Sikrit Info

The Euro crisis, in musical form

2011-11-09T20:01:00.000-08:00

On the edge of the storm

2011-08-27T06:08:00.000-07:00

Satellites are astonishing: right now it's merely cloudy, but I can see that the clouds here are at the edge of the giant storm. My father is one block away from the NYC evacuation zone, so he may be heading out of the financial district and to my grandmother's place in upper Manhattan as I type.

Economic disasters are harder to see, especially if everyone involved has a motivation to pretend it's not coming. But if you pay attention, you can see some of those coming too... like the collapse of the housing bubble in Australia, perhaps finally about to arrive.

The Lessons of War

2011-08-23T04:48:00.001-07:00

I've been reading Beatrice Webb's autobiography, "My Apprenticeship", and came across this astonishing quotation she includes from Charles Bradlaugh, who wrote this in 1872:

"These bodies which now we wear belong to the lower animals; our minds have already outgrown them; already we look upon them with contempt. A time will come when Science will transform them by means which we cannot conjecture, and which if explained to us we would not now understand, just as the savage cannot understand electricity, magnetism, steam. Disease will be extirpated; the causes of decay will be removed; immortality will be invented. And then the earth being small, mankind will emigrate into space and will cross airless Saharas which separate planet from planet, and sun from sun. The earth will become a Holy Land which will be visited by pilgrims from all quarters of the universe. Finally, men will master the forces of Nature; they will become themselves architects of systems, manufacturers of worlds. Man will then be perfect; he will be a creator; he will therefore be what the vulgar worship as God."

She explains however that this religion of science is no longer conceivable: "In these latter days of deep disillusionment, now that we have learnt, by the bitter experience of the Great War, to what vile uses the methods and results of science may be put, when these are inspired and directed by brutal instinct and base motive, it is hard to understand the naive belief of the most original and vigorous minds of the 'seventies and 'eighties that it was by science, and by science alone, that all human misery would be ultimately swept away."

And yet, this "naive belief" survived well into the 20th century among Science Fiction writers. Are SF writers just behind the times? Personally I suspect it's more that so many of the writers were Americans, and the impact of World War I, and later World War II, was never really felt in the same way in the US. Wikipedia suggests almost 10 million combat casualties in WWI of which only 116,000 were Americans; if the US had some proportion of casualties to population as the rest of the combatants, it would've been more like a million US casualties, ten time as many... and that's even before civilian deaths.

A bunch of quacks

2011-08-22T04:48:00.000-07:00

Kragen hates object-oriented ducks:

"The problem with examples like `Duck extends Bird` is that it gives you no understanding of the kind of considerations you need to think about in order to decide whether the design decisions discussed above are good or bad.

In fact, it actively sabotages that understanding.

You can’t add code to ducks.

You can’t refactor ducks.

Ducks don’t implement protocols.

You can’t create a new species in order to separate some concerns (e.g. file I/O and word splitting).

You can’t fake the ability to turn a duck into a penguin by moving its duckness into an animal of some other species that can be replaced at runtime."

Oh dear

2011-06-27T18:25:00.000-07:00

The always excellent "Behind the News" interviewed Yanis Varoufakis a few weeks ago on the crisis in Greece (the second half of the show). Short story: if Greece leaves the Euro, bank runs in other periphery countries on expectations of devaluation (e.g. Ireland), and Germany will leave the Euro so it doesn't have to bail them out; the Euro monetary union will be gone within days. At that point Germany and other surplus countries will have a deep recession as their new currencies appreciate and their exports become expensive.

More at Varoufakis' blog.

Arithmetic, it is hard

2011-06-16T06:59:00.000-07:00

From the Massachusetts Association of Realtors®:

When REALTOR® members were asked about what they thought was going to happen with interest rates in the next 12 months, 67 percent responded that rates would either increase significantly (1 percent) or increase slightly (66 percent). Thirty-six percent thought interest rates would stay the same and four percent thought interest rates would drop slightly. None of the respondents thought interest rates would drop significantly in the next 12 months.

67% + 36% + 4% = 107%. Obviously there are too many Realtors® in MA...

