View 698 Thursday, October 27, 2011

· Uncle John McCarthy, RIP

Bubbles

We’ve previously discussed the origin of the Great housing Bubble. There’s a good article on it in today’s Wall Street Journal, The Mortgage Crisis: Some Inside Views by Columbia professor Charles Calomiras revealing new evidence that the crisis was not only foreseeable , but foreseen. The turning point was in early 2004, when the Bush Administration regulators succumbed to the pressure for “affordable” housing and did not intervene as Freddie Mac made massive cuts in underwriting standards. Prior to 2004 there was a cap placed on “low doc” and “no doc” loans, but Freddie Mac officials said in a memo to loan security officials worried about giving jumbo loans to people who could not prove their income and credit stability, “under the current circumstances, a cap would be interpreted by external critics as additional proof we are not really committed to affordable lending.”

The key word is affordable lending: lending money to those unlikely to pay it back is “affordable” lending. Affordable lending is an entitlement. As usual I ask, if someone is entitled to something, who is obligated to pay for it? Where does the entitlement come from, and who has laid the obligation on someone to pay it?

And as usual, the entitlement comes from the will of those who want the entitlement, and the obligation to pay for it comes from those willing to use the machinery of the state to extract it. It’s all part of the trend. And they never catch wise.

Of course the “affordable lending” injected large sums into the housing market. When more money chases goods, the price of the goods rises. This inevitably produces a bubble. It can go on quite a while. The Housing Bubble inspired the credit swap bubble, the Mortgage Secured Assets bubble in which massive packages of high risk loans were bundled into packages that were then sold (with high commissions to those packaging and selling) to Government backed outfits like Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac paid huge dividends to investors and huge bonuses to its managers. But if something cannot go on forever, it will stop. The housing bubble could not expand forever, and in 2008 it stopped. The result was the Mortgage Secured Assets collapse, which led to the Second Great Depression that we enjoy to this day. Fannie Mae and Freddie Mac were taken over by government, which assumed their losses. The Treasury bailed out investment banks that had invested heavily in various derivatives they sold each other at increasing prices. The entitlement was for “affordable lending”. The obligation fell on the American middle class. So it goes.

The Education Bubble

There is another bubble building and we all see it: the academic bubble. While some “higher education” actually teaches something valuable, most of what is taught today does not seem to do that. As more and more people go to these institutions the classes get larger, and as more and more are admitted, the content of what is taught goes down to accommodate them. Staffs grow. Costs rise. Student loans inject more and more money into the system. It is estimated that the total of outstanding student loans is about $1 Trillion. That is a $1 Trillion dollar expansion of the funds available for spending on education. The system was well able to absorb that. Prices rose. Tuition costs rise. The need for student loans rises. The political demand for “affordable” college education increases. Loans are restructured, graduates with worthless degrees are guided into “public service” as a mean of reducing their debts. Those in what would have been the middle class find themselves in bondage for most of their lives. Those fortunate enough to come from the ruling class which can afford to send its young to colleges without the necessity of student loans converting them to bondslaves can go demonstrate for more “affordable” education for a few days or weeks to assuage their guilt feelings.

And the bubble rises.

If something cannot go on forever, it will stop. We have a college education bubble. At some point it will burst. What will happen next I do not know.

In some of my early stories I postulated a new kind of Higher Education, with large international corporations opting to start their own higher education programs. They needed well educated workers and executives, and the traditional education institutions were not providing them.

There remains a demand for well educated workers and executives. It’s possible to get that if one is careful – although even the intellectual elites are subjected to tribute levied by the Social Studies and Special Studies and Responsible Studies departments which have entrenched themselves in academe. As technology becomes more complex the demand on those studying chemistry and physics and engineering and modern biology rise to greater heights, yet the Department of Redundant Studies and the various Departments of Voodoo Science get more shrill in demanding that the smart kids in the tech schools go over and “get a well rounded education,” meaning that they go waste some time in one of the Voodoo departments. That can’t go on forever.

One tragedy here is that these parasites are killing genuine liberal education. When I was an undergraduate at the University of Iowa there was a “core course” requirement in liberal arts. Those included a year of George Mosse’s lectures on Western Civilization, and courses like “Greeks and the Bible,” “Masterpieces of English Literature” — none of which I would voluntarily have taken I think. I am very glad that I wasn’t given the choice. There is an importance to civilization’s continuity. I know that it was important to my life that I learn differential calculus, but I think George Mosse’s searching questions about the Enlightenment, and Mr. Carstairs’s discourses on Milton had an equally important effect on my life. Certainly the seminar paper I gave on Camus did. If instead of those courses I had been forced to take Voodoo Studies in the general humanitie, I am not sure what the result would have been, but I do not think it would have been good.

