Thursday, October 30, 2008
Horton wonders what the 200 Justice Department employees and contractors stationed in Iraq do all day, noting that there has not been a single completed criminal conviction against a US contractor implicated in a violent crime anywhere in Iraq since the invasion. "We have a complete process in place for solving military criminal violations when soldiers commit crimes, but for the 180,000 employees of private contractors over there, there is nothing," says Horton.
Wednesday, October 29, 2008
I'm sure if John McCain was raped and had a baby growing in his penis, he would want it publicly discussed with the same level of abstraction, without concern for his specific "life", or... "penis".
Tuesday, October 28, 2008
My sense is that this financial crisis is going to amount to a coming-out party for behavioral economists and others who are bringing sophisticated psychology to the realm of public policy.
Monday, October 27, 2008
"McCain got his political formation during the Cold War, he dedicated most of his life to the fight against communism. It's clear that to this day he still thrashes along that front without seeing any real difference between the Soviet Union and modern Russia."
"Obama doesn't differ particularly in his beliefs about Russia from the Republican candidate, but he is a young politician, without prejudices and so, more ready to take on a new proposals and approaches."
He couldn't have said it better, though a small part of me wishes he didn't, for Obama's sake.
ZAKARIA: People talk about a crisis and how it's going to test the next president. Well, you've been watching, in a sense, a crisis that is testing Barack Obama already, the financial crisis. You've been in on a number of meetings where he has formulated and decided what his position is going to be, what he would do if he were president -- all that kind of thing. Describe what Obama is like in those meetings.To address a potential source of skepticism about this testimonial, later in the interview Rubin says: "I'm not going back to Washington."
RUBIN: I think he's remarkable, Fareed. I first met him about four years ago through a fellow who had worked with me at Treasury -- my chief of staff at Treasury -- who had been on the Harvard Law Review with him.
And then after Hillary dropped out, I got very involved with Barack. And they're a small group of us -- Larry Summers, Laura Tyson, Paul Volcker, in some measure Warren Buffett, and a few others a little bit more intermittently -- who have been very involved with him. And I would say that we probably talk with him once a week perhaps, either on the phone most of the time, or occasionally in person.
And each time he does the same thing. He says, "I want to put all politics aside. I want to put the campaign aside, and I want to really focus on what's happening."
And it is a remarkable thing for somebody to do in the middle of a campaign. He has tremendous seriousness of purpose. He is very bright, as we all know.
He thinks, he makes decisions very much like President Clinton did. He wants to get all the factors on the table, and then he weighs and balances them, and tries to judge what the probabilities and the tradeoffs are.
And he's very much the leader of these discussions. He is the leader of his own economic team. I think he's really and truly terrific, Fareed.
ZAKARIA: How would he -- but he seems very different temperamentally from Clinton.
RUBIN: He's different temperamentally, but he's very similar in the way that he approaches decisions. He recognizes the inherent complexity of issues, and he's very much focused on trying to get in front of him all the considerations, including the views of those who disagree with him. And then he's very much a weigher and a balancer.
You know, temperamentally, it's interesting. They are somewhat different, but they both have a sense of humor. Obama has a very good, sort of ironic sense of humor. And they're both very similar to work for, in the sense that they're engaged, they're interacting.
And I don't think that Senator Obama cares whether you're a 35- year-old who's sitting at the table, or you're double that age and much more experienced. What he cares about is the substance that you bring to the discussion. And that's exactly the way President Clinton was.
Sunday, October 26, 2008
From The Economist .. the overall result not terribly surprising, though there are a few head scratchers: Cuba - Leaning McCain? Iraq - Strong McCain? Slovakia - only "Leaning Obama" country in the EU (as opposed to "Strong Obama")? Huh?
Saturday, October 25, 2008
Friday, October 24, 2008
Studies have shown that most health care is not based on clinical studies of what works best and what does not — be it a test, treatment, drug or technology. Instead, most care is based on informed opinion, personal observation or tradition. It is no surprise then that the United States spends more than twice as much per capita on health care compared to almost every other country in the world — and with worse health quality than most industrialized nations.The implication seems to be that other countries spend less on their health care because they are much better at determining what works and what doesn't, which strikes me as somewhat misleading. Other countries spend less on healthcare per capita than the US simply because they either cannot afford to or do not want to. And their outcomes are better on average simply because their healthcare system is more equitable. The best care in the US is still by far the best care anywhere; the problem is just that fewer and fewer people are able to access it.
