November 01, 2003
Quick Links
Make excellence a 'black thing' - SATs, HOPE scholarships and grade inflation. A well written column that makes excellent sense.
Castro: Is Schwarzenegger All Muscle? - Fidel questioning someone's intelligence. Pretty funny.
Mind the gap - A column slamming "hipocrisy." Yes, spelled with an "i" not a "y." Excellent article.
The Price Of Peace
I seem to be on a bit of a Palestinian/Israeli article kick tonight. I wonder why? Oh well, no matter.
Today marks the eighth anniversary of the assassination of Yitzhak Rabin by a Jewish extremist opposed to the peace process.
I think that this points out a huge and significant difference in the Israelis from the Palestinians.
Say what you will about Rabin and the peace process. You can disagree with his position and his actions, but you cannot deny that he was a person who inspired the Israeli people and who acted from conviction.
Rabin has been dead for eight years now. Yet they still hold peace rallies in his memory. They still try to work towards the goal of peace with the Palestinians that he set out back in the early '90s.
The Palestinians, on the other hand, celebrate suicide bombers. They celebrate the murder of civilians. The celebrate not the idea of peace, but the concept of jihad.
One side celebrates life. The other, death. One side wants to help the other to build a state. The other wants destroy their neighbors.
Until there is a change in the situation on the ground, the Israelis will continue to hold peace vigils for Rabin and his dream will not be realized.
I Wonder Why?
Once again, Israel has restricted access to the Temple Mount in anticipation of violence during Ramadan. The Palestinians are, to be expected, upset about this. So why would Israel feel a need to do this? What justification might they have?
Well, how about:
Al-Qaida plans to launch massive attacks on U.S. and allied interests throughout the Mideast during the Islamic fast month of Ramadan.
Or:
For its part, the Islamic Jihad movement stressed in a festival held in Beit Lahia town to the north of Gaza on the 8th assassination anniversary of its founder and secretary general Fatehi al-Shiqaqi, its persistence to continue resistance and rejection of any truce with Israel.
I've been to the Temple Mount. If the Israelis are voicing concerns about the potential for violence, I can agree that they are well founded.
This is a case of the Palestinians reaping a little of what they have sown. They used the Mount as a platform for violence in the past and as a result they've lost any real credibility in claiming it won't be the same this time. They made a choice to lash out against the Jews in Jerusalem, using the Mount for cover; they also made a choice to accept whatever reasonable punishment the Israelis might impose because of that action.
It is my belief that the Palestinian right to pray on the Temple Mount is greatly outweighed by the Israeli right to security and self-defense. If the Israelis feel it is necessary to restrict access to a known flashpoint for violence, well, you won't hear any complaints from my little corner of the world.
Interesting New Site
Was just looking at the last update to my site (to make sure everything was kind of OK) and I noticed in the 'Blogs Linking Me' a new site: HobbyBlog.
I went over and took a look. Looks like it hits on one of my pet topics: Roman coinage.
Very cool! Go take a look, Ed's got a nice Salonina Provincial on the page right now.
Of course, now he's going to force me to finally get around to completely rebuilding my other site to make it more user friendly.
What Is Al-Qaida's Thing For Airplanes?
What is the fascination that Al-Qaida has for airplanes? We've got 9/11, the El Al flight coming out of Kenya (unsuccessful), and now this report coming out that they have acquired Russian made SA-7 missiles with the idea of shooting down a Western airliner during Ramadan.
Why?
What does shooting down a Western airliner really accomplish? They might scare a few people, particularly if they do it over here. But how does it further their cause?
The only thing that it would prove is that they have no concern for innocent human life. And that they could hit the aeronautical equivalent of a barn door with a guided missile.
There is no symbolism in shooting down a 747 any more. Today, we have no equivalent to Pan Am. There would be no equivalent image as the Clipper of the Seas lying in the field in Lockerbie. Everyone who knows anything about commercial aircraft knows that those big turbofans are nothing more than giant bullseyes for infrared missiles.
So by shooting one down, they prove that they can pull the trigger and that they're willing to pull it on innocent people. Unless you're truly deranged enough to think that you can win a battle with a motivated, focused, and pissed American people this probably isn't too bright. Ask Adolf or Tojo. Ask Kaiser Wilhelm if bringing the Americans in full force was a bright idea. Hell, Yamamoto knew it and still ended up paying for with his life.
Why do people keep thinking it's a good idea to create the next Lusitania or Pearl Harbor? Why do they think it's a good idea to draw us into a wider war, one in which our weaponry, our tactics, and most importantly, our conviction are superior? To judge us by our peacetime internal squabbling and open demeanor is to make a grave mistake.
They have SA-7s. We have a reserve of strength and fortitude stronger than any weapon,. They have jihad. We have such a belief in our values that we don't feel a need to impose them on everyone by force. They believe it to be a great accomplishment to murder hundreds and to destroy millions of dollars of hardware. We believe the murder to be lamentable and the destruction to be replaceable. They are pushing their limits every which way. We've barely begun to scratch the surface of ours.
They can shoot down an airplane and our lives will go on. Theirs, however, becomes more questionable.
Revenge Killing In Iraq
We knew it had to start happening at some point. Shi'ites in Basra are nowexecuting revenge killings against Ba'athists Sunnis who used to run Iraq.
We've really done a pretty good job of keeping these kind of events under control. But look at the response of the Iraqi police chief in Basra: With a shrug, Cpl. Hisham Jabar, chief investigating officer in the killing of Muhammad Abdul Nabi al- Gishi on Wednesday afternoon, said, "No one has been arrested."
Want to know why it's not time to turn the country back over to the Iraqis? That response right there is the best reason.
They have made strides, but they still don't understand completely the concept of rule by law. Coming out of a system where the rule of law was fungible it is unreasonable to expect an instant adjustment to a fair and equitable law. But that shift must be made before the country can be completely turned back over to the Iraqi people.