The Higher Education Bubble is running full tilt. What will happen when it stops? Because it will. It cannot go on forever.

Credentials

As to what happens then, I remind you that you can’t really predict the future, but you can invent it. And sometimes things invent themselves. Look to the roots of the university system. Think about what Universities are organized to do, which is to collect money and spend it on themselves while issuing credentials. The actual produce is the credential, which in theory certifies that its holder has certain capabilities. Note that the validity of the credentials and the appropriateness of the education product are determined by the university system itself. Note the regulations which force employers to take account of the credentials lest they be sued for one or another form of discrimination in hiring employees (who cannot be fired for incompetence if the incompetence results from a ‘disability’ like alcoholism).

And the beat goes on.

You can’t predict the future, but you can invent it. I note that some of the greatest lectures ever given, and most of the great works of all time, are available for almost nothing. What is needed is a means of converting a real education into a credential. Your children need a credential. They really need an education as well. The cost of the credential is much higher than the cost of the education. The cost of the credential for all but the wealthiest is subjecting their children to student loans.

Who here is so base as to sell his children into bondage?

Salve, Sclave.

Uncle John McCarthy, RIP.

<http://www.nytimes.com/2011/10/26/science/26mccarthy.html?_r=1&hp=&pagewanted=all>

—

Roland Dobbins

As I have said earlier, I am not very good with memorials and obituaries. John McCarthy was a friend of forty years and more, a member of the Citizen’s Advisory Council on National Space Policy that I chaired, and the man who introduced me to what later became the Internet. One of my last meetings with him was at the “Singularity” conference at Stanford. We corresponded perhaps monthly for the past twenty years and we were both members of a couple of closed Internet conference groups. I learned a very great deal either directly or indirectly from John. The world is a better place for his having been in it.

Der Dr. Pournelle:

Richard Muller, an announced climate-change skeptic, did a study reviewing climate data; among his funders were the Koch brothers. He recently announced his finding: climate change is real.

http://www.washingtonpost.com/blogs/ezra-klein/post/a-skeptical-physicist-ends-up-confirming-climate-data/2011/10/20/gIQA6viC1L_blog.html

Comments?

– Nathaniel Hellerstein

Is there anyone on Earth who does not believe that climate has changed, very dramatically, during historical times from the Bronze Age on? In Viking times we had a Warm, so much so that there were colonies in Greenland, and Greenland was in fact green enough to warrant the name. Then, after 1300, there was a dramatic shift to cold, the Viking colonies were covered with ice, Greenland became Iceland as Iceland became volcanoland. Brackish canals in Holland froze over to accommodate Hans Brinker and the Silver Skates. The Thames froze over hard enough that there were markets set up on the ice. The Hudson froze over hard enough that cannon could be brought across the river to George Washington in Harlem Heights the day before Christmas 1776. It was cold. Then the warming began. It continues now.

There is no climate model that can duplicate those trends: you can’t start with the initial conditions in 800 AD, or 1300 AD, or 1800 AD and do a computer run that gives you the actual observed results. The models aren’t much good. They may be the best we have, but shall we bet the future economy of the US on them, particularly since China and India will not?

I do not like the increase in CO2 but I am far less concerned about its effect on climate than I am about its effect on ocean acidity. We ought to be spending money on research on what we can do about carbon dioxide levels. I suspect that if we had bought Amazon rain forest to make parks we might have had more effect for what we have spent on carbon reduction than what we did with it. At some point there will be money in this, but for now the research into CO2 level reduction (and controlling ocean acidity) is going to need basic research. Make some of the money thrown about available for that research.

I am hardly astonished that there has been climate change. Everything I have ever read about history indicates that climate has been changing for a long time. The Ice Age – which in theory we’re still in, this being only a remission – had an enormous effect on humanity. See my friend Adrian Berry’s Ice With Your Evolution for some intriguing speculations on those effects.

Of course there is climate change, and it is important to understand it, but in fact we don’t have very good models of climate change. As always, the question is not “is it changing?” but rather how much? And What caused that? And we can’t say we know until we can feed in the initial conditions for, oh, say, 1900 and run it; when the outcome looks like what did happen from 1900 to present, including the “new ice age” trends that scared us in the 70’s, we can start having some confidence in our answers. Until then we need to do more research and less politicking.

View 698 Wednesday, October 26, 2011

For NASA SWAT Teams making America safer, see below. It’s an interesting story.