Political question of the day

2011-06-06T05:39:00.000-07:00

Does being associated with an unpleasant substance like santorum impede one's ability to run for President? How do you fight back against what you feel is a smear campaign, especially when you can't call it that?

Rick Santorum's solution is to complain about a double standard of incivility. My proposal: double down with more comparisons of homosexuality to bestiality and pedophilia and then choose a new campaign slogan: "More civility, less civil rights." The conservative base will love it.

On the other hand, I've seen some conservative blogger who dislikes Santorum because he supports food stamps. So maybe the faction of the Republican party that hates poor people more than it hates gay people will kick him out in the primaries and the interwebs will have to stop making horrible puns.

A Poem for Thomas Friedman

2011-05-09T18:10:00.000-07:00

The Fascist octopus has sung its swan song
as our victorious heroes step up to the plate
their hearts aflame with desire
to eat the calamari of freedom.

Nitwit Narwhal

2011-05-04T20:10:00.001-07:00

I installed the new Ubuntu, and of course the new UI is terrible. In particular, you have to guess: unless I knew from previous experience where menu bars and scroll bars ought to be, I would never know they existed. Likewise, unless I knew that previous versions of Ubuntu had control panels, I would never know that such things existed. I'm sure the list goes on.

They care!

2011-04-01T19:06:00.000-07:00

NYTimes: "The White House and the Democratic Party are banking on voters focusing not on the unemployment rate, but on a trend of job growth."

Actual jobs are, of course, far less important than the perception that the unemployed might possibly get their jobs back in 2016. After years with no income, degraded skills, and a resume with a giant hole, and... how's that supposed to work again?

Liberating the world, block by block

2011-02-08T19:45:00.001-08:00

From the Guardian:

Ayman Abdullah, a 43-year-old teacher, said he regards [Tahrir] Square as liberated territory.
"This is the first piece of the new Egypt. Mubarak does not rule here anymore. Suleiman does not rule here. We will rule here and will rule all of Egypt," he said.

Which reminded me of the Temporary Autonomous Zone:

Are we who live in the present doomed never to experience autonomy, never to stand for one moment on a bit of land ruled only by freedom? Are we reduced either to nostalgia for the past or nostalgia for the future? Must we wait until the entire world is freed of political control before even one of us can claim to know freedom? Logic and emotion unite to condemn such a supposition. Reason demands that one cannot struggle for what one does not know; and the heart revolts at a universe so cruel as to visit such injustices on our generation alone of humankind.
...
Let us admit that we have attended parties where for one brief night a republic of gratified desires was attained. Shall we not confess that the politics of that night have more reality and force for us than those of, say, the entire U.S. Government? Some of the "parties" we've mentioned lasted for two or three years. Is this something worth imagining, worth fighting for? Let us study invisibility, webworking, psychic nomadism--and who knows what we might attain?

And from Ken MacLeod:

In Tahrir Square last week thousands of people stood up to a counter-revolutionary mob and fought it back, yard by yard over a long day and night, with sticks and stones. In those few hours they proved in practice that the human being's conscious will can change history. They brought the human subject and human emancipation back into politics. Whatever the immediate outcome in Egypt, this consciousness will not go away. We can all go back to being human. That doesn't mean we will all love each other. It means we can fight each other for good reasons.

As someone said on Twitter: 'Yesterday we were all Tunisians. Today we are all Egyptians. Tomorrow we will all be free.'

Can we just shoot Javascript and pretend it never happened?

2011-02-07T06:02:00.001-08:00

The Gizmodo/Io9/etc. complex has switched to a new design which is astonishingly, stupidly unusable. And slow. It's like it was designed by some sort of idiot savant who had to invent scrollbars from scratch because he'd never heard of them. For comparison, they still have a variation on the old, sane interface.

I'm sure it works adequately on an iPad though, and that's what really matters, right?

Update: A coworker with an iPad tested it for me, and I was wrong, it's completely broken there.

