sentencing disparity between those who plea bargin instead of requiring their guilt to be proven in a court of law, as our Constitution demands it must-- does this create an incentive to plea bargin? you bet it does, especially when a) that is what their public defender tells them is their only option. In fact, some 95% of felony cases are settled with a plea bargin.
Monday, November 21, 2011
What is wrong with the repulicans
By David Frum, a GOP heavyweight thinker.
His thesis is that the party surrendered its leadership to the media.
He also shows how this media creates a fantasy world of false information.
His thesis is that the party surrendered its leadership to the media.
Extremism and conflict make for bad politics but great TV. Over the past two decades, conservatism has evolved from a political philosophy into a market segment. An industry has grown up to serve that segment—and its stars have become the true thought leaders of the conservative world. The business model of the conservative media is built on two elements: provoking the audience into a fever of indignation (to keep them watching) and fomenting mistrust of all other information sources (so that they never change the channel). As a commercial proposition, this model has worked brilliantly. As journalism, not so much. As a tool of political mobilization, it [incites] followers to the point at which they force leaders into confrontations where everybody loses.
He also shows how this media creates a fantasy world of false information.
Sunday, October 23, 2011
re: thirteen observations
In reply to thirteen observations
Uncle Stan gives several stories illustrating bureaucratic bloat in the US and its human costs. He is more supportive of the Tea Party, because of their goal to get rid of some of this regulation.
Glenn –
As you speculated from your distant perch that Americans don’t seem to be very happy these days, I began to speculate on the reasons why such an impression might be conveyed abroad. As previously stated, I cannot judge the mindset of our country as a whole (where there appears to be massive indifference to many issues that excite the press), but I can relate a couple of recent incidents with which I am very familiar, and which seem symptomatic of others’ frustrations that I read or hear about.
Several years ago, in response to requests for shovel-ready stimulus projects, Baldwin County (where I am located) submitted a grant request for funds to create transit hubs at key points throughout our county (which is many times the geographic size of Luxembourg). It was a relatively modest request for $1.8 million, which in time was approved. However, before the money could be spent, the Federal Transit Administration (FTA) wished to have answered a battery of questions. The County Commission responded. The FTA replied to that with more questions. There ensued a bureaucratic ping-pong game that finally tired out the Commission, which determined the game not worth the candle and then sent the money back. The effect was to prolong the eventual creation of a transit infrastructure with potential for substantial economic development and job creation. It will come about, in the fullness of time, by other means, but at a much slower pace. Meanwhile, the incident created a few new Republican voters. Similar situations elsewhere may account for the slow pace of “stimulus” spending, although a few billion has gone down the drain in failed “green energy” efforts.
My wife, Beth, as you know, is an audiologist (She also qualifies for Intertel, an organization for those with IQs in the upper one percentile). She has practiced that profession with a high and broad degree of skill and success for several decades. A few years back her professional society decided to upgrade the profession’s image by converting its largely MS/MA, mostly female membership to AuD. That, of course, required an expensive return to campus to attain the necessary certification and elevated doctoral designation. Existing practitioners were grandfathered (grandmothered?) in legitimacy, and Beth determined that she was of an age that cost and inconvenience could never be amortized within the remaining span of her career—so fugettaboutit. For awhile this was no problem. She was even appointed by our Governor to a three year term on the state licensing board for audiologists and speech pathologists, where she diligently served with distinction, but not with pay. She came to notice of the VA, which offered her contract (non-Civil Service) work in evaluation of hearing disabilities. She was happy to accept, and submitted the paperwork. It took about eight months of back and forth communication, and more paper, before she was taken on board, part-time. After 18 months she was laid off. There were enough younger, more prestigious, and less knowledgeable AuDs to replace her—although the VA continues to send her $0 payroll statements.
Soldering on, Beth managed to gain some short stints at a Pensacola general and a children’s hospital, as well as with a local hearing aids dealer. But the rules began to change. Now it was required that she obtain a registry number as a Medicare provider. Otherwise, she could not be hired, even to substitute. This entailed a 42 page application, signed off on by an established AuD or MD, as sponsor. No problem, except that long after submission she had not heard a word. She re-did and resubmitted her application—certified mail, signature required (and obtained). Still no response. She wrote to our congressman. He enquired and finally the authorities wrote back that they knew nothing about her. At their suggestion, she tried again. Eventually, several days ago, she and her sponsor each received a several page letter stating that she had submitted an incorrect form (the code designation of which was not among those requested or that she prepared), and was therefore not to be granted the precious number at this time. Meanwhile, she has no work, has a pending offer (one day per week) with another local hearing aids dealer, and must muster her forces to create another application from scratch. Does she find this situation irritating? You bet she does.