This is not an unexpected turn of events, but it does represent a test for the Iraqi law enforcement and the formative Iraqi regime. They need to bring the responsible people to justice. They need to show that the laws will be enforced fairly, regardless of who the victim or the perpetrator might be.
Only when that begins to become the expectation, rather than the exception, will it be time to turn the country back over.
October 31, 2003
Quick Links
Permanent ban on Internet service taxes bogs down as temporary ban runs out - The ban needs to get renewed ASAP. The last thing the Net needs is getting taxed.
Day of the Dead: Many Mexicans seek burials in their homeland - I'm going to skip the rude comments here - although the possibilities are legion.
UT students single out profs: The Young Conservatives of Texas target professors over ideology - I know this has got to have the professors up in arms, but I really don't see anything wrong with it. The kids are advertising who they are.....
Lawmakers Fume on Canceled N. Korea Trip - North Korea is a bad enough situation without having Congress getting in there trying to screw it up even more.
Why I Don't Like The Orlando Sentinel
The last couple of days, one of the guys I work with has been bringing in the daily editions of the Orlando Slantinel, er, Sentinel. I haven't actually read the Sentinel in quite a while, outside of the classifieds, (mainly because I get almost all my news information from the Net, including the Sentinel website), but I figured since it was there, I would actually read through it to see if there was any worthwhile reason for starting a subscription.
The front page was pretty much like it always has been: full of AP reprints, exposes of problems anyone paying attention already knew about, and the same lame op-ed fare that they've always had. But then I went to the Local & State section and decided that there is no way I will even consider subscribing anytime soon.
The Sentinel has a columnist named Mike Thomas. I always remembered Mike as writing happy little columns that were never really outstanding, but never really offensive either. It always seemed that he would be writing a story about something some grandma did, or some school play, or maybe a community event - the kind of stuff that a local news reporter would report on. So when I saw his name in the byline for a column, I stopped to read it - to maybe learn some little odd tidbit about the community that I didn't already know.
Now Thomas' columns are still printing on the front page of the Local & State section as if they were the same generic community building columns as before. They are presented as news. But read some of the comments and language used just in his last four columns:
"In talking about whether he would run for his U.S. Senate seat, Bob Graham said he didn't have a "God complex." I guess that's what separates him from Jeb Bush. Jeb did not talk to medical experts or Terri Schiavo's husband before ordering a feeding tube stuck back in her brain-dead body. But he did talk to Randall Terry, founder of the extremist anti-abortion group Operation Rescue. "Our goal is a Christian nation," Terry once said. "We don't want equal time. We don't want pluralism." Seems Jeb took that to heart..."He is the Barney Fife of pathologists -- likable and well-meaning, but incompetent. If he exhumed Marie Antoinette, he probably would conclude she died from drowning.
Gore says he will step down in June. That would be fine if we could guarantee that nobody dies between now and then."
Is that the language of reporting? Or is it the language of editorializing; of opinion?
I don't really care that Mike Thomas has these positions. I generally disagree with him, but he's entitled to believe whatever his little heart so desires.
I do have a problem, however, with his opinion being cast as "news." His opinion, no matter how arrogant he might be, is not fact. His opinion, no matter how righteous he and the editorial staff believe it to be, is not material for the front page of a news section. For the op-ed page, absolutely. Heck, he might even liven up that page up and make it more worth reading. But for the front of Local and State - no way.
I find this to be rather condescending of the Sentinel's editorial board. Do they think that I'm not smart enough to know that they're trying to shamelessly pass of editorializing as news? Do they really think that little of the intelligence of their readership?
I can understand politicized language slipping into articles from Reuters, or the AP, or the UPI, as the editorial staff does not have direct control of the writers and the content. But Mike Thomas is a Sentinel writer. There is no excuse for him to be using words like "anti-abortion extremist" (my emphasis) or for referring to any official as a "Barney Fife" on a news page. If he wants to expose a problem, that's fine. But it can be done with facts. The personal attacks need to be confined to the op-ed page, where they belong and are expected.
The Sentinel editorial staff's use of Mike Thomas' columns on a news page is intellectually dishonest. As a result, I am not going to be subscribing to the Sentinel until such time as they feel fit to respect me.
A Sign For Halloween Only
Stopped by a convience store to get a drink while I was out picking up lunch today. On the door they had a sign that could only work for Halloween:
Take Off
Masks
Before
Entering
Store
Thanks!
Maybe it's just me, but I don't see that working any other day. Unless maybe you're in a bad section of town.
Know why I remember it so well? It's because it made me feel pretty stupid. I completely forgot that it was Halloween at that point and the first thing to go through my head was: "That probably won't really help the robbery problem too much."
<sarcasm>I'm glad that there's no stress in my life!</sarcasm>
Short Story Symposium #2 Is Up!
The "Second Annual Spherewide Short Story Symposium - Halloween Edition" is now up and available for your reading pleasure over at Master of None.
I get a special mention as being the first person to enter two times in a row! Go me! (Be warned though, my story is most certainly not scary. I don't do scary. Personal, thing, you know?)
Go over and take a look. It looks like Michael has done a pretty good job and that once again, I will be taking home the prize for the most poorly written and off-topic story.
Morning Humor
Something Awful has a collection of Halloween stories that didn't quite make it (look for today's post).
I particularly liked the first one The Cursed Bean.
Of course, the link for Preggie Pops is a little more, um, odd. Just another little something to make you go "Hmmm" to start the morning.
October 30, 2003
More Quick Links
I couldn't resist linking to these also:
Get PLAY: NU gets good vibrations - Hmmm. Makes you wonder what they're really studying at Northwestern.
The perfect gift for the pet that has--ahem--almost everything - " 'How are you, Bucky?' He gave me his paw, and I shook his hand. He went to clean himself, and I'll never forget the look on his face. He looked down and didn't do anything but look up at me, then look back down and back up with those big bloodhound eyes. 'Where in the world did they go?' he was asking. After that, he acted extremely depressed for three days.' " Can I really say more?
Man makes startling discovery in break-in: Nude photos of sister found in apartment - This is when you know that burglary is not the profession for you.