King in Council

2011-02-06T07:17:00.000-08:00

Some of the best classes I took at the Harvard Extension School were the World History series with Prof. Ostrowski. Two points he emphasized have stuck with me. The first, the importance of a sufficiently high threshold of evidence. For example, there is no contemporary evidence that Martin Luther nailed his theses to the church door, nor is it ever mentioned in his own extensive writings. Somehow, everyone has still heard this apparently fictional story.

The other point was that a ruler is very seldom an unrestrained, all-powerful dictator. Instead, a much more common model is the King in Council, where the ruler is the balance point between various factions of the elite, who advise him and constrain his actions.

"On the Durability of King and Council: The Continuum Between Dictatorship and Democracy" is quite possibly the academic paper he was inspired by. Certainly it seems like a good discussion of the subject:

Abstract. In practice one rarely observes pure forms of dictatorship that lack a council, or pure forms of parliament that lack an executive. Generally government policies emerge from organizations that combine an executive branch of government, ``the king,'' with a cabinet or parliamentary branch, ``the council.'' This paper provides an explanation for this regularity, and also provides an evolutionary model of the emergence of democracy that does not require a revolution. The analysis demonstrates that the bipolar ``king and council'' constitutional template has a number of properties that gives it great practical efficiency as a method of information processing and as a very flexible institutional arrangement for making collective decisions.

Two thoughts on Egypt

2011-01-28T14:08:00.000-08:00

The first historical comparison that came to my mind was 1848, but I've seen at least one writer compare the street protests to 1989 in Eastern Europe. The revolutions of 1848 were related but separate, and they mostly failed, or were undermined soon after... but the people remembered, and eventually democracy won (more or less). 1989 was the collapse of an empire, with local governments' weakness in the periphery demonstrating the fragility and lack of power of the Soviet Union in the center. If this is 1989, then the empire that is weakening is the United States.
If Mubarak goes, quite possibly the Egyptian cooperation with Israel's Gaza blockade will also go; I suspect it's not popular with actual Egyptians. Relations with Israel would deteriorate. Separately, this would increase the chances of Israeli military action in Gaza. Relations between Israel and Egypt would deteriorate further.

A quick summary of Boston real estate

2010-11-05T06:01:00.000-07:00

I discovered this illuminating comment in a Boston Globe real estate blog post:

Just yesterday my boss and a co-worker were INSISTENT that now is not only a great time to buy (my wife and I are potentially first-time buyers) but that right now we are at the ABSOLUTE bottom. Their claims were largely based upon the historically (absurdly) low interest rates and that within the next year jobs were going to come roaring back to Greater Boston and that 300K dump in Arlington that I kind of liked would then be 450K. They stopped just short of using the phrase "buy now or be priced out forever."

... I asked my boss if my salary was going to increase enough to warrant the expected increase in values/asking prices and he changed the subject.

Since housing is almost always bought with debt, prices are determined by how much one can borrow. Now that banks have lending standards again, borrowing is constrained by income and previous savings for down payments. Here's the price/income ratio for the (Greater, stretching to edge of New Hampshire) Boston area, courtesy of Boston Bubble; notice how we're still above the peak of the previous bubble in the late '80s:

It's just a jump to the left, and then a step to the right

2010-11-03T05:25:00.000-07:00

In his victory speech last night, Rand Paul noted that "the American people want to know why we have to balance our budget and they don’t." If he actually wanted an answer, it's easy to find out: the Federal government doesn't need to balance its budget because the government can print as much money as it wants. The question is whether this is a good idea; too much extra demand without corresponding productive ability will lead to inflation. That is not a problem at the moment, with millions of workers unemployed and factories sitting idle. Government spending can also be quite wasteful, like the botched banks bailouts or our never ending wars in Iraq and Afghanistan... but there are some signs that once Rand Paul is in Congress he will become a big supporter of the latter brand of government waste. Wise spending on infrastructure, on the other hand, can have a huge positive impact on future growth, and R&D spending created technologies like the computer and the Internet.

In any case, the question is whether the new Republican Congress members are actually serious about balancing the budget is an important one. Demand in the economy can come from exports, households, business or government. Instead of exports, we have imports, and households are suffering from massive debt and unemployment. So either businesses decide to start hiring and investing again, or we're reliant on government spending... and state and municipal governments must balance their budget and are constrained by massive revenue shortfalls.