Feeling Safer Already

It has been a strenuously good day. Began with short walk with Roberta and Sable, getting home in time to set up for Skype calls to Jack Cohen in England, and Steve Barnes in Atlanta. Skype doesn’t allow conference calls, or if it does, I don’t know how to do them, and it was all complicated by the fact that Barnes had given us the wrong Skype number, and to make it even more complicated Jack has two machines, one better for Skyping than the other, but of course the Skype number I have for Jack is on the least preferred machine. Niven is the wrong person to consult for this sort of thing, but eventually we got it working, only of course only two conversations at the same time. So Larry and I talked to Barnes for a couple of minutes about our upcoming novella in the Beowulf’s Children series, then we had a long talk with Jack Cohen about the aliens and evolutionary design and plot points. Then we called Steve Barnes and went over it with him.

It was a very productive hour. We’ve got a powerful work in progress, and in fact it’s nearly finished, and we ironed out some important points. This will be a good story with, as Jack put it, some of the customary deep undertones expected from a Niven/Pournelle book. Not to leave Steve out. He supplies the emotional appeal that isn’t so much expected from Niven/Pournelle. I think this will be one to be proud of, and we have a neat new alien.

After which Niven, Sable, and I went up the hill, 2 miles each way, something more than 400 foot altitude gain. Strenuous for all three, a bit exhausting for Niven and me. Sable loves it. The fire road up the hill is lined as far as the eye can see with gopher holes, and every now and then a gopher puts his head up. Sable has yet to catch one, but she sure likes to try. There are more holes than gophers – the rattlesnakes seem to have got a few of them – but now that the crows have thinned out the newly hatched rattlesnakes I make no doubt the gopher population will return. Interesting ecology in the scrub hills. We put together a lot of stuff for Lucifer’s Anvil – the title will probably involve Samael, the protector angel – as well as getting a great hike.

After which Sable went flat in the kitchen and we went to lunch in the local Thai restaurant, and back for a nap. A very productive if exhausting day. As Niven observed, we still think about as fast as we used to. We just can’t keep it up for as long. A day to count blessings.

Of course as I was writing this I saw a Time-Warner truck parked on our street, and then discovered that my Internet access was gone. Naturally I thought the worst. I reset the cable modem and router. I even went outside to see if I could talk to the Time/Warner guy, but he was gone. So then I thought about what I might have just done. Well, I had pushed the computers around a bit to make room for Niven to have a chair in view of the Mac Book Pro I use for Skype, and — well, and lo, I had managed to turn off the main Ethernet switch that connects my office systems to the main router connecting to the cable modem and —

Which is to say, it was my own damn fault, and it didn’t take long to fix. My DLink switches and routers work fine and have been for a long time – it’s probably about time to get a couple of spare switches just in case. I use Belkin and DLink for my Ethernet equipment and I have never had any reason to regret that. Ah well. Another lesson. And more blessings to count.

Feeling safer already.

NASA Makes Bunny Inspectors Look Tame

Jerry,

You may have seen this already:

"The target [of a sting by NASA to recover a tiny speck of moon dust], Joann Davis, a grandmother who says she was trying to raise money for her sick son, asserts the lunar material was rightfully hers, having been given to her space-engineer husband by Neil Armstrong in the 1970s….

When officers in flak vests took a hold of her, the 4-foot-11 woman said she was so scared she lost control of her bladder and was taken outside to a parking lot, where she was questioned and detained for about two hours."

Here is a link to the entire story at Reason.com: http://reason.com/blog/2011/10/26/nasa-freaks-out-little-old-lad

Apparently Mrs. Davis triggered the sting operation by appealing to NASA for help in selling the Lunar material. Instead of telling her she couldn’t do that, or even sending a bureaucrat to her home to get it back, the agency set up a sting operation, then had armed men apprehend and question her at a public restaurant where she thought she was meeting a potential buyer.

I tell you, between the rampant bunny abusers and the student loan felons and the grannies trying to sell off our national heritage, what is this country coming to? I certainly feel safer knowing that every single Federal agency now has an armed SWAT team ready to jump in and stop these serious offenses whenever and wherever they occur.

But, as you say, despair is a sin.

Best wishes,

John DeVries

The Iron Law applies everywhere. Some military outfits manage to avoid the worst consequences, but the Iron Law applies everywhere. Sometimes it is silly, sometimes it is dangerous.

I am not really very good at obituaries. John McCarthy was an old friend of forty years and more. John McCarthy, RIP. He first showed me the ARPANET, back when very few had ever heard of it. He was part of the Council I chaired that recommended Strategic Defense to Reagan, An old friend and a man of some importance in the history of computer science. Goodbye, old friend.

View 698 Tuesday, October 25, 2011

If something can’t go on forever, it will stop. The US exponential growth in spending and deficits cannot go on forever.