Hillary Thinks Bush is Bad For Democracy - Well, she would know now wouldn't she?
Quick Links
Ignoring Jewish Humanity - Raises good questions, but ones that are never answered.
Poll: Young not in step with 30-plus crowd - Oh great. Now, according to CNN, I'm old.
BLOODY KING LINKED TO SAXON BEACH FIND - Another of those little history stories I like so much.
"35 or 40" countries able to make nuclear weapons: IAEA chief - He wants to create a new safety system based on fairness, not dissuasion. Sounds like a pipe-dream to me.
A No Hudna Zone
Gees, that friendly "charity" known as Hamas has declared that "there is no room for discussion" of another cease fire until Israel stops its aggressions.
Sounds like something a child would say: "I'll act right when you quit punishing me!" That's the time to jack up the pressure, not to release it. That's when you know that you're having a real effect is when they start blustering about how you're not having any effect.
Besides why would the Israelis want a hudna anyways? All it is is a ceasefire designed to give both sides time to rearm before beginning the conflict again. Perhaps during medieval warfare this was a generous offer, but not now it isn't. It's simply an opportunity for the bomb makers in Gaza and the West Bank to build up an inventory to be used in a "blaze" of hateful "glory."
Let Hamas declare their opposition to a hudna. Let them declare their opposition to peace. Let them prove just how charitable they really are.
Belief vs. Opportunity
I just read a Washington Times article which talks about how the Democratic strategists are recommending to the candidates that they move more towards the center. Specifically, they want the candidates to take more moderate, or even conservative, stances on such issues as gun control and abortion. Essentially, they want to co-op the Republican position on these issues to make them at best, a non-issue in the upcoming elections.
Politically, this is probably a wonderful short term move. But for the health of our nation and our political system, it is a huge mistake.
They aren't looking at move towards these new found positions out of conviction or reasoned belief. It is simply a matter of political expediency. A lie, if you will.
I realize that basically all politicians lie. I'm not that naive or pollyannish. But this is a lie on a different scale. This isn't a case of breaking a promise or of cutting a backroom backscratching deal. This is a flat out denial of core beliefs, a denial of who they are. How can you possibly vote for the person who will best represent you, when you don't even know who the candidates really are; what they really stand for?
By denying their core values and by lying about who they really are, they would only foster more distrust of the system than there already is. It's bad enough that we now assume that politicians are lying about promises to "work for their constituancy" or to "bring more money home for us." With this new degree of lying, we'd have to worry about socialists getting elected under the guise free-marketeers. We'd have to worry about appeasement pacifists getting elected as warmongers. All because the one position is more popular.
I really don't have a problem, per se, with someone being an appeaser, or a socialist, or anti-gun - so long as they're honest about it. I want to know what your positions truly are so that I can determine whether or not I'm going to vote for you based on that. Where I have a problem is where you deliberately mislead me on the major underpinnings of your belief system simply to get elected. That is just wrong.
I really hope that we don't see too many candidates trying to pull this off. Daschle has already done so voting to limit gun manufacturer's and retailer's liabilities and by voting for partial birth abortion because it was time to move on. If a position is truly important, truly a position of conviction, then there is no time to move on - that only comes when the position is one of expediency.
I can respect a person of conviction when they're opposed to me. I cannot stand a person who stands with me, simply because it is the path of least resistance.
A Short Version Of The History Of Halloween
While perusing the web this morning instead of doing anything productive at work, I came across this article on the history behind halloween.
OK, so not every detail is perfect (potato lanterns?), but it is interesting nonetheless. I always find it amazing how superstition plays such an important part of our everyday lives, even now.
Guess I need to go back to pretending to work.
October 29, 2003
Quick Links
Discriminatory deeds a shocking discovery and Racist fliers likely protected as free speech, FBI reports - Just because something is offensive does not necessarily make it illegal. In both cases here, the speech was reprehensible, but protected.
Deficit warning for France and Germany - France to rest of EU: "EU rules for thee, but not for me." Is anyone really surprised?
Texas Sex Offenders Face Halloween Orders - Frankly, I'm surprised that this wasn't already in place. I just don't like the "for the children" justification quote at the end.
Curbs sought on DoD contracting with foreign civil air carriers - This is a good move, hamstring our ability to move large numbers of troops and equipment in a fit of "Buy American"ism. This is a bad move. Foreign companies should not be the backbone of CRAF, but should be able to participate in an airlift if it becomes necessary.
Grow Tall; Make More Money?
Well, this should work out well for me. A University of Florida management professor has come out with a study showing that tall people earn about $789 dollars a year more per inch than short people.
The author claims the results to be "troubling." I think that it's interesting, but I'd want to see a corroborating study before I truly bought into the idea. This sounds like one of those studies in which the data fits the hypothesis, but the results only represent a loose correlation, not causation. I don't know. Show me that it replicable.
That being said, if it is true, I'm going to have to ask for a raise. I am obviously not getting paid what my height dictates I'm worth.
Interesting stuff.
Well That Wasted A Lot Of Time
Getting a late start on blogging tonight because, while perusing the latest over at Electric Venom, I came across a fairly addictive timewaster: Iraqi Blackjack. Oh well, better get started on the articles I found.
October 28, 2003
Quick Links
When Rogues Defy Reason: Bashar's Syria - Ah, haven't seen too much of Baby Bashar in the news lately. Good to know he still hasn't gotten a clue.
AP: Iraq Expense Leaving Others in Cold - Lots of whining about a lack of spending on those other important programs.
French May Scrap Holiday for Health Care - Hmmm, think that might be a good idea after this summer's debacle?
THE WORST HALLOWEEN COSTUMES OF ALL TIME - I'd try to find one or two of these for the kids for Friday, but they're probably too much money and I'd get killed.
Supply, Demand, Price Controls, Economics, Etc.
While I had the honor of compiling this week's Carnival of the Capitalists, one of the articles that was submitted (by Jonathan Wilde of catallarchy.net) was an analysis of an article by Paul Krugman about a babysitting co-op in the Washington DC area.