Working closely with doctors, the federal government and the private sector should create a new institute for evidence-based medicine. This institute would conduct new studies and systematically review the existing medical literature to help inform our nation’s over-stretched medical providers.However, that seems a touch idealistic. A lot of review and evidence already exists and is routinely ignored both by payors and providers alike. Take the example of surgical robots which cost $2 million a piece, have questionable comparative quality outcomes, yet hospitals are tripping over each other buying them and not because they believe the robots are such good medicine. When I talk to hospital CEOs and CFOs they often express downright hate for the robots. They cost a lot, they lose money on every procedure they perform, yet - to stay competitive - they know they need to have one. In a competitive market place there is always the temptation if not actual incentive to do more with more fancy technology, no matter what the evidence says.
I haven't seen you today but I was told that you are wearing pants that could be considered jeans or a bit too casual for our office. I'm just bringing it to your attention so you can help me out by being careful not to get too casual with your great outfits.
Thursday, October 23, 2008
"We had a relationship that went far beyond friendship. Jörg and I were connected by something truly special. He was the man of my life."
..what disturbs me most is, is this idea that not only is Powell endorsing Obama—Obama can’t prevent that—but that Obama has responded by saying that Powell might play a key role in an Obama administration. And we should ask ourselves, what does that say about Barack Obama’s promises to end this war quickly? I don’t think it necessarily says something good if he’s putting someone around him who helped get us into this war, who helped lie us into this war and has been basically unrepentant about that.
Wednesday, October 22, 2008
Just because Obama is not a Muslim, does not mean he's not a dancing socialist. OK, maybe not a socialist, say actual socialists. But definitely dancing and supposedly better than McCain. Tonight, Larry King asks: "is this relevant?" For bloggers? Definitely. Larry King Life? Not so much.
Tuesday, October 21, 2008
Obama couldn't get security clearance
Tuesday, October 21, 2008
About 40 years ago when I was a young man in the U.S. Navy, my job required a secret security clearance. Even though I had already been in the Navy for 10 years, I still had to undergo the clearance process of completing a form telling everything I could remember about my life and family.
My entire life back to my birth was scrutinized by the FBI. Family members called to say they were questioned about me. Some of my friends told me the same. Months later I was granted the security clearance.
In a few weeks we'll be electing the next U.S. president. This person will have access to all our nation's top secrets.
Back when I got my clearance, current presidential nominee Barack Hussein Obama couldn't have gotten his. And if he had been granted clearance before his associations were known, it would have been revoked. Any connection with a terrorist, communist or racist would have disqualified him. Such associations would have adversely impacted his entire career, if he still had a career in the Navy.
It's unbelievable to me that a person like that would even be considered for president. How can we trust him? Where is J. Edgar Hoover when we need him?
The other major party presidential candidate has proven that he would give his life for his country. He has faced death on at least three occasions and survived. He will make sure to the best of his ability that our nation will also survive. He loves America.
My vote goes to a man we know we can trust: U.S. Sen. John SidneyMcCain. I pray that yours will too.
Ralph F. Cauble, Martinez
If you don't like what the Catholic church teaches, don't be a member, its that simple.
Response: If you don't like gay marriage, don't marry someone of the same sex, it's that simple.
But back to the case of Mr. Farrow - how refreshing to see a man in the ranks of the Catholic church who puts conscience and compassion first and is not afraid to stand up to the backwards ideas of the Vatican.
"I know these words of truth will cost me dearly, but to withhold them . . . I would become an accomplice to a moral evil that strips gay and lesbian people not only of their civil rights but of their human dignity as well."The statement from Fresno Bishop John Steinbock, on the other hand, reminds me why the Communists ( back when I was growing up) could never live harmoniously side by with the church - there just wasn't enough room for two ridiculous dogmatic ideologies.