The foregoing stories are not atypical. I hear similar stories from others. How does such an atmosphere come about? The short answer is bureaucratic bloat. Within the Federal Civil Service the surest route to promotion is to be overburdened with paper and in need of more assistants. I saw this, myself, as my naval career progressed. People supervised is a key ingredient to pay grade evaluation. Clearly, the more complex, detailed, and pettifogging the paper processing chain can be made, the more people are needed to keep it in operation. The Civil Service has kept this basic principle in place for many, many years. It got worse in the early 60s when JFK, inspired by Wisconsin’s ground-breaking example, issued an executive order authorizing support for Federal employee unionization, at a time when any GS-3 or 4 secretary made far more in salary and bennies than her average civilian counterpart, and had no fear in this life of losing her job. LBJ saluted the idea, and had it made into law. Is it any wonder that career Federal employees (and DC area residents, in general) overwhelmingly vote a straight Democrat ticket, election after election? And what was the percentage of NEW Federal employees added to the rolls after January 2009? Why do you suppose that happened?
While the Hatch Act precludes any sort of open campaigning by Civil Service or military members, the Civil Service unions pour enormous funding into Democrat campaigns. (Military folk may not join unions, and predominantly vote Republican, these days. DoD civilian employees, however, remain in the Democrat camp). It does not matter who sits in the White House or the Congress. Most public policy originates within the administration, and arises from the creative minds of Civil Service staffers who clearly understand the cultural rules that affect their careers. The more they can promote for themselves to do, the better. Appointed officials of either party at the top levels have little time to consider the details, only the broad scope briefed to them on actions that require their endorsement. The result is ever increasing complexity, as the Federal administration grows and grows, and effective decision-making slows and slows. (It ought to be noted that Congress has no Civil Service. It operates on the old-fashioned spoils system, and seems to take pretty good care of itself). Is it any wonder that the Administration makes so much fuss over job security for teachers and first responders at state levels? These constituents carry great emotional appeal and belong to the same unions—an endless source of political allies.
We hear a lot of talk about job creation as a first priority. It’s more of a first talking point, unless government jobs are the subject. Like cancer, the current system has no easy cure. Cancer, however, whether biological or political, eventually kills. We see this throughout Europe today. But why should Americans be unhappy?
Your own pursuits seem to be really interesting. Keep at them. Love, Uncle Stan
Uncle Stan gives several stories illustrating bureaucratic bloat in the US and its human costs. He is more supportive of the Tea Party, because of their goal to get rid of some of this regulation.
Glenn –
As you speculated from your distant perch that Americans don’t seem to be very happy these days, I began to speculate on the reasons why such an impression might be conveyed abroad. As previously stated, I cannot judge the mindset of our country as a whole (where there appears to be massive indifference to many issues that excite the press), but I can relate a couple of recent incidents with which I am very familiar, and which seem symptomatic of others’ frustrations that I read or hear about.
Several years ago, in response to requests for shovel-ready stimulus projects, Baldwin County (where I am located) submitted a grant request for funds to create transit hubs at key points throughout our county (which is many times the geographic size of Luxembourg). It was a relatively modest request for $1.8 million, which in time was approved. However, before the money could be spent, the Federal Transit Administration (FTA) wished to have answered a battery of questions. The County Commission responded. The FTA replied to that with more questions. There ensued a bureaucratic ping-pong game that finally tired out the Commission, which determined the game not worth the candle and then sent the money back. The effect was to prolong the eventual creation of a transit infrastructure with potential for substantial economic development and job creation. It will come about, in the fullness of time, by other means, but at a much slower pace. Meanwhile, the incident created a few new Republican voters. Similar situations elsewhere may account for the slow pace of “stimulus” spending, although a few billion has gone down the drain in failed “green energy” efforts.