Thinks to look out for:

Renewal of the emergency extended unemployment benefits. There are 3.7 million people claiming unemployment benefits past the standard 26 weeks. The funding for this expires Nov 30th, and depends on a lame duck Congress for renewal. Of course, there are also many others who've hit the limit of 99 weeks and now get nothing.
The Catfood Commission. Obama's Deficit Reduction Committee will be announcing its recommendations December 1st, probably with (completely irrelevant and unnecessary) suggestions for cutting Social Security. This may have no short term impact, since to appease the "we got our Social Security and Medicare, so fuck the rest of you" crowd, aka Tea Partiers, the Republicans may try for a phased implementation of cuts.
War spending. Just kidding, no one who cares about balanced budgets would dream of cutting that.

Republicans were elected on the back of massive unemployment. It seems unlikely things will improve much by the next election.

Avatar: The Last Airbender and the Corruption of American Youth

2010-10-23T07:14:00.000-07:00

I finished watching Avatar: The Last Airbender last night, a TV show aimed at children much in the way an AK-47 is aimed at the heart of a patriotic American soldier.

The "heroes" of the story are members of a ragtag international terrorist conspiracy. Recruited from various corners of the developing world, they are united by an animistic witchcraft religion and an irrational hatred of their world's industrial superpower. Their goal is to impose an environmentalist world government on the unsuspecting citizens of the superpower; there's even an obvious metaphor for so-call anthropomorphic global warming, blamed on the superpower!

The head of the terrorists is the Avatar, the reincarnation of previous Avatars; Avatars are unique in that they can master all four forms of witchcraft, and are supposed to bring "balance" to the world. However, the last Avatar was frozen away in a glacier for a hundred years, and has now returned from hiding to rid the world of "tyranny." Apparently the writers couldn't be bothered to hide the fact they are inspired by the Shi'ite Islam vision of the Mahdi that is so vocally promoted by such figures as Iran's President Ahmadinejad. As Wikipedia explains:

Twelver Shia Muslims believe that the Mahdi is Muhammad al-Mahdi, the Twelfth Imam, who was born in 869 CE and was hidden by God at the age of five (874 CE). He is still alive but has been in occultation, "awaiting the time that God has decreed for his return". ... The Twelfth Imam will return as the Mahdi with "a company of his chosen ones," and his enemies will be led by the one-eyed Antichrist and the Sufyani.

What do we know about the Sufyani?

The Sufyani's army will go to Kufa; a city in Iraq, and from there he will launch an attack against the people of Khurasan. At the Gate of Istakhr, Shuayb bin Salih and the Hashimite under the black banners, will join forces and engage the army of the Sufyani. The battle will be extremely fierce with a tremendous loss of life and the army of the Sufyani will suffer a temporary defeat. It is at this time that a yearning for the Mahdi's appearance is on the lips of everyone.

So, to recap, the hidden Mahdi (Avatar) will return and fight two enemies, one of them one-eyed and the other a defeated general. And, what do you know, the main enemies of the Avatar (Mahdi) and his company of terrorists are a prince, who has had one eye damaged, and his uncle, who used to be a general but was defeated in his attempt to conquer a large city!

I am astonished that this TV show was ever allowed to air in the United States of America, especially since it's entertaining enough that it can be enjoyed by adults, expanding its propagandistic reach even further. Thankfully, the recent movie version is not quite as good as the TV series, so perhaps no more damage will be inflicted on the fragile psyche of our nation's youth.

Changing Times

2010-10-20T06:19:00.001-07:00

In 2006 , "Ibrahim Hooper, spokesman for the Council on American-Islamic Relations ... call[ed] Little Green Footballs 'a vicious, anti-Muslim hate site . . . that has unfortunately become popular.'" These days Little Green Footballs has changed its tune because of what the blog's author describes as "anti-Islamic bigotry that goes far beyond simply criticizing radical Islam, into support for fascism, violence, and genocide" and "hatred for President Obama that goes far beyond simply criticizing his policies, into racism, hate speech, and bizarre conspiracy theories."

