THE VIEW FROM CHAOS MANOR
View 624 May 24 - 30, 2010
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May 24, 2010
It's a front page Wall Street Journal story: 'Ratings Shopping' Lives as Congress Debates a Fix . The headline pretty well tells the story: companies are bundling junk bonds into packages, then shopping for firms that will give them a AAA rating on the packaged junk -- and getting that rating. That's the same rating as Treasury Bonds. The WSJ article continues:
Note that the House version of the huge financial grab does nothing to correct this; the Senate version doesn't really change things. The notion that I pay you to give me a good rating is inherently wrong, we all know it, yet it's written into public law that you must choose one of those hucksters to get a rating before you can issue bonds. The ratings companies have lobbyists. Oh boy, do they! And the beat goes on.
I am no great fan of conspiracy theories, but this situation, which has endured for decades, makes no sense. We've known since before the real estate collapse that rating mortgage based securities based on bundles of junk is just plain more risky than Treasury Bonds. They are not blue chips and can't be under any stretch of the imagination; the collapse showed that the ratings houses had not a clue as to the value of those AAA rated bonds (I am ascribing their actions to incompetence, not malice). Yet the beat goes on, and brokerages sell this stuff to pension funds and insurance companies as conservative, blue chip investments.
Much of the coming public debt for cities and states is caused by overly aggressive investments by pension fund managers and boards; they bought risky stuff and their losses must be made up by the public. However, some of those pension outfits acted in what they though was a responsible manner, buying only AAA related investments. The result was toxic assets. The practice continues.
We have a new financial reform act coming, and it doesn't do anything to address the fundamental problem. The big ratings companies continue to rate bundled junk as AAA, and are paid well to do it. Making companies disclose that they shopped around for their ratings may help some investors decide to look elsewhere, but the fact remains that ratings companies continue to have incentives to hand out the highest ratings, and no one in Congress is anxious to change that. One might wonder why.
I note also that some Republicans of the big government establishment are nervous about the immigration issue and want to run away from it. I also note that in California the two Republican candidates are trying to out-do each other on their steadfastness to immigration enforcement and opposition to amnesty. They at least have caught on.
Next November will be, I think, a real anti-establishment election. In 2008 the voters thought they were getting "hope and change". They were disgusted with the Republican Creeps, and did not yet understand that individual Democrat candidates' positions were irrelevant: the Nuts were in charge, and there was no such thing as a "pro-life Democrat", or a "Blue Dog Democrat", or what used to be described as a "conservative Democrat." When push came to shove the leadership of the Democratic party was in the hands of the Nuts, and people like Pelosi with safe seats and big war chests controlled Congress to the point of being able to ram through measures clearly opposed by a majority of the populace.
The "Reagan Democrats" are not a new phenomenon. We understood who they were in the Reagan era. I have registered people to vote as Republicans who simply could not say the word Republican, being a Democrat was so fundamental a part of their internal makeup. "That other Party" was as close as they could come to saying they wanted to register as Republicans so they could vote for Reagan in a primary.
Conservative Democrats are vanishing due to the grinding of the Nut establishment, but perhaps they will come back. They are marked by politics as usual on certain matters: their Congressman is expected to bring home the bacon, with tidy little earmark projects like a local library, or a "demonstration" public transport project, a road or a court house. They tend to be in favor of measures like minimum wages. Yes, I can demonstrate that a minimum wage either has no effect -- someone was willing to pay that much anyway -- or to eliminate the job -- if I have to pay that much to get my yard mowed, I'll make my teen age kid do it or what the hell, I'll do it myself I can use the exercise anyway. Doesn't matter. There are people who simply believe that minimum wages drive wages up and thus affect their pay.
I could write a long essay on what Conservative Democrats believe; the point is that while I tend to disagree with them on many points, they tend to favor transparency and subsidiarity as principles, and there is basis for a position most conservatives can accept. After all, the neo-conservatives with their big government and overseas adventurism, big Federal initiatives and enormous expansion of spending were hardly more conservative than the voter who simply wants funding for a local library to be named for a deceased Senator or Congressman, or a "research" project that tends to promote the production and buying of blueberries or some other local crop.
The best thing we can hope for next Fall is that not only will there be a change in which party holds a majority in one or the other house (or, thrillingly but unlikely both) but that there is a change in the internal leadership of those parties. This may be a chance to turn the rascal Creeps and Nuts into minorities not only in Congress but in their own Parties. Well, I can dream, can't I?
On the oil spill:
Whose fault is it? Who can we blame? How can we blackguard Bush, or Obama, as the oil comes ashore?