My wife, Beth, as you know, is an audiologist (She also qualifies for Intertel, an organization for those with IQs in the upper one percentile). She has practiced that profession with a high and broad degree of skill and success for several decades. A few years back her professional society decided to upgrade the profession’s image by converting its largely MS/MA, mostly female membership to AuD. That, of course, required an expensive return to campus to attain the necessary certification and elevated doctoral designation. Existing practitioners were grandfathered (grandmothered?) in legitimacy, and Beth determined that she was of an age that cost and inconvenience could never be amortized within the remaining span of her career—so fugettaboutit. For awhile this was no problem. She was even appointed by our Governor to a three year term on the state licensing board for audiologists and speech pathologists, where she diligently served with distinction, but not with pay. She came to notice of the VA, which offered her contract (non-Civil Service) work in evaluation of hearing disabilities. She was happy to accept, and submitted the paperwork. It took about eight months of back and forth communication, and more paper, before she was taken on board, part-time. After 18 months she was laid off. There were enough younger, more prestigious, and less knowledgeable AuDs to replace her—although the VA continues to send her $0 payroll statements.
Soldering on, Beth managed to gain some short stints at a Pensacola general and a children’s hospital, as well as with a local hearing aids dealer. But the rules began to change. Now it was required that she obtain a registry number as a Medicare provider. Otherwise, she could not be hired, even to substitute. This entailed a 42 page application, signed off on by an established AuD or MD, as sponsor. No problem, except that long after submission she had not heard a word. She re-did and resubmitted her application—certified mail, signature required (and obtained). Still no response. She wrote to our congressman. He enquired and finally the authorities wrote back that they knew nothing about her. At their suggestion, she tried again. Eventually, several days ago, she and her sponsor each received a several page letter stating that she had submitted an incorrect form (the code designation of which was not among those requested or that she prepared), and was therefore not to be granted the precious number at this time. Meanwhile, she has no work, has a pending offer (one day per week) with another local hearing aids dealer, and must muster her forces to create another application from scratch. Does she find this situation irritating? You bet she does.
The foregoing stories are not atypical. I hear similar stories from others. How does such an atmosphere come about? The short answer is bureaucratic bloat. Within the Federal Civil Service the surest route to promotion is to be overburdened with paper and in need of more assistants. I saw this, myself, as my naval career progressed. People supervised is a key ingredient to pay grade evaluation. Clearly, the more complex, detailed, and pettifogging the paper processing chain can be made, the more people are needed to keep it in operation. The Civil Service has kept this basic principle in place for many, many years. It got worse in the early 60s when JFK, inspired by Wisconsin’s ground-breaking example, issued an executive order authorizing support for Federal employee unionization, at a time when any GS-3 or 4 secretary made far more in salary and bennies than her average civilian counterpart, and had no fear in this life of losing her job. LBJ saluted the idea, and had it made into law. Is it any wonder that career Federal employees (and DC area residents, in general) overwhelmingly vote a straight Democrat ticket, election after election? And what was the percentage of NEW Federal employees added to the rolls after January 2009? Why do you suppose that happened?
While the Hatch Act precludes any sort of open campaigning by Civil Service or military members, the Civil Service unions pour enormous funding into Democrat campaigns. (Military folk may not join unions, and predominantly vote Republican, these days. DoD civilian employees, however, remain in the Democrat camp). It does not matter who sits in the White House or the Congress. Most public policy originates within the administration, and arises from the creative minds of Civil Service staffers who clearly understand the cultural rules that affect their careers. The more they can promote for themselves to do, the better. Appointed officials of either party at the top levels have little time to consider the details, only the broad scope briefed to them on actions that require their endorsement. The result is ever increasing complexity, as the Federal administration grows and grows, and effective decision-making slows and slows. (It ought to be noted that Congress has no Civil Service. It operates on the old-fashioned spoils system, and seems to take pretty good care of itself). Is it any wonder that the Administration makes so much fuss over job security for teachers and first responders at state levels? These constituents carry great emotional appeal and belong to the same unions—an endless source of political allies.
We hear a lot of talk about job creation as a first priority. It’s more of a first talking point, unless government jobs are the subject. Like cancer, the current system has no easy cure. Cancer, however, whether biological or political, eventually kills. We see this throughout Europe today. But why should Americans be unhappy?