Meanwhile the rebirth of Fascism in Hungary continues:

Things won't get that bad -- at least that was what Jewish intellectual Gaspar Miklos Tamas, 61, used to think. But he changed his mind one day last year, when a group of men in black uniforms and riding boots appeared outside his house in downtown Budapest, shouting "Heil Hitler, Professor Tamas, how are you?"

Really?

2010-09-02T06:24:00.000-07:00

Top 3 most popular books on Amazon:

Mockingjay, some sort of popular young adult book
Freedom, by Jonathan Franzen, great American novelist du jour
Publication Manual of the American Psychological Association, Sixth Edition

One last thought

2010-09-02T04:54:00.000-07:00

To steal a line from Churchill, freedom of religion is the worst system possible, except for all the others that have been tried. But freedom of religion is a legal concept, and there's still the question of public attitudes. I think we'd all be better off if we swapped the roles of religion and sex in our society. Religion would be something you did in private, and politicians would spend their time explaining how awesome they are in bed instead of how much they love Jesus.

Wouldn't you rather the President said "Hope you get laid tonight, America" instead of "God bless America" after promising to spend billion of dollars killing random civilians in Afghanistan? At least with the former you don't have to think about how what kind of God would approve of mass murder...

An expert on money

2010-08-23T19:50:00.000-07:00

I'm proud to be a graduate of the Harvard Extension School. I got a wonderful liberal arts education, and it wasn't even that expensive. Unfortunately, when it comes to economics the Extension School is just as bad as the rest of Harvard: worse than useless.

For example, this fall you can take ECON E-1452: "Money, Banking and Financial Institutions." According to the syllabus, "this course is an analysis of money and its role in financial markets and the economy. It considers the impact banks and other financial institutions have made in the United States and internationally, as well as the events leading up to the financial crisis of 2008." The course textbook was written by Frederic S. Mishkin.

This is the same Frederic Mishkin who was apparently paid $124,000 to write a paper which stated that "it [is] unlikely that there are serious problems with safety and soundness in the [Icelandic] banking system," and though a financial meltdown might be possible, such "self-fulfilling prophecies are unlikely to occur when fundamentals are strong, as they are in Iceland."

The Icelandic banking system subsequently collapsed. Mishkin never disclosed in the report that he was paid to write it by the Icelandic Chamber of Commerce.

Apparently one Charles Ferguson is making a movie about the financial crisis, and he interviewed Mishkin on the subject:

(The CV has since been changed to include the correct title of the paper mentioned in the video.)

The Wider Point of View

2010-08-19T15:00:00.000-07:00

All fiction is a reflection of its time; only rarely does it poke its head through the mirror and take an active look around. Good science fiction is more likely to do this because its writers, like anthropologists, have internalized that the present is contingent, temporary, always provincial. Travel a bit in time or space, and the world is a different place, seen through alien eyes. But since fiction is a reflection of its time, often the same critical theme crops up again and again, the product of a particular soil and climate.

The last time I noticed this, the theme was the corruption of power. In book after book published in the same couple of years, thrillers and mysteries (all in the SF or fantasy genres) came to the same revelatory climax: the government or those in power were the villains. I'll omit the names of the authors for fear of spoilers.

This time the pattern I'm seeing is antagonistic reflections on religion, although the list of books is shorter so far. Stross' "The Fuller Memorandum" isn't quite as good as his previous two Laundry novels, although it'll still appeal to Lovecraft fans, and Ken Macleod's "The Night Sessions" (still!) hasn't made it to the US yet so I've yet to read it. Ian McDonalds "Ares Express" is quite good, as is China Mieville's "The Kraken", which I just finished reading. Strangely, the novel feels like Mieville is channeling Terry Pratchett, in his guise as humanist rather than humorist. There is some of the latter though, and Mieville can wield a sharp pun, e.g. in the climax of this short story.