"Your statement contradicted the teaching of the Catholic Church and has brought scandal to your parish community as well as the whole Church."
Monday, October 20, 2008
For an issue I know and care so much about, I have neglected health care suspiciously on this blog. This neglect partially stems from the fear of boring the reader; much greater part of this hesitation is really my appreciation for the complexity of the issue that is preventing me from trying to spit out quick and dirty entries I could never consider complete or comprehensive enough.
“The really right answer is, what if he is? Is there something wrong with being Muslim in this country? No, that’s not America.”
Sunday, October 19, 2008
A few days ago I wrote about a greater need for integration of economics and psychology to understand (and prevent) situations like the current financial crisis. On Friday, Ezra Klein had a similar post inspired by a New America Foundation event he attended. Is behavioral finance the next big thing?
Below are my adorable fellow travellers- Kevin, Bryan and Brian.
Final note worth sharing is that the patron saint of the journey was Suze Orman by way of Kirsten Wiig. Inspired by this video, we spent the whole day talking in Suze-talk..
So. Good night. My. Dear. Readers.
Friday, October 17, 2008
The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point?I do often wander what keeps people who have amassed a certain fortune in this business. I guess they can't imagine doing anything else?
Thursday, October 16, 2008
"We are in a serious economic downturn and this is just the beginning. Immediate, decisive and swift action is required, along with frugal, day-to-day management of expenses and our business is required."
We are in drastic times. Drastic times mean drastic measures must be taken to survive. Forget about getting ahead, we’re talking survive. Get this point into your heads.
We are in the beginning of a long cycle, what we call a “Secular Bear Market.”In other words, CEOs are being told to assume the business equivalent of the fetal position.
This is a global issue and not a ‘normal’ time.
There is significant risk to growth and your personal wealth.
A “V” shaped recovery is unlikely [√]
Cuts in spending will accelerate in Q4/Q1. Look at eBay—this is just the beginning.
This is a different animal and will take years to recover.
So last night, instead of dissecting the debate right away, I played a little game with myself and I recommend that you play it, too. It's called "close your eyes and imagine." It's actually quite simple yet quite powerful. After the longest campaign in the history of the world, the 2 candidates are omnipresent; you can hardly go a minute without either hearing about them, reading about them or seeing them. However, we still think of them as candidates. So last night, I tried to forget about my biases, and my substantive policy views and tried to imagine what they would each look like as the President of the United States. How will they look addressing the American people especially in the time of crisis? How will they connect with world leaders especially those they don't like - and those they have offended in the past? How will they interact with those that disagree with them in the Congress - especially if both chambers end up being majority ruled by the other party? How will they deal with complex issues that transcend the simplistic dichotomy of left and right and that go beyond war and spending? After watching the candidates side by side in three debates, I cannot guarantee you who will do a better job with the economy or who will do a better job in Iraq. I do, however, have a fairly definitive answer who made me feel better during the "close your eyes and imagine" game. What was yours?
That said, why not have some fun with some highlights from the debate?
When asked about their VPs:
McCain: .. And, by the way, she [Palin] also understands special-needs families. She understands that autism is on the rise, that we've got to find out what's causing it, and we've got to reach out to these families, and help them, and give them the help they need as they raise these very special needs children.
Obama: .. I do want to just point out that autism, for example, or other special needs will require some additional funding, if we're going to get serious in terms of research. That is something that every family that advocates on behalf of disabled children talk about. And if we have an across-the-board spending freeze, we're not going to be able to do it. That's an example of, I think, the kind of use of the scalpel that we want to make sure that we're funding some of those programs.
McCain: .. But again, I want to come back to, notice every time Sen. Obama says, "We need to spend more, we need to spend more, that's the answer" -- why do we always have to spend more? Why can't we have transparency, accountability, reform of these agencies of government?
McCain: Joe wants to buy the business that he has been in for all of these years, worked 10, 12 hours a day. And he wanted to buy the business but he looked at your tax plan and he saw that he was going to pay much higher taxes. You were going to put him in a higher tax bracket which was going to increase his taxes, which was going to cause him not to be able to employ people, which Joe was trying to realize the American dream.