Your own pursuits seem to be really interesting. Keep at them. Love, Uncle Stan
Friday, October 21, 2011
Thirteen Observations
Clipped this from
Thirteen Observations made by Lemony Snicket while watching Occupy Wall Street from a Discreet Distance
Responses:
Dad
Stan
1. If you work hard, and become successful, it does not necessarily mean you are successful because you worked hard, just as if you are tall with long hair it doesn’t mean you would be a midget if you were bald.
2. “Fortune” is a word for having a lot of money and for having a lot of luck, but that does not mean the word has two definitions.
3. Money is like a child—rarely unaccompanied. When it disappears, look to those who were supposed to be keeping an eye on it while you were at the grocery store. You might also look for someone who has a lot of extra children sitting around, with long, suspicious explanations for how they got there.
4. People who say money doesn’t matter are like people who say cake doesn’t matter—it’s probably because they’ve already had a few slices.
5. There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.
6. Nobody wants to fall into a safety net, because it means the structure in which they’ve been living is in a state of collapse and they have no choice but to tumble downwards. However, it beats the alternative.
7. Someone feeling wronged is like someone feeling thirsty. Don’t tell them they aren’t. Sit with them and have a drink.
8. Don’t ask yourself if something is fair. Ask someone else—a stranger in the street, for example.
9. People gathering in the streets feeling wronged tend to be loud, as it is difficult to make oneself heard on the other side of an impressive edifice.
10. It is not always the job of people shouting outside impressive buildings to solve problems. It is often the job of the people inside, who have paper, pens, desks, and an impressive view.
11. Historically, a story about people inside impressive buildings ignoring or even taunting people standing outside shouting at them turns out to be a story with an unhappy ending.
12. If you have a large crowd shouting outside your building, there might not be room for a safety net if you’re the one tumbling down when it collapses.
13. 99 percent is a very large percentage. For instance, easily 99 percent of people want a roof over their heads, food on their tables, and the occasional slice of cake for dessert. Surely an arrangement can be made with that niggling 1 percent who disagree.
Thirteen Observations made by Lemony Snicket while watching Occupy Wall Street from a Discreet Distance
Responses:
Dad
Stan
1. If you work hard, and become successful, it does not necessarily mean you are successful because you worked hard, just as if you are tall with long hair it doesn’t mean you would be a midget if you were bald.
2. “Fortune” is a word for having a lot of money and for having a lot of luck, but that does not mean the word has two definitions.
3. Money is like a child—rarely unaccompanied. When it disappears, look to those who were supposed to be keeping an eye on it while you were at the grocery store. You might also look for someone who has a lot of extra children sitting around, with long, suspicious explanations for how they got there.
4. People who say money doesn’t matter are like people who say cake doesn’t matter—it’s probably because they’ve already had a few slices.
5. There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.
6. Nobody wants to fall into a safety net, because it means the structure in which they’ve been living is in a state of collapse and they have no choice but to tumble downwards. However, it beats the alternative.
7. Someone feeling wronged is like someone feeling thirsty. Don’t tell them they aren’t. Sit with them and have a drink.
8. Don’t ask yourself if something is fair. Ask someone else—a stranger in the street, for example.
9. People gathering in the streets feeling wronged tend to be loud, as it is difficult to make oneself heard on the other side of an impressive edifice.
10. It is not always the job of people shouting outside impressive buildings to solve problems. It is often the job of the people inside, who have paper, pens, desks, and an impressive view.
11. Historically, a story about people inside impressive buildings ignoring or even taunting people standing outside shouting at them turns out to be a story with an unhappy ending.
12. If you have a large crowd shouting outside your building, there might not be room for a safety net if you’re the one tumbling down when it collapses.
13. 99 percent is a very large percentage. For instance, easily 99 percent of people want a roof over their heads, food on their tables, and the occasional slice of cake for dessert. Surely an arrangement can be made with that niggling 1 percent who disagree.
Sunday, October 2, 2011
Beyond regulatory capture
From Simon Johnson, 'The Quiet Coup", Altantic Monthly May, 2009.
Mr. Johnson is a former chief economist for the IMF. As such, he has been involved in financial rescue packages for a number of emerging economies. The general problem is that the oligarchs have taken on outsized risks, which have gone bad. The solution is for the government to let a few of them fall. This is politically difficult, as the oligarchs have power.