Now Jonathan did an excellent analysis of the article itself, one that I wholeheartedly recommend reading, and I do not plan to recreate his wheel, as it were. Instead, I want to use the article to help illustrate how inflation and deflation are both vital to a healthy economic cycle.
The biggest flaw that I saw in the co-op's scheme was that of price controls. The value of the coupon was pegged at 1 hour of babysitting per coupon. Period. It did not vary upwards in times of great demand; it did not vary downward in times of little demand. Consequently, the only tool available to influence the "economy" was the size of the money supply, which is not entirely realistic.
Jonathan also pointed out that they coupons used in the co-op were not true money, as their use was limited. They could only be exchanged for other babysitting services. In doing full blown economic effectiveness analysis, this would be a significant factor hampering the extrapolability of the results, but for the discussion I want to have, this isn't really a factor.
Hypothetically, let's eliminate the price controls in the co-op and create a given coupon supply. The number of coupons is a fixed number and their par value (or issuing value) is, as it was in Krugman's article, 1 hour/coupon. Further, we're going to say that there is no banking mechanism, no issuance of additional scrip, and no "virtual" coupons. Every coupon is paper, there is no credit, and every transaction is paid immediately in scrip.
Now when the coupons are first issued, people will freely exchange them for 1 hour of babysitting, just as the par value indicates. But what happens as we head towards winter and people decide that they need to start saving coupons, perhaps in anticipation of the State of the Union? The demand for babysitting services naturally declines, but the demand for coupons is still there. So how can people acquire more coupons?
Well, we have already prevented the co-op from issuing more coupons, so the value of the coupon should naturally begin to deflate. Coupons should begin to be valued at say 2 hours per coupon, maybe more. Eventually, prices will drop enough (coupons will buy more hours per coupon) to begin to stimulate activity again. People who want to collect and hoard coupons will have them become available and people who maybe have more coupons than they really need or who want to spend more time going out will begin to use more of them as they see the value increase.
Eventually, though, the spenders will need more coupons and the service providers will need to use the co-op services. At that point, the coupons start to flow the other direction and the value stabilizes at the new lower level.
But then what happens when the State of the Union comes up and everyone wants to go? Now you have huge demand and little supply. Prices will begin to rise (each coupon will buy fewer hours of babysitting) until a point is reached where there are enough people willing to spend the night at home working that the need is satisfied. That point may be at, say, 10 coupons per hour. Inflation will have eroded the value of each coupon substantially, but eventually there will be more people willing to work than that price level will support and prices will deflate back towards a reasonable level, followed by the whole process running its course again.
The cycle I've just described could be described something like this: contraction-bust-growth-boom. Look at a sine graph for a graphical representation of what
it would look like. It is a "perfect" cyclical model.
Unfortunately, the textbook, theoretical model does not exist in the real world, as we all know.
Let's look at what might happen if there was a bank involved in the process that was capable of creating and destroying scrip at will, not unlike the Treasury (although the Treasury does it through the issuance and open-market redemption of bonds).
In the contraction phase of the cycle, the bank could, as Krugman proposed in his original article, make more scrip easily available through low interest rates (maybe borrow 10 scrip, only repay 11) to help stimulate demand. It makes sense to do so, because it avoids the harsh effects of deflation on an organization (in this case the co-op), which has debt as part of the capital structure. The risk, however, is ending up in the dreaded liquidity trap where no amount of Keynesian pushing the string will stimulate demand.
During the boom part of the cycle, the bank could, attempt to contract the scrip supply by making it more expensive to borrow (say borrow 10 and repay 20), which would contract the scrip supply by the process of some people paying off their debts, while limiting the amount of scrip being created. This would help to avoid inflation by reducing the number of coupons available to chase after the limited supply of babysitting time (it limits how high up the demand curve the economy can go). The risk here however is that if people have been borrowing scrip to repay with scrip, it makes sense to encourage the continued rise in prices through further borrowing as it then takes less effort to repay the debt than the value received in incurring it.
Notice the similarities between the two. In the first scenario, we are expanding the money supply to encourage spending, thereby discouraging deflation. It is assumed that a little inflation is a better alternative than a little deflation. In the second scenario, the goal is to rein in inflation, but it is still assumed to exist.
In other words: inflation=good; deflation=bad.
Here are the two problems I see with that the actions of the bank. First, deflation is the monetary equivalent of a check and balance in the government. Deflation discourages the piling on of debt by making it more difficult to repay that debt down the road (imagine the person who borrows 10 coupons for 1 hour of services, only to have to repay 20 coupons in which they receive 1 coupon for every 2 hours of babysitting - a 40 to 1 ratio in hours).
Inflation, conversely makes saving less attractive by devaluing the worth of each coupon (imagine the person who hoards 10 coupons at 1 every 2 hours only to use them at a rate of 10 per hour - that's a 20 to 1 ratio). Too much of either extreme, savings or debt, is bad for the economy. Inflation and deflation are the checks against the extremes. By cutting out one, we remove one of the consequences of poor economic decision-making.
The second problem I have, is that constant inflation erodes confidence in the value of the scrip. You run into a scenario where people eventually ask what the point is of working for a coupon that will get you half of what you put into it, so they either remove themselves from the economy by transitioning to a barter system, or they immediately spend their earnings, regardless of the utilization value, in an effort to stave off the effects of inflation, when if fact they are simply exacerbating the problem (this is where it turns into hyperinflation).
In our economic system, we have virtually eliminated (on an economy wide scale, in certain industries the effects are still felt and even then I would argue that they are offset to a large degree by substantial productivity gains in those same industries) deflation as a real risk to business today. That's not good. There is no check against out of control borrowing and we're now starting to see the effects of an economy being strained under the weight of simply too much debt. I think that we're at a crossroads, economically right now. Our nice little 2-3% inflation rate has been outstripped by our mushrooming debt. If businesses start hiring large numbers of people again, I think we're going to see the inflation rate increase significantly. If they don't start hiring pretty soon, I think we're going to see debt induced deflation - which will not be pleasant at all, as each default will lead to more defaults as everything is based on a house of cards, where one debt backs another debt which in turn is backed by another debt which is backed by the original debt. Default on any one and the whole group comes down.