Which is all silly. In 1967 I proposed to Reagan that California create an oil spill recovery service, something like a fire department, to be financed by separation taxes from the oil industry. I later proposed it as a National Service, possibly a branch of the Coast Guard or Civil Defense. It would have a corps of professionals whose job was to learn all that was known about oil spill containment and cleanup, and others who would do research into what we don't but ought to know: what chemical detergents will aid in dispersing the oil with the least damage to the environment? Under what circumstances are we better off simply setting fire to the sea -- possibly by adding an accelerant to what's floating? Burning it off in marshes (marshes do burn naturally and recover).
What facilities and accessories are needed? What local resources can help? Is there an inventory of sea going vessels public and private in each region? What is the cost of commandeering them for an emergency? Do we need to stockpile booms and nets, and what other containment equipment would be useful? Does it exist and if so where is it?
I could go on for a while, but surely the point is made? My original briefing which was prepared by Pepperdine art students on VuGraph (overhead projectors have pretty well vanished now that we have PowerPoint and computer screen projectors, but that used to be the format for all briefings). It has long since vanished, but it wouldn't take a lot of work to create a better one: we know more now, having gone through the Santa Barbara oil spill in 1969 and the Exxon Valdez disaster twenty years later. We learned something from those: but we didn't apparently learn enough.
There will be oil spills, as there will be coal mine accidents. We need to deal with the current spill now, but we also need to prepare for the next one. Time enough to assess blame after the disaster is contained; but it's more important to look past this spill to the next. What are we going to do next time?
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|This week:||Tuesday, May
Today's Wall Street Journal has a number of items of interest today -- or perhaps I am feeling enough better that I find more of them interesting. In any event, I made a number of notes at the breakfast table while reading the Journal for the day. The thrust is this: the NUTS are still in charge. There is no slowing them down: they are insisting on acting as if they are not merely the majority party, but that their wishes will prevail as if they were not merely a majority but a supermajority, a consensus of all right thinking citizens; as if, in fact, they are a constitutional convention capable of doing whatever they think is right.
Item: see the editorial "American Jobbery Act". The Nuts have come up with a new "stimulus" bill, $190 billion dollars they don't have and a greater sum than was raised by the Corporate Income Tax in 2009.
There's more funding of ObamaCare in there, too, $24 billion in Medicaid.
This will be sold as a jobs act, and the emphasis will be on benefits: extending unemployment payments, always very popular. Of course it's not a jobs program -- paying people for not working doesn't create jobs -- but it will be called that. It increases the power of government and diminishes Liberty. And it will be popular among compromisers in Congress.
The lesson here is that the Nuts are going to do as much damage as they can before November. This is their last chance to remake America in their image, with Amnesty and Open Borders, Sharing the Wealth, Soaking the Rich (except themselves: look for loopholes for those who already have money) and in general converting the US to the kind of Socialist state that was England before Thatcher. This, they are certain, is the way humans ought to live, and those who don't understand that are racist bigots with no understanding of philosophy, economics, or science. They are the Enlightened, and they will bring the true millennium to the Benighted, who are the Rest of Us.
The Nuts got in because the Republicans sold out to the Creeps. Now true: all those who bought in to "compassionate conservatism" were not Creeps. They genuinely thought there was a way to compromise, preserving freedom and the concept of charity while taking care of the wretched of the Earth. If pressed they would cite Burke: for a man to love his country, his country ought to be lovely. They would insist they were not radicals, merely charitable. This is illogical even though understandable, and I would argue that it's actually creepy: it hands to bureaucrats the task of charity, forgetting that charity is of more benefit to the giver than the receiver. It robs those of limited means (and often limited ability) but boundless energy and devotion of the satisfactions that come with volunteer work. For more on that, see Tocqueville. Illogical, but they are not Creeps. The Creeps were those who "did well by doing good" with Big Government Conservatism, treating regulation not as something to be abolished in the name of Liberty, but guided and modified to fall heavily on anyone trying to enter their business and compete. Regulation became something tailored to fit the existing large firms while falling heavily on startups and newcomers.
Of course the Nuts have a bit of creepiness in their policies as well. They make it possible for the rich to stay rich, but not for anyone else to get rich except through alliance with those already in power. This has always been the goal of an Establishment. For a while Liberty prevailed, but over time the Creeps took power. It's not entirely a coincidence that most of the founders of new-conservatism were formerly Trotskyites.
In a word: we are in for a period of storms. The Republic is under attack by the Creeps and Nuts who hope to ally to retain power.
Another article in today's Journal raises an interesting question: what are the "humanitarian" obligations of these United States? Mia Farrow does a good job of presenting the "humanitarian" argument in "Obama Ignores Sudan's Genocide" and makes her case well. God knows there are stories enough to break your heart. In another era the Empire would send Gordon to Khartoum for less compelling reasons.