He writes: "In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American
political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a
sideshow today, Jack Abramoff notwithstanding.
Instead, the American financial industry gained political power by amassing a kind of cultural
capital—a belief system ... Washington already believed that large financial institutions and free-flowing capital markets were crucial to America's position in the world."
Article saved as Johnson2009IMF.pdf
Mr. Johnson is a former chief economist for the IMF. As such, he has been involved in financial rescue packages for a number of emerging economies. The general problem is that the oligarchs have taken on outsized risks, which have gone bad. The solution is for the government to let a few of them fall. This is politically difficult, as the oligarchs have power.
He writes: "In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American
political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a
sideshow today, Jack Abramoff notwithstanding.
Instead, the American financial industry gained political power by amassing a kind of cultural
capital—a belief system ... Washington already believed that large financial institutions and free-flowing capital markets were crucial to America's position in the world."
Article saved as Johnson2009IMF.pdf
Saturday, October 1, 2011
America the addict
So I have been telling people for years that the decline I see in the US is just like the decline I saw in my friend Dave Evans, who was addicted to cocaine. This guy puts it so well:
source (http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111)
An edited cut and paste:
The road out of Vallejo passes directly through the office of Dr. Peter Whybrow, a British neuroscientist at U.C.L.A. with a theory about American life. He thinks the dysfunction in America’s society is a by-product of America’s success. In academic papers and a popular book, American Mania, Whybrow argues, in effect, that human beings are neurologically ill-designed to be modern Americans.
The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. "The problem is that our passions are still driven by the lizard core of our mind." We are set up to acquire as much as we can of things we perceive as scarce, particularly sex, safety, and food.” Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. We cannot think down the road when we are faced with the chocolate cake.
The richest society the world has ever seen has grown rich by devising better and better ways to give people what they want. The effect on the brain of lots of instant gratification is something like the effect on the right hand of cutting off the left: the more the lizard core is used the more dominant it becomes. "We have lost the ability to self-regulate, at all levels of the society. The $5 million you get paid at Goldman Sachs if you do whatever they ask you to do—that is the chocolate cake upgraded.”
The succession of financial bubbles, and the amassing of personal and public debt, Whybrow views as simply an expression of the lizard-brained way of life. A color-coded map of American personal indebtedness could be laid on top of the Centers for Disease Control’s color-coded map that illustrates the fantastic rise in rates of obesity across the United States since 1985 without disturbing the general pattern. The boom in trading activity in individual stock portfolios; the spread of legalized gambling; the rise of drug and alcohol addiction—it is all of a piece. Everywhere you turn you see Americans sacrifice their long-term interests for short-term rewards.
What happens when a society loses its ability to self-regulate, and insists on sacrificing its long-term interest for short-term rewards? How does the story end? “We could regulate ourselves if we chose to think about it,” Whybrow says. “But it does not appear that is what we are going to do.” Apart from that remote possibility, Whybrow imagines two outcomes. The first he illustrates with a true story, which might be called the parable of the pheasant. Last spring, on sabbatical from the University of Oxford, he was surprised to discover that he was able to rent an apartment inside Blenheim Palace, the Churchill family home. The previous winter at Blenheim had been harsh, and the pheasant hunters had been efficient; as a result, just a single pheasant had survived in the palace gardens. This bird had gained total control of a newly seeded field. Its intake of food, normally regulated by its environment, was now entirely unregulated: it could eat all it wanted, and it did. The pheasant grew so large that, when other birds challenged it for seed, it would simply frighten them away. The fat pheasant became a tourist attraction and even acquired a name: Henry. “Henry was the biggest pheasant anyone had ever seen,” says Whybrow. “Even after he got fat, he just ate and ate.” It didn’t take long before Henry was obese. He could still eat as much as he wanted, but he could no longer fly. Then one day he was gone: a fox ate him.
The other possible outcome was only slightly more hopeful: to hit bottom. To realize what has happened to us—because we have no other choice. “If we refuse to regulate ourselves, the only regulators are our environment,” says Whybrow, “and the way that environment deprives us.” For meaningful change to occur, in other words, we need the environment to administer the necessary level of pain.
source (http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111)
An edited cut and paste:
The road out of Vallejo passes directly through the office of Dr. Peter Whybrow, a British neuroscientist at U.C.L.A. with a theory about American life. He thinks the dysfunction in America’s society is a by-product of America’s success. In academic papers and a popular book, American Mania, Whybrow argues, in effect, that human beings are neurologically ill-designed to be modern Americans.