What really scares me is that a form of the circle may, in fact be what our entire economic system is based on. In another article from the Carnival, Mike Northover of Master of None did an excellent post on the Real Bills Doctrine, in which it is proposed that our currency is in fact backed, backed by commercial paper issued by corporations and bought and held by the Fed.
Before I go too far into this discussion, a little look at what commercial paper is. Commercial paper is basically an IOU written by a company in which they promise to pay you back x number of dollars plus interest in say 90 days. Commercial paper has absolutely no backing; if the company defaults there is no recourse - you're just out of luck. Generally, commercial paper is issued by the largest and most stable companies out there as a way of doing short term financing. It saves the companies on the costs of doing a bond issue and generally commercial paper is easy to roll over. It is usually attractive to investors because it offers a combination of decent return (due to the risk associated with no recourse) and relative safety from the short time period.
But what is the commercial paper backed by? It is backed by the full faith and credit of the issuing corporation. One of the reasons why commercial paper is considered to be such a decent short term parking place is because it is denominated in dollars. People like the perceived strength and stability of the US dollar, which is fine. But it means that to a degree, the value of the commercial paper is backed by the perception of the US dollar (GE commercial paper issued in Mexican pesos will not be as valuable to a Mexican as a dollar denominated scrip is to an American because of the perceived risk in the peso, even removing exchange rate risk).
And according to the real bills doctrine, the value of the dollar is backed, to an extent, by the value of the commercial paper. In other words, the paper provides some backing to the dollar, which in turn provides some backing to the paper. But so what, you say?
What happens in the event that some event shocks one side of the backing or the other? Say an active paper issuer like GE goes bankrupt? If real bills holds true, the dollar should lose some of its luster, which in turn would devalue the rest of the commercial paper, which would take the dollar down more, so on and so on and so forth.
Think it can't happen? It already has once. In 1970, the Penn Central railroad, then the largest issuer of commercial paper in the market, went belly up. It was at the time, the largest bankruptcy in US history. It can happen. It has happened. The question is, could our economy, if the value of our money is based on the real bills doctrine, withstand another shock like that? Luckily, in 1968 when we left the gold standard, we were about two years from the end for Penn Central. The Fed would have had an opportunity to avoid stocking up on PC scrip. But even so, the revelation of the true depths of the problem at PC came out in early June of 1970; by the end of the month they were in bankruptcy - and all the paper holders were SOL.
Today, if something like that were to happen, if real bills is at work (which I don't doubt it is), it could be a devastating blow to our economy. Particularly now that a number of companies are issuing Euro denominated commercial paper, which now adds in exchange rate risks on top of everything else. A blow to the dollar could dry up significant parts of the paper market, leading to more insolvencies, further hurting the dollar and putting us into a vicious circle until some sort of equilibrium is reached.
But here's something to consider that kind of ties together both parts of this post: We left the gold standard in 1968, Penn Central went bankrupt in 1970, and Nixon imposed price controls in 1972 that lasted until 1974. This all coincided with the beginning of the bear market of '70s and was followed by stagflation. It was nearly 15 years, until about 1983, before we were able to pull out of the issues caused by the events of the late '60s/early '70s. Recently, consumers and corporations alike have seen an explosion of debt burdens and we're now possibly approaching the end of the debt boom. Our economy is sick, there is no doubt about that (and before someone says look at the stock market, that is not a reliable indicator of the health of the economy.), what is in question is whether or not the sickness is getting better or worse.
I think that we've harmed our ability to rectify difficult economic circumstances by taking away one of our check and balance tools - deflation. It is a necessary evil to maintaining a healthy economy. Just a few months ago I was arguing the need to depreciate the dollar to try to export our way out of recession. The more I study the whole situation, the more I'm becoming convinced that we need a broad based deflationary environment for a short period of time to try to introduce a measure of rationality into the economy. The biggest obstacle I see is that we have accrued so much debt in anticipation of never ending inflation that deflation would be catastrophic to many. We may have inflated our way into a situation where we can no longer inflate, but we cannot afford to deflate like we need. We, too, may have hit a liquidity trap, and may be in for a long ride while the economy tries to absorb and/or wring out all the extra debt created money floating around out there. I'm not sure what's worse: rapid fire deflation where all the pain comes now and we can begin rebuilding, or a long drawn out economic collapse, like Japan has gone through for the last 10 years, where the pain just keeps coming and coming and coming in little increments for a long time before you can begin the process of rebuilding.
Do I have the answer? No. Just kind of thinking out loud here. And getting really tired of seeing supply and demand curves in my head.
October 27, 2003
Why The Geneva Initiative Won't Work
The EU currently has a proposal on the table known as the Geneva Initiative, which is designed to promote peace between the Israelis and Palestinians. Soem Israelis have been studying the Initiative pretty closely and have identified a number of problem areas.
A small selection:
* Supervision to prevent the smuggling of weapons may remain in force for only five years.* An Israeli military presence, under the supervision of an international force, may remain in the Jordan Valley for only 5.5 years.
* Israel is to begin withdrawing from Yesha immediately, while no time element is associated with the disbanding of Palestinian terror forces.
* No mention is made of the collection and removal of illegal weapons within the PA.
* Israel is barred from patrolling the airspace over Judea and Samaria, only a few kilometers from Ben-Gurion International Airport.
So, in essence, the Geneva Initiative is little more than a reworded version of the Israel concession/Palestinian promise plan.
But what exactly is a Palestinian promise worth?
Lerner also noted that "Article 6 Paragraph 5(b)iii [states that] the Waqf will determine what may 'disrupt religious worship decorum on the site' - and since the Waqf has the authority to determine what may disrupt religious worship decorum, and since, as you know, the Waqf believes that Jewish prayer on the Temple Mount is blasphemy, it follows that they will bar Jewish prayer on the Temple Mount on the grounds that it disrupts decorum."