All of these authors are British, though I couldn't say why. Perhaps now that religious discrimination is becoming fashionable in the US maybe we'll see some American authors chiming in. I do sympathize with the claim that religions whose members have been involved in religiously-motivated bloodshed should be looked upon with suspicion. The Spanish Inquisition, all the Jews slaughtered during the Crusades, the Protestants killed by other Protestants during the Reformation for believing in the wrong method of salvation (theological disputes are easy to win if the municipal executioner works for you), the Thirty Years War... violent bunch, these Christians. As one of many contemporary examples, there are all those avid readers of "The Left Behind" series (millions of copies sold!), excited about the impending death of my siblings in the coming apocalyptic wars in Israel.

Lets ban some churches first, and then maybe we'll talk about mosques.

Here's what Schaffer the Dark Lord has to say (or rather, sing) on the subject:

A hero for our time

2010-06-20T18:31:00.000-07:00

I grew up in Kochav-Yair, an Israeli town named after Avraham "Yair" Stern. When an Israeli minister gives a speech extolling Stern's memory, I can't help read and wonder:

"Stern's words of eternal dedication and national Jewish pride have been contaminated in public discourse. They have been turned from words of national consensus to negative remarks seen as 'extreme' and 'uneducated.'"

In 1940 Stern founded a militant organization -- terrorist, even, to his enemies -- dedicated to fighting the British rulers of Palestine and founding a Jewish State. When Ayalon, Israel's Minister of Strategic Affairs, thinks of this eternal dedication and national Jewish pride, was he thinking of Stern's attempted negotiations with the Nazis (before the Final Solution, to be true) who were after all fighting the hated British? Or Stern's organization's participation in the massacre of Palestinian civilians in the town of Deir Yassin?

What I'm Reading

2010-04-11T18:13:00.000-07:00

"If we look at Europe with Latin American lenses, we realize that the Eurozone is ... a bunch of over-indebted countries with their currency pegged to, of all the economies of the world, Germany."

"The last thing the West wants is to help potential competitors develop in the way that it has developed itself ... The strategy is for global conglomerates to buy up property (with tax-deductible credit), while European banks extend loans to fuel debt bubbles. This policy has left the Baltics and other post-Soviet countries economically dependent beyond their ability to pay down the debts they have run up so rapidly over the past decade."

"The success of the [Jobbik] party, which has railed against “Gypsy crime” and Jews, threatens to tarnish Hungary’s international image ... Some economists fear that the growing influence of Jobbik, which wants to eliminate tax rules favoring foreign companies, could undermine the country’s economic recovery by alienating already jittery investors, spooking credit agencies and making it harder for the country’s next prime minister to shepherd the economy."

"This hostility to universal citizenship is, I submit, the main characteristic of fascism. And the rejection of even a tempered universalism is what we now see repeated under democratic circumstances."

Facing the presence of the past

2010-01-29T04:46:00.000-08:00

There is no explanation of how each of the detainees, much less all three, could have done the following: braided a noose by tearing up his sheets and/or clothing, made a mannequin of himself so it would appear to the guards he was asleep in his cell, hung sheets to block vision into the cell—a violation of Standard Operating Procedures, tied his feet together, tied his hands together, hung the noose from the metal mesh of the cell wall and/or ceiling, climbed up on to the sink, put the noose around his neck and released his weight to result in death by strangulation, hanged until dead and hung for at least two hours completely unnoticed by guards.

The Economist's Democracy in America blog has more more details:

All three men were found to have rags inserted in their throats to a point where it would have impeded breathing. The camp commander, after first ordering guards to make sworn statements, retracted his order and forbade them to make sworn statements, instead holding a group meeting that appears to have been intended to get their stories straight. And these are just some of the most glaring inconsistencies; there's much, much more in the report.

How do you deal with the aftermath of war crimes, murder, torture? In most countries, for most people, the answer is simple: pretend such things ever happened. It's even easier if you won the war, or have an enemy whose own atrocities you can focus on. McNamara describes the firebombing of Tokyo he helped plan, long before Vietnam: "In a single night we burned to death a hundred thousand Japanese civilians – men, women and children." It's hard to believe that these actions have no consequences, no impact: the the people who ordered such actions don't disappear from government, the people who executed the orders eventually go home to their families.