The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. "The problem is that our passions are still driven by the lizard core of our mind." We are set up to acquire as much as we can of things we perceive as scarce, particularly sex, safety, and food.” Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. We cannot think down the road when we are faced with the chocolate cake.
The richest society the world has ever seen has grown rich by devising better and better ways to give people what they want. The effect on the brain of lots of instant gratification is something like the effect on the right hand of cutting off the left: the more the lizard core is used the more dominant it becomes. "We have lost the ability to self-regulate, at all levels of the society. The $5 million you get paid at Goldman Sachs if you do whatever they ask you to do—that is the chocolate cake upgraded.”
The succession of financial bubbles, and the amassing of personal and public debt, Whybrow views as simply an expression of the lizard-brained way of life. A color-coded map of American personal indebtedness could be laid on top of the Centers for Disease Control’s color-coded map that illustrates the fantastic rise in rates of obesity across the United States since 1985 without disturbing the general pattern. The boom in trading activity in individual stock portfolios; the spread of legalized gambling; the rise of drug and alcohol addiction—it is all of a piece. Everywhere you turn you see Americans sacrifice their long-term interests for short-term rewards.
What happens when a society loses its ability to self-regulate, and insists on sacrificing its long-term interest for short-term rewards? How does the story end? “We could regulate ourselves if we chose to think about it,” Whybrow says. “But it does not appear that is what we are going to do.” Apart from that remote possibility, Whybrow imagines two outcomes. The first he illustrates with a true story, which might be called the parable of the pheasant. Last spring, on sabbatical from the University of Oxford, he was surprised to discover that he was able to rent an apartment inside Blenheim Palace, the Churchill family home. The previous winter at Blenheim had been harsh, and the pheasant hunters had been efficient; as a result, just a single pheasant had survived in the palace gardens. This bird had gained total control of a newly seeded field. Its intake of food, normally regulated by its environment, was now entirely unregulated: it could eat all it wanted, and it did. The pheasant grew so large that, when other birds challenged it for seed, it would simply frighten them away. The fat pheasant became a tourist attraction and even acquired a name: Henry. “Henry was the biggest pheasant anyone had ever seen,” says Whybrow. “Even after he got fat, he just ate and ate.” It didn’t take long before Henry was obese. He could still eat as much as he wanted, but he could no longer fly. Then one day he was gone: a fox ate him.
The other possible outcome was only slightly more hopeful: to hit bottom. To realize what has happened to us—because we have no other choice. “If we refuse to regulate ourselves, the only regulators are our environment,” says Whybrow, “and the way that environment deprives us.” For meaningful change to occur, in other words, we need the environment to administer the necessary level of pain.
Wednesday, September 14, 2011
Friday, July 8, 2011
re: republicans, the party of fear
Hi, Glenn - Sounds interesting. You mentioned FDR's first inaugural (the only thing we have to fear is fear itself) You should check out the fuller context on line -- his words describing the prevailing economic distress sound remarkably apt for the situation today, which makes his words all the more salient. With each passing year the man's greatness strikes me more clearly -- he and Churchill.
We included the FDR paragraph in our readings of American sources that we did in place of the sermon at church on the 3rd of July, which had a 4th of July theme. Others were parts of the Dec. of Independence, some MLK jr. speeches, Maya Angelou, Robert Frost's "The Gift Outright" ("The land was ours before we were the land's . . . ") JFK's inaugural, etc. It was very moving, many tears in many eyes, a powerful & much-needed reminder of who we can be at our best, especially in the context of our present situation in the state which is pretty much showing us (or at least the Republicans among us) at our worst.
I am much concerned that the dynamics in the state are the same as at the national level, which means we are watching a dress rehearsal on the Minnesota level for what could become a major national economic & constitutional crisis nationally come August or so.