When I was on the Temple Mount, they had a terrorist museum/celebration of victimhood. When I went in, I really hadn't really developed any anti-Palestinian feelings (those started right after we left the museum and a little kid was calling me a Zionist because I wouldn't but his pictures for $50). But the inside of the museum was just too much, way, way too much. Bloody shirts, weapons, pictures of Israeli "oppression." It was all just laid on so thick. It makes it completely believable that they would ban Jewish worship on the Temple Mount without a concern in the world about being fair to the spirit of the agreement.
But the bigger problem is this:
...Israel is an illegitimate state. This definition applies to organizations
and individuals that represent [Israel] or recognize it. Therefore, in order
to emphasize this illegitimacy, all ties with the "Israelis" should be
canceled, and in other words: normalization with Zionists should be opposed
on a world level, not only in the Arab homeland...
...There is no option other than the elimination of the imperialist-Zionist
project... The meaning of resisting Israel is resisting Globalization, and
vice versa..."
How can you realistically make peace or lasting agreements with people who want you eliminated? It's would be like the French trying to buy peace with Hitler by giving up Paris. It's asinine to think it would work. The Palestinians are only interested in peace - once the Jews are gone. They have never given up the idea of pushing Israel back into the sea and they never will.
That is why the Geneva Initiative will fail, just like the Oslo Accord; just like the Road Map. Peace requires both parties to want it. The Palestinians do not want peace. They only want to get rid of the Jews.
Until that basic fact changes, every agreement, no matter how well intended, will fail.
French To Retarget Their Nukes?
France is to enact a historic shift in military strategy by targeting its nuclear missiles on "rogue states" that have weapons of mass destruction, it was reported yesterday...In unveiling such a new strategy, M Chirac would bring France into line with America, which has said it might one day be necessary to use nuclear force against nations with weapons of mass destruction.
From the Telegraph
I love that last part. Chirac is looking at bringing France into line with the US. Eating that kind of humble pie has got to be painful to his pride. But then again, an acknowledgement of reality after vocal denial usually is a shot to the old ego.
The bottom line here is that nukes still work. They are, in quantity, still a real deterrent. I'm pretty sure that somewhere, some rational imam has realized that really ticking off the US probably isn't a bright idea. Yeah, you might pull off some great operation in the name of Allah, but it's awfully hard to spread the religion when most of the followers are turned to glowing dust in the wind by an infuriated nuclear power.
It's good to see Chirac finally wising up to the ways of the world. Appeasement is not the end all answer. Sometimes the best defense is having an offensive capability that inspires fear in the enemy.
And telling them that the nukes are already targeted on them - well, it helps to put the fear of Allah in them. It means that the thought has already been taken out of the decision loop. It goes from piss us off, let us think while we retarget, and then push the button to piss us off, push the button. It takes out that extra doubt inducing step.
I don't often say this, but if the report is accurate, this is a good move by Jacques.
IndyMedia Cheap Shots
I don't spend much time, if any, scanning the IndyMedia message boards. Just not enough good stuff to counter out the absolute BS, in my opinion.
But while looking over at Wizbang today, I saw where Kevin had noted an attack on Charles Johnson of Little Green Footballs.
LGF was one of the first blogs I ever read, although lately I've kind of slacked on reading it. Sometimes I think Charles goes a little too far out there, but this IndyMedia post is just way too much.
The author (Moonbat?) shows a complete lack of taste and/or tact. There are lines of civility that shouldn't be crossed and this guy crossed quite a few.
Does it reach the point of libel? I don't know. I'll leave it to the lawyers to figure that one out. I just know that it reached the absolute depths of tastelessness - even by nutcase standards.
The worst part of this: no one has pulled the post yet. One of the moderators should have noticed the deceit in the byline and the questionable nature of the post and should have in good conscious pulled it.
This is not journalism, not by any stretch of the imagination. IndyMedia should have had no qualms about pulling it.
October 26, 2003
Carnival Of The Capitalists #3
Welcome, welcome one and all to the show that never ends! I'm going to dispense with all the Earnhardt paeans (even though I have the perfect opportunity for them, having week #3 and being Southern and all) and get right into the meat of why you came: this weeks collection of excellent posts having to do with capitalism in all its forms and pieces.
Entries for next week's Carnival, which is being hosted by Robert Prather of Insults Unpunished, can be sent to editor - at - robertprather.us or to the old standby capitalists - at - elhide.com.
And now for the entries, in no particular order:
What's Your Threat Business Model? by Tim Oren. Tim analyzes how we managed to end up with SSL (secure socket layer - the technology that runs e-commerce right now) despite the best efforts of the tech developers to screw it up.
Time Inconsistency and Social Security by Steve Verdon. Steve looks at how privatization of Social Security isn't as clear cut and simple as everyone wants to believe. His analysis of risk behaviors is dead on.
Google IPO by Beth Mauldin. Beth takes a look at the proposed Google IPO and a few of the very real issues with how IPOs are issued. She points out a number of facts about IPOs that most investors don't know, but should.
A possible answer to the economic puzzle of the Do Not Call list by Craig Newmark. Craig looks at a few of the reasons why telemarketers oppose the Do Not Call list.
Dow 10000, Psychology, and the ECMH by Stephen Bainbridge. Professor Bainbridge looks at one of my favorite topics - market anomalies. The psychological barrier of 10,000 is just one.
World Series Web Browsing by Matt Certo. Matt looks at some of the different advertising techniques that Sprint used during the National League Championship Series and their effectiveness.
What Would Adam Smith Do? by Robert Prather. Next week's host looks at how regulation and protectionism affects the economy through a phenomenon known as "rent-seeking."
Globalization by Kyle Markley. Kyle looks at globalization and how it has helped to make more efficient use of the factors of production in the US.