McCain: I admire so much Sen. Obama's eloquence. And you really have to pay attention to words. He said, we will look at offshore drilling. Did you get that? Look at.McCain's arrogance in this one is only trumped by his silliness. "Look at" is about as good a guarantee as either one of you can give us about anything at this point. If he is truly so concerned about words, this is one of the lesser offenses in the debate.
McCain: I would have, first of all, across-the-board spending freeze, OK? Some
people say that's a hatchet. That's a hatchet, and then I would get out a scalpel, OK?
McCain: I know how to save billions of dollars in defense spending. I know how
to eliminate programs.
McCain: Sen. Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago. I'm going to give a new direction to this economy in this country.
Obama: .. the fact of the matter is that if I occasionally have mistaken your policies for George Bush's policies, it's because on the core economic issues that matter to the American people, on tax policy, on energy policy, on spending priorities, you have been a vigorous supporter of President Bush. Now, you've shown independence -- commendable independence, on some key issues like torture, for example, and I give you enormous credit for that. But when it comes to economic policies, essentially what you're proposing is eight more years of the same thing. And it hasn't worked.
McCain: And, Sen. Obama, when he said -- and he signed a piece of paper that said he would take public financing for his campaign if I did -- that was back when he was a long-shot candidate -- you didn't keep your word. And when you looked into the camera in a debate with Sen. Clinton and said, "I will sit down and negotiate with John McCain about public financing before I make a decision," you didn't tell the American people the truth because you didn't.
Obama: I think the American people are less interested in our hurt feelings during the course of the campaign than addressing the issues that matter to them so deeply.
McCain: By the way, when Sen. Obama said he would unilaterally renegotiate the North American Free Trade Agreement, the Canadians said, "Yes, and we'll sell our oil to China." You don't tell countries you're going to unilaterally renegotiate agreements with them.
McCain: Free trade with Colombia is something that's a no-brainer. But maybe you ought to travel down there and visit them and maybe you could understand it a lot better.
McCain: .. as he said, his object is a single payer system. If you like that, you'll love Canada and England. So the point is...
Schieffer: So that's your objective?
Obama: It is not and I didn't describe it...
McCain: No, you stated it.
Obama: I just...
McCain: Excuse me.
Obama: I just described what my plan is. And I'm happy to talk to you, Joe, too, if you're out there. Here's your fine -- zero. You won't pay a fine, because...
Obama: Zero, because as I said in our last debate and I'll repeat, John, I exempt small businesses from the requirement for large businesses that can afford to provide health care to their employees, but are not doing it.
McCain: Hey, Joe, you're rich, congratulations, because what Joe wanted to do was buy the business that he's been working for 10-12 hours a day, seven days a
week, and you said that you wanted to spread the wealth, but -- in other words, take Joe's money and then you decide what to do with it. Now, Joe, you're rich, congratulations, and you will then fall into the category where you'll have to pay a fine if you don't provide health insurance that Sen. Obama mandates, not the kind that you think is best for your family, your children, your employees, but the kind that he mandates for you.
McCain: I would consider anyone in their qualifications. I do not believe that someone who has supported Roe v. Wade that would be part of those qualifications.
McCain: Just again, the example of the eloquence of Sen. Obama. He's health for the mother. You know, that's been stretched by the pro-abortion movement in America to mean almost anything. That's the extreme pro-abortion position, quote, "health."
Obama: Well, we have a tradition of local control of the schools and that's a tradition that has served us well.
McCain: We have to stop the spending.
Wednesday, October 15, 2008
However, while we're still deep in the middle of it all, I can also see how it is incredibly demoralizing to some: Markets are supposed to be perfect.. Regulation is supposed to prevent this.. 10% drops and gains in the stock market are supposed to be extremely unlikely.. People are supposed to be rational. In other words, imagine your whole professional life is predicated on certain assumptions and overnight those assumptions turn out to be shaken, if not crumbling down. A perfect case in point is this blog entry:
We should ditch the assumption - which in a sense is mere courtesy - not only that others are rational but even the weaker assumption that they are nearly so. Perhaps we should indeed regard them merely as “empty suits.”Apart from making that substantive point about ditching a widely-held assumption, I was quite moved by the sense of helplessness and confusion embedded in the final words of that entry:
All of which leaves me genuinely puzzled. Were banks risk managers really that bad? Are bosses an order of magnitude stupider than even I had thought? Or is something else happening? Help me.I can relate to this sense of confusion, anger and frustration. I encounter it quite often in my job: when common sense logic and endless analytical work is telling you one thing and the market is telling you the complete opposite. When you spend days, weeks, months and sometimes years being right about something fundamentally but still lose money in the market. Problem is that quite often the market is not driven by logic or common sense, but rather by pure emotion. It can be anywhere from humbling to outright insulting to see that your analysis is correct albeit sometimes completely irrelevant.