Love, Dad
We included the FDR paragraph in our readings of American sources that we did in place of the sermon at church on the 3rd of July, which had a 4th of July theme. Others were parts of the Dec. of Independence, some MLK jr. speeches, Maya Angelou, Robert Frost's "The Gift Outright" ("The land was ours before we were the land's . . . ") JFK's inaugural, etc. It was very moving, many tears in many eyes, a powerful & much-needed reminder of who we can be at our best, especially in the context of our present situation in the state which is pretty much showing us (or at least the Republicans among us) at our worst.
I am much concerned that the dynamics in the state are the same as at the national level, which means we are watching a dress rehearsal on the Minnesota level for what could become a major national economic & constitutional crisis nationally come August or so.
Love, Dad
Tuesday, July 5, 2011
re: re: Minnesota shutdown
Re-- student loans. The reason people should lend them thousands of money without collateral is that student loans are not covered by bankrupcy-- the only ways out (except paying them off, of course) are death or moving all of your assets out of US jurisdiction.
They figure they have on average a lifetimes worth of earnings they can garnish to get their money back, at 8.5% interest. Not bad, when inflation is running close to nil.
Did you know you can buy CDOs of student loans, just like the CDOs of house loans that caused some trouble a little while ago? But the thing with homeonwners is that they can default on the mortgage and your deathgrip becomes only a deathgrip on a house worth a fraction of the loan amount.
Now with a student loan, that deathgrip is a little more inclusive.
I am working on an essay titled "The Immorality of Debt", or rather I should be when not busy working on amphetamine (it is a hobby) [yes, that is a joke. I am working, as a hobby, on my second publication which demonstrates the harm that amphetamine usage causes to the brain and no, I am not one of the research subjects] or my zombie paper or my UW photo essay or my android apps which I should develop, oh, and did I forget that I am a father, husband, house-holder, and did someone mention that I also have a day job?
+glenn
They figure they have on average a lifetimes worth of earnings they can garnish to get their money back, at 8.5% interest. Not bad, when inflation is running close to nil.
Did you know you can buy CDOs of student loans, just like the CDOs of house loans that caused some trouble a little while ago? But the thing with homeonwners is that they can default on the mortgage and your deathgrip becomes only a deathgrip on a house worth a fraction of the loan amount.
Now with a student loan, that deathgrip is a little more inclusive.
I am working on an essay titled "The Immorality of Debt", or rather I should be when not busy working on amphetamine (it is a hobby) [yes, that is a joke. I am working, as a hobby, on my second publication which demonstrates the harm that amphetamine usage causes to the brain and no, I am not one of the research subjects] or my zombie paper or my UW photo essay or my android apps which I should develop, oh, and did I forget that I am a father, husband, house-holder, and did someone mention that I also have a day job?
+glenn
re: Minnesota shutdown
Hi, Glenn- Sounds like you and Puppy are in the same camp with respect to human nature. Yes, I agree about the advantages of a shut down. From my experience with Bethel students, mostly heritage Republicans, very few realize how big a positive role government has had in their lives. E.G., most women didn't realize there would be no women's athletic programs without Title 9 of the Civil Rights Act; they just hold that women's athletics is natural and right, so of course it's there, but not particularly as a policy result. Or student loan guarantees: Why shouldn't someone lend them thousands of dollars at low interest without collateral -- they're good people, after all, don't intend to default, and are spending it for a good cause. When they think of "gummimint" it's usually the things they disagree with.
Minnesota shutdown
The good that I hope comes out of the MN situation is that people realize they actually enjoy government services. Unlikely, but still one can always hope.
My counterexampe comes from a news story a year or two ago covering a gathering of the tea-party faithful. 90% of the people in attendance relied to a greater or lesser extent DIRECTLY on government support (medicade-paid scooters, etc) not to mention indirect, as in they drove on public roads to get to the event which was held in a public building etc yet seemed blind to the fact that they were calling for an elimination of these benefits.
I'd like to have a happier opinion of humanity but people make it so damn difficult.
+glenn
My counterexampe comes from a news story a year or two ago covering a gathering of the tea-party faithful. 90% of the people in attendance relied to a greater or lesser extent DIRECTLY on government support (medicade-paid scooters, etc) not to mention indirect, as in they drove on public roads to get to the event which was held in a public building etc yet seemed blind to the fact that they were calling for an elimination of these benefits.
I'd like to have a happier opinion of humanity but people make it so damn difficult.
+glenn
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