The New Economics of Music: File-Sharing and Double Moral Hazard by Umair Haque. Umair has an excellent post about how downloading of .mp3s is as much a form of risk transference as it is of piracy
The Grinding Heel of Socialism by Kin Kinayda. Kin takes on the socialist mindset, particularly in Israel, but also in the US through a use of personal anecdotes and well reasoned argument.
The Real Bills Doctrine (who needs gold?) by Mike Northover. Mike and I had been having a crossblog debate on the gold standard and this is the last post (for the time being). A very interesting theory and one which has made think.
American Airlines Showing Profit by Michael Williams. Michael looks at the government bailout of the airlines and the flaws in the current airline business model.
First Thing...Let's Quell All the Liars by David Giacalone. David looks at legal ethics from the point of view of the consumer, analyzing Shakespeare's famous "Kill all the lawyers" quote and the ABA's attempts to put a positive spin on it. I love the part about the profession needing more PR: "Professional Responsibility," not "Public Relations."
Rant Ahead by Chuck Simmins. Chuck takes on all the folks who refuse to volunteer and then complain about paying taxes to pay for services that volunteers used to perform.
Truth by Kevin Aylward. Kevin points out that the Free Software Foundation is espousing a form of communism by calling for all software and digital media to be made open source by virtue of its very production.
It's An Improving Economy, Stupid by Director Mitch. Mitch takes us, step by step, through an analysis of the macroeconomic environment and how it will trickle down to his company and the upcoming Presidential election. This post shows in detail how to do an analysis like this - a skill that really is lacking in today's business world.
Student loan rip-off by Michael Kantor. Michael looks at how the explosion of student loan debt may have hurt graduates by making their degrees less valuable while simultaneously saddling them huge debt loads. I think he's right that this is a problem issue that very few people want to address.
The Frankenstein Economy? by Barry Ritholtz. Barry states many of the points I've been trying to express, mainly that we may be seeing not a fundamental strengthening of the economy, but the result of massive economic stimulus. He, of course, does it in a much more concise and interesting to read format than me.
Choose the right words by Todd. Todd takes a look at the most valuable words to have when selling Google ads with Adsense.
Business and the "Tragic" View of Human Nature by Rob. Rob looks at and compares the art and science of management. He also analyzes how human nature affects our decision making process in regards to management decisions.
Capitalism and Complacency by Sorge Diaz. Sorge offers his advice to the government and to the citizens in how to improve the economy and welfare of our citizens.
Mutual Fund Corruption could be serious by Howard. Howard takes a good look at the possible ramifications of the mutual fund scandal along with the relative lack of recognition about the problem on the part of the political left.
DUMB COMPANY TRICKS Call Center Clownishness by David Foster. David takes on companies that script calls for their call center reps - and refuse to allow any discretion in times of high call volume. This is one of my pet peeves also since I was once on the other side of the phone trying to help as many people as possible.
Should someone be penalized for a bad roll of the genetic dice? - by Jack Grant. Jack takes on the insurance industry and its unusual position in our society. I agree that the insurance industry has substantial problems that need to be addressed and unfortunately agree that it won't happen.
No Way To Run Things by Jay Solo. Jay has provided us with an excellent post on some of the most important lessons to remember when setting up a contract between companies. He also is calling for commentary on items he might have missed. The company I currently work for is in the position of his customer, so I completely understand everything he talks about.
Paul Krugman sings the babysitting blues by Jonathan Wilde. Jonathan takes a long hard look at fiat currency, pricing via the market mechanism, and inflation by analyzing a Paul Krugman article. An excellent read.
These are a few entries I found during the week that were not formally submitted, but that I thought would have been good candidates.
I gotta say this by Drumwaster. Drumwaster takes issue with the striking grocery workers in Southern California, pointing out how they are helping to contribute to the higher price of food in the area.
Anti-Spam Legislation by Dean Esmay. Dean takes a look at the whole issue of anti-spam legislation, in particular at how spam does in fact cost the recipient, in terms of time and productivity. He also proposes a reasonable penalty for violation, one that is scaled based on the egregiousness of the violation.
Hell Froze Over by Jeff Walters. Jeff looks at the "new" Apple iTunes Store and comes away suitably impressed. He also goes through the marketing points that Apple is using and their effectiveness on him.
This has really been fun and has introduced me to a number of blogs that I probably never would have read otherwise. I really appreciate Rob and Jay offering me the opportunity to host this event and I look forward to seeing what everyone enters in the future!
Jay also has a poll going over at his site about possibly renaming this Carnival. Some of the proposed names are pretty good! Go over and vote on your choice or to keep the Carnival of the Capitalists name.
If you find any errors, omissions, or broken links, please send me an email at blog - at - cbnoble.com
Idea for the logo shamelessly ripped off from Professor Bainbridge
Quick Links
I'll get the Quick Links posted early tonight, in anticipation of the coming of the Carnival...
Hispanic advocates decry tax-preparation deceit - I don't know why, but I am consistantly surprised by the people who abdicate the use of common sense. If you're going to take business deductions, doesn't it just make sense that they would have to bear some resemblence at least to your business?
Jihad remains key subject in Pakistan's religious schools - No real great surprise here. Doesn't make you feel all warm and fuzzy about the possibility of rational dialogue, huh?
Greek Muslim women want education first, sharia abolition later - I think it should be the other way around. Education first, abolition second just means that they will intellectually know how badly they're getting screwed - and still won't be able to do anything about it.
'Smart stamps' next in war on terrorism - It's Orwellian, it's obnoxious, and it's probably a next to useless waste of money. The only real effect I see this having is to scare off folks engaging in legitimate free speech that may be unpopular. We really need to find better ways to spend our money, we really do.
I Think I'm Annoyed
Gees, I was just reading my posts from the last couple of days and I really sound annoyed. Excepting the post on the retirement of Concorde, I think I was maybe a bit too sarcastic. Maybe it was the stories I was finding; maybe it was just a weekend in which I needed a serious attitude adjustment, I don't know.
On the bright side, I think I've got some possibilities for Venomous Kate's Hunting of the Snark (my dad will be so proud...)