Market fundamentalists often respond to this observation by saying that eventually, in the long run, the market gets it right - emotions give way to underlying fundamentals and the prices correct. However, that long run can be painfully long, especially for those who are evaluated on their daily, weekly, monthly, quarterly and - if they're lucky enough to be still around - annual performance. (Which is why people often find it easier - and more lucrative - to predict emotions rather than to predict fundamentals, but there I really digress.)
So how is that related to the frustration expressed in the blog post and this meltdown? Perhaps the answer to the deep questions underlying this whole crisis cannot be found in any one of the academic fields I mentioned above because all of them either simplify or altogether ignore the role of psychology and the human element in their analysis. In other words, the assumption that people are rational is not necessarily flawed; maybe people are just much more complex that we give them credit for in standard economics analysis and until we can somehow break down the artificial barrier between economics and psychology we will never quite get it.
Surely enough, this idea is not at all novel. In its origins, classical economics was indeed quite interested in understanding the link between human psychology and economic decision-making and more recently there has been a resurgence in behavioral finance and economics. However, much like the idea of a Black Swan, it sits very much on the fringes of academia. Perhaps thanks to this situation it will finally get more respect and airtime in those Econ 101 classes.
Until then, I have found myself a new interesting read which may contain some good insights applicable to this situation: Almost Certain Loss: The Psychology of Pyramid Schemes.
Monday, October 13, 2008
Wednesday, October 8, 2008
There's an evolving consensus that we're no longer seeing a liquidity crisis, but rather a solvency crisis. Banks don't just lack cash; they're fundamentally insolvent, with their assets (things like mortgage-backed bonds) worth less than their liabilities (including their deposits). Improving liquidity, through rate cuts or swap lines or discount windows or buying unsecured commercial paper or any other means, can no longer get us out of our present hole. What we need is a recapitalization of the banking system.The government is slowly realizing this however can it act fast enough - given that only 2 weeks ago they claimed that buying up toxic assets from banks was the only plausible solution? And what if - in the process of recapitalizations - it turns out that the problem is much bigger that we can, even globally, afford to pay? Consider what this article says about credit default swaps - the financing instrument du jour - which dwarf the subprime mortgage problem:
So here is a global private market whose products, combined, have a nominal value roughly equal to the total size of the world economy’s output in a year, and apparently no one in any government knows the full market’s shape, distribution, or true vulnerabilities. Gulp.Last time I wrote about this distaster, after the failure of the bailout package in the House led to a 777 point decline in the DOW, I was worried about what all could happen before it's finally passed and implemented. Indeed, by the time it was approved, it was almost a moot point as it became clear that the rest of the world in even deeper trouble than the US and that the US employment saw a sharp drop. 5 different steps by the Fed later, it feels like we are perpetually 2 steps behind and 2 days too late.
Tuesday, October 7, 2008
Monday, October 6, 2008
Sunday, October 5, 2008
So what do I feel when I hear Joe Biden accuse John McCain of supporting tax breaks for oil companies? Anywhere between cognitive dissonance and nausea. I want Obama/Biden to win this election and I consider myself a democrat for many reasons. But some of their statements on economic issues make me want to hold my ears and scream. Another funny example from the same debate: Biden warning that McCain's $5,000 tax credit to help families buy health insurance "will go straight to the insurance company" as if that meant the insurance company CEO will take that money and go buy a yacht with it. Except, duh, if you're buying healh insurance with the money, it obviously goes to the insurance company to, um, insure you.