The US budget system has a built in exponential rise in spending: that is, under the rules, any appropriation to any department that doesn’t include a rise is counted as a cut, and a freeze or actual decrease becomes for the lobbyists a “drastic cut” and generally “balancing the budget on the backs of the poor.”

Orange County sanitation workers earn an average of about $100,000 a year. That includes part time workers. That’s a bit high for public service employees in California but not outrageously so. That’s state and county, but it’s indicative. In general public service employees including federal have guaranteed jobs paying a good 25% more than they would earn in similar private employment subject to layoff.

Tax reforms are important, and both Cain and Perry have tax reform plans; but before the US will get out of this hole it has to stop spending money we don’t have. What I want to hear from the candidates is just what they will cut, not what they will do about taxes.

At least the candidates seem united in denouncing Dodd-Frank, ObamaCare, Sorbanes-Oxley, and much of the regulatory spate that has plagued us. Cutting regulations – freedom – is a more sure way out of this economic mess than adjusting taxes, and the most attractive part of Perry’s plan is that he wants to exploit American resources and move toward energy independence. Low cost energy and freedom will get us out of this economic hole, but not if we continue to spend more money than we take in. We’re not borrowing for the future. We’re spending like drunks.

If something cannot go on forever it will stop. But it can go on long enough that the stop comes too late. As in bleeding.

Ron Paul’s plan is the most drastic. http://blogs.wsj.com/washwire/2011/10/17/ron-pauls-economic-plan-cut-5-cabinet-agencies-cut-taxes-cut-presidents-pay/

None of the candidate plans will be adopted unchanged. All will have many adjustments. They are all moving in the right direction. And any of them is preferable to four more years of this.

Newt and the Next-in-Line Problem

http://www.americanthinker.com/2011/10/newt_and_the_next_in_line_problem.html

"Of the remaining viable candidates, there is only one who is not a part of the establishment, has laid out a viable plan to rescue the country, is not intimidated by the mainstream media or the Democrat smear machine, is knowledgeable of how to get drastic changes through the congressional legislative meat grinder, is more than capable of overwhelming Barack Obama in a debate, is experienced in foreign affairs, has a record of conservative legislative accomplishments, and can articulate to the American people as to where he will take the country. It is time for the Republican primary voters to rediscover Newt Gingrich."

I thought this would entertain you. Certainly as I examine the flawed candidates, Newt has gone from my no possible way category to my consider category.

Gingrich’s flaws are mostly personal, and certainly no more severe than Cinton’s were. He’s generally still the smartest man in the room whatever room you’re in, and his conservatism is principled and founded on good historical knowledge. His major political flaw is a tendency to say things that he doesn’t mean and can’t really defend, but which seemed like a good idea at the time. In many cases they are ideas he hasn’t thought through.

This is a virtue in most circumstances, but it’s not a virtue when done in public. It’s one thing to be a Global Warming Skeptic who thinks there ought to be more conservative participation in the Climate Change debate; it’s quite another to participate in an Al Gore fund raising ad. That’s so far from a virtue as to raise suspicion of a temporary lapse of sanity. You don’t induce the Pelosi-Gore camp towards fair play by trying to set an example for them. That kind of negotiation only works within small communities, the sort of society that academia once was when everyone has a shared dedication to finding the truth. There is precious little of that in academia, less in American politics, and about zero in the world of international politics.

Newt Gingrich has many outstanding virtues.

“This day is called the feast of Crispian”

http://thisainthell.us/blog/?p=27169

"Brandon reminds us that today is Saint Crispin’s Day and the anniversary of the Battle of Agincourt in 1415 during the Hundred Years War and immortalized in Shakespeare’s “Henry V” who gave us the “Band of Brothers” speech."

Worth remembering.

Graves

I’ve been meaning to work these into an essay, but I haven’t. They are worth your attention. I’ve been saving them in open Firefox tabs, and I have to cut those way back since Firefox keeps crashing on me. You can’t keep a lot of tabs open for a long time. What’s needed is an automatic way to add a bunch of tabs into a pull down list attached to a bookmark-like tab but is for temporary bookmarks. Or maybe I just need to study the problem better.

http://www.theregister.co.uk/2011/10/14/esa_amateurs_spot_near_earth_asteroid/

http://www.timeshighereducation.co.uk/story.asp?sectioncode=26&storycode=417361&c=1

http://www.politico.com/news/stories/0911/64612.html

http://hotair.com/archives/2011/10/18/celebrated-redistributionists-discover-healthy-respect-for-private-property/

http://www.infowars.com/state-department-agitator-advising-occupy-movement/

http://us1.campaign-archive2.com/?u=a08314c42670c972d435f9af0&id=9163420691&e=b825265d5a

http://www.aipnews.com/talk/forums/thread-view.asp?tid=19857 (hormesis)