Wow, Chirac Is Really Generous
Political grandstanding is a trait that I do not like in politicians. So is it any wonder than, once again, I'm annoyed with Jacques? In his latest grandstanding he has decided to set an example of generosity, granting Mali a four reprieve from paying its debt to France.
Sounds all nice and generous, maybe even bighearted of Jacques, right?
Well, yeah, except that the total debt is a grand total of US$14 million. Or, using the revenue numbers from the CIA's World Fact Book approximately 1.8% of Mali’s budgetary revenue base for 2002. As a percentage of the total external debt it is even more insignificant a gesture. The US$14 million represents a grand total of 0.42% of the US$3.3 billion in debt (same source).
US$14 million represents to France a grand total of 0.000049% of their 2002 budgetary revenue. If Chirac had simply wrote off the amount, rather than suspending repayment for a few years, it would have had roughly the same significance, namely zero.
Chirac spoke at a joint news conference with Malian leader Amadou Toumani Toure in Bamako, Mali's capital, on the last day of a trip he said was aimed at showing France's support for the former French colonies, which are among the world's poorest nations (emphasis mine).
Did Chirac ever bother to consider why this is? Did he ever stop to consider that French colonial elitism might have played a role in the abject failures that their colonies have a tendency to become? Why did the British colonies suceed, where the French did not? Why did the Spanish colonies succeed where the French did not? The Dutch? The Belgians? The Portuguese?
I'm not saying that France should forgive the Malian debt. The Malians accepted it, they have a moral responsibility to repay it.
But before Chirac sits there and puffs out his chest in magnanimous pride, perhaps he should look to the past to see if he's simply granting reprieve on a debt incurred as a result of previous French "generosity."
It's not a point of pride to help someone out of a problem you (or your nation) created. It's called doing the right thing.
Carnival Reminder
Last call for Carnival of the Capitalists entries! We're up to 27 entries so far and I expect the post to be up sometime late this evening.
Last chance to get involved in this week's listing! Send your entries in by 6 pm Eastern (about 1 1/2 hours from now) to cotc - at - cbnoble.com or capitalists - at - elhide.com
More On Peace With Iran
Yesterday, I had short discussion about the fact that Iran has been acting like it wants play nice in the world community and how I thought that it was a bad idea to cozy up to them. Well, today, in the Washington Times, we find a commentary calling more political pressure and more support for Iranian dissidents.
That is probably the least confrontational way of trying to reign in the Iranian thugocracy. Negotiating with them doesn't work. Treaties, agreements, understandings are all made to be broken when convenient for the thugs. Some don't even make it a week before abrogation. Is this the kind of regime we want to be holding talks with? Is a regime that views agreements with non-Muslims as invalid the kind of regime with which we want to have "normal" diplomatic relations?
Ratchet up the pressure. When the regime falls and a more reasonable and trustworthy regime takes over, then we can talk about normalizing relations.
Until then, we need to keep the formal, diplomatic relations on ice.
Don't They Know When To Stop?
I swear the Palestinian Authority acts like my kids sometimes: they just don't know when to shut their mouth.
We all are aware that the Palestinians don't really like the idea of limited right of return (basically that they can return the future Palestinian state, but that's it. No RTR in Israel, which is fair in my opinion). Yet the Palestinian Foreign Minister made a pronouncement yesterday that limited right of return is unacceptable (side question, how can you have a foreign minister when you don't have a real country? I want to know so that I can appoint myself dictator for life of some fictious nation).
Too bad. Limited right of return is what the Israelis have been willing to agree to; limited right of return is what you get. It doesn't matter what the "Arab states initiative for peace" (kill all the Jews?) in the UN says. They are not party to the issue. Maybe if they had welcomed their Palestinian brethren, I would feel different. But instead they rejected their responsibility; abdicated their religious responsibility to help their fellow Muslims in need. With that, they also abdicated their legitimate right to have a say in the issue. They are certainly entitled to their opinion, just as I'm entitled to mock it.
Just like I'm going to mock the EU resolution recommending putting Palestine under a mandate should the Road Map fail. Wasn't a Mandate part of the original problem here? Maybe it isn't the US that is the neo-imperialist power here. It kind of sounds like the EU is still harboring elitist feelings, since obviously they feel that they know how to provide security and fairness better than anyone currently involved.
Sometimes it better to just shut up, take what is offered, and move on. But that requires a measure of long term planning that seems to be lacking in the region.
Just like with my for the moment kids.
Stealing Muslim Manhood
Mark Steyn has got a hilarious column today: Muslim paranoia: Enemies made us impotent!
I can't really add much to what he says, but I like this passage:
One of the things I'd feel humiliated about if I lived in the Arab world is that almost all the forms of expression of my anti-Westernism are themselves Western in origin. Pan-Arabism was old-school 19th century nationalism of the type that eventually unified the various German and Italian statelets. Nasserism was transplanted European socialism, Baathism a local anachronistic variant on 'tween-wars Fascist movements. The Arabs even swiped Jew hatred from the Europeans. Though there was certainly friction between Jews and Muslims before the 20th century, it took the Europeans to package a disorganized, free-lance dislike of Jews into a big-time ideology with the Protocols of the Elders of Zion, Mein Kampf and all the rest.Even Islamic fundamentalism, though ostensibly a rare example of a homegrown toxin, has, as a practical matter, more in common with European revolutionary movements than with traditional expressions of Islam - an essentially political project piggybacking on an ancient religion to create the ideology of choice for the world's troublemakers.
There's something pathetic about a culture so ignorant even its pathologies have to be imported. But what do you expect? The telling detail of the vanishing penis hysteria is that it was spread by text messaging. You can own a cell phone, yet still believe that foreigners are able with a mere handshake to cause your penis to melt away.
I had never quite thought of it that way, but it's true. They couldn't even create their own hatred of the Jews. Even that, the foundation of many of their lives, is a rip-off.
Go read the column and start your Sunday off with a snicker and a smile.