There is a second editorial in today's Journal, "Cap and Flee", which gives some insight into the thinking of the Nuts including some creepy Nuts who are doing very well out of the general nuttiness. Cap and Flee is about cap and trade legislation: something California has already tried. In California's case the results are pretty unambiguous: increases in the cost of energy causes capital flight. Jobs are exported to places where the energy costs are lower. The result is higher prices and fewer jobs in the US, as expected -- and no decreases in CO2 because the energy consumption takes place elsewhere. The CO2 level in the atmosphere doesn't care where the CO2 comes from.
Some say, yes, all the states would have to adopt this, and since they won't, it needs to be Federal. After all, it's America's destruction of the environment. We must Do Something. This is a moral imperative.
I leave out the arguments that man-made Global Warming is mistaken science. We have had that discussion before. The fact is, though, that if America were to adopt cap and trade, the result would be enrichment of those with a big stake in that business -- Al Gore would be a multi-billionaire -- but no real reduction in CO2 as the jobs are exported to China and India, which aren't about to adopt cap and trade. And as I said thirty years ago about "The Limits to Growth" movement, there's an even larger effect on the rest of the "developing" world: as a black South African friend put it, "Now that Africans can get in on it, you're shutting down the game."
Of course it is obvious to Members of Congress, who manage daily to challenge Napoleon Bonaparte's dictum "Never ascribe to malice that which is adequately explained by incompetence." Surely no one can be so stupid as not to understand this? Incompetence or malice, or corruption by lobbyists is nearly irrelevant: the fact that the Democrats are trying to keep Cap and Trade alive tells us all we need to know: the Nuts are in power, they intend to stay in power, and they don't care a fig for what the voters think. Their agenda is to ram through what they can before November.
Ours should be to stop them. The next few months are a time for maximum effort missions. I don't like to say things like "the fate of the Republic is on the line," but I fear that for the next few months this is true. Think about it: we have ObamaCare with much of its cost left out, now to be funded through a "jobs" bill that will destroy rather than create jobs. We have a determine effort to revive Cap and Trade when anyone who has at all looked at it knows it will destroy economies and export jobs.
The Nuts will go to the Creeps to try to get this through by "reaching across the aisle" and other "bipartisan" compromises. The Nuts mean to stay in control, and they are perfectly willing to throw some major scraps to the Creeps if that's what it takes.
May 26, 2010
Niven and I have something this afternoon, and I got a late start.
Good news: Norman Spinrad is in good shape, walking the halls of Sloan Kettering, and with luck goes home Friday. The direness of his dire straits has greatly mitigated.
More good news from here: we took Sable around the block as the first part of our morning walk. She loved it. We didn't want to tire her out or put too much strain on her rebuilt knee. All was well, and she was ready to go further, but we decided not to risk anything more. Looks as if she is recovering. Her main problem now is that she's got the cone back on, because she tends to lick her incision and it's not entirely healed so I am taking no chances. The cone also slows her down a bit and so is less strain on the knee. She's favoring that leg, of course, but less every day. We're looking forward to complete recovery.
I'm off. Back tomorrow.
22:34 Back from Third and Fairfax which is the old Farmer's Market, which still exists and in addition there is a mall, part of which is a large Barnes and Noble at which there was a book launch for the Kilin Brothers. Niven and I got swept into it to be part of The Neverending Panel, which I won't try to explain. If you want to see segments that include Niven and me and others, see www.neverendingpanel.com. You will also find there another session in which Niven and I are on with Steve Barnes on the subject of collaboration in writing. Tonight's shenanigans probably won't be up for a day or so, but the previous sessions will.
Tonight's panelists include Chase Masterson, voted the sexiest woman in science fiction (or so I am told). Looking her up on Google I find she was born in Colorado Springs about the time I first visited Mr. Heinlein at his home at 1776 Mesa Ave. in Colorado Springs. I don't know if that's depressing or not. I confess I haven't seen her movie (she produced it as well as had a supporting part) Yesterday Was a Lie but from the discussion tonight it uses "quantum physics for a metaphor for the human condition." Niven remarked that "if she thinks she understands quantum physics she probably knows more about it than I do." I thought about that and pointed out that Richard Feynman once told me that "anyone who thinks he understands quantum physics probably doesn't." All of which reminds me of the filk song, "You got your quantum mechanics and your QED, your general and your special relativity..."
Anyway, Chase was quite charming, and she probably understands quantum mechanics better than I do, but it didn't come up in the panel. I did get a good blackmail picture of her with Niven.
Anyway Niven and I had a pleasant afternoon and a New Orleans gumbo dinner in the Farmer's Market, then a pleasant time at the book launch. And I'm exhausted.
The radio is still talking about the oil spill, so I presume it has not been capped. My observation is that there's no need for us to have wells at 5,000 foot depths. There is plenty of off shore oil at a few hundred feet, and for that matter oil fields on land. We ought to be exploiting those, not going out to the vasty deep. Of course the environmentalists pushed us out to those deep wells.
We pay a trillion a year to import oil. If we had exploited the oil easily available in much shallower water, and on land, we'd have saved a great deal of that money, and while yes, there would have been spills -- there always are -- it's a lot easier to control them when they're not under 2000 psi pressures. When this mess is over, we should think hard about preparation for the next disaster. There will be one. When it happens we need to know about detergents and dispersal agents and their effects, and a lot more about containment methods. But I've said all that before. Many times.
May 27, 2010
I'm still recovering. Apologies.
We took Sable for a two block walk today, and she's using the left back leg more now than before the operation. It does look as if she will recover.
I'm slowly trying to catch up with everything.
There is good news from Norman Spinrad. He will leave hospital Monday, and it may be that the operation that was supposed to prepare him for more operations was in fact curative. We can all hope.
And I will do all I can to catch up. Thanks for your patience.
Incidentally, Tim Powers did several endless panel recordings at LASFS see www.neverendingpanel.com. They ought to be up in a day or two.
I don't know how long it takes them to get these things posted. Apparently they have not done the ones Niven and I did last night. Real Soon Now, I expect.
May 28, 2010
The runaway undersea oil gusher may or may not be in check but this is Obama's Katrina and then some. It's probably said about as well as can be by Peggy Noonan in her column "He Was Supposed to be Competent." Obama is not only incompetent in the sense of not being able to do things very well, but he turns out to be incompetent politically. He can't even put on a show of being in charge.
This is perhaps political good news and bodes well for November, but it's not good news for the country. The obvious incompetence of the President is apparent to everyone, enemies and allies, tempting the one and discouraging the other, and that bodes badly for all of us in coming years. The collapse of American hegemony was predictable and predicted. I am hardly alone in pointing our that we have been sowing the wind for decades, and we may expect to reap the whirlwind. That hardly makes me feel better as things inevitably get worse and the whirlwind approaches.
Mark Steyn points out that "We're too broke to be this stupid."
It's all true. The November election may be the most important since the Civil War. Either there will be a fundamental change, casting out the Creeps and the Nuts and the Desperate like Crist of Florida, or we are in real trouble. If we throw out the Democrats and bring back the Creeps we won't have changed things much. If we don't cut into what the Nuts thought were utterly safe districts we won't have changed things much.
The coming election is crucial. We have sown the wind. We will reap the whirlwind. We must prepare for that, and the preparation must include changing directions. When you are in a hole the first thing is to stop digging.
The main lesson of the BP runaway gusher is that we must rebuild the Civil Defense organization. There are predictable potential disasters in every region, and it is clear that FEMA in particular and Washington in general is not competent to handle them. Yes, the oil disaster is a national disaster and would be were it in California or in the Gulf; but the organization of the resources of the region needs to be done in advance, and with local chains of communication and command. Yes, there needs to be research and development done before the disasters, but again, those who live in the areas will have thought more about it then someone in the old NASA building in Washington. FEMA is a disaster waiting to happen. Make that, FEMA is a disaster that has happened, is happening, and is waiting to happen again. We will always be disappointed in FEMA.
Obama may or may not have plugged the hole -- clearly he hasn't yet since I don't hear the shouts of self-praise -- but is anyone thinking of how to organize for the next time?
We need Civil Defense. We need it now more than ever.
I'm still recovering. We took 3/4 of our usual walk today, and Sable came with us. No cone. She loves it, and she's beginning to use the leg more. It looks as if things are recovering at Chaos Manor.
John Finn, RIP http://www.nytimes.com/2010/05/28/us/28finn.html?src=me
May 29, 2010
Still trying to catch up.
May 30, 2010
.I'll have a lot of mail up later this afternoon.
Be of good cheer:
Trust Washington. These are the people we've been waiting for. Hope and change... Once we get health care and more bail outs and financial reform all will be well. Surely government can find a way to earn enough to pay for it all. Things can't possibly be that bad...
I am not sure I trust the numbers entirely, particularly the future indebtedness, but the situation is a bit cheerless.
This is a day book. It's not all that well edited. I try to keep this up daily, but sometimes I can't. I'll keep trying. See also the weekly COMPUTING AT CHAOS MANOR column, 8,000 - 12,000 words, depending. (Older columns here.) For more on what this page is about, please go to the VIEW PAGE. If you have never read the explanatory material on that page, please do so. If you got here through a link that didn't take you to the front page of this site, click here for a better explanation of what we're trying to do here. This site is run on the "public radio" model; see below.
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