Of course, Japan lost their war, and were both perpetrators and victims on a vast scale. So maybe it's not surprising that Japanese culture has created shows like Full Metal Alchemist: Brotherhood whose themes would be unimaginable in the US. It's completely horrifying... and one of the best shows on TV today (far better than the first series).

A historical moment

2009-10-09T05:38:00.001-07:00

I can't decide which is worse: Obama winning the Nobel Prize for being less of a jerk than that other guy, or the Washington Post noting that the "Twitterati appear perplexed by [the] selection" (on the front page of the website, no less). It appears we've entered an age of lowered expectations, where not being completely incompetent is astonishing, and trivial thoughts even I can come up with win you that the most prestigious of suffixes, -ati.

Phase change

2009-09-20T18:32:00.000-07:00

Imagine you're driving on a crowded highway. In theory, speed doesn't matter as long as everyone drives at the same speed. But at some point, a car will slow down because of a road bump, or a moment of distraction. The car behind it will need to react. At 10MPH, this is not a problem. At 100MPH, on a crowded highway, the result is disaster: reaction times are too slow, drivers overreact, and suddenly the fast flowing traffic crashes to a halt.

What is true of traffic is also true of the economy: like speeding on a crowded highway, too much consumer and corporate debt is unsustainable. If A owes B money who owes C money who owes D (and so on), in theory it all cancels out. But if B can't pay, C now needs to find some money to pay D; if the level if debt is too high, a damaging chain reaction occurs. Irving Fisher, who in 1929 declared that "stock prices have reached what looks like a permanently high plateau," later recognized that the plateau was really the edge of a cliff of debt:

Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links:

1. Debt liquidation leads to distress selling and to
2. Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
3. A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
4. A still greater fall in the net worths of business, precipitating bankruptcies and
5. A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make
6. A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
7. pessimism and loss of confidence, which in turn lead to
8. Hoarding and slowing down still more the velocity of circulation.

The above eight changes cause

9. Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

The need to repay debt causes distress selling of assets and less spending by indebted consumers and companies, which reduce prices, and therefore profits, leading to unemployment... and to even more fire sales and even less consumption in order to pay off debt. The more effort is put into paying off debt, the worse the economy does, and the harder it is to pay off debt. Noticed falling house prices recently?

Consider the following graph, US total debt to GDP ratio (keeping in mind that data before 1950 or so is less accurate). Notice where were in 1929, and where we are now:

If we really are in a debt deflation, then things are not going to get better anytime soon.

Numbers

2009-07-06T06:52:00.001-07:00

427: number of books I have borrowed from the library over the past ~~[three]~~four years. I read most, but not all. I have also bought some unknown number of books.

~~[$1300]~~$1000: minimum amount of money the library saves me each year.

237: number of books on my "want to read" list (I use Amazon to track these).

I'd count the number of books on the floor of my room, but that would be both difficult and embarrassing.

Notes from the Future

2009-07-04T06:57:00.000-07:00

Actually, notes from Japan. Update: and a counterpoint.

Random links

2009-05-29T05:43:00.000-07:00

Shorthand and alternate writing systems

Grid Beam: like Lego for the real world

I'm done

2009-05-13T06:17:00.000-07:00

I started taking college classes in September of 1995. After 14 years, three different schools and a continent away, I just submitted my last piece of homework. Barring unforeseen mishaps I will graduate and get my diploma in 3 weeks from the Harvard Extension School.

I <3 the Interwebs

2009-04-30T14:19:00.000-07:00

Looking up a reference to a paper in a blog post, I found a summary... on a wiki site devoted to summaries of social science papers.

References:

One R short of a BRIC

Weingast and Marshall: The industrial organization of Congress

The aspiring novelist

2009-03-24T06:34:00.000-07:00

My friend Hefzibah entered the Amazon Breakthrough Novel contest (along with 10,000 other writers), and made it to the quarterfinals. Apparently Amazon reviews will be taken into account, so read the free excerpt and write a review - it's good:

Easter Island

Now I know what Dollhouse is about

2009-03-24T06:25:00.000-07:00

And after watching the latest episode, it's getting really disturbing (and a lot more Whedonesque). I expect Fox to cancel the show after one season, however popular it is, since they must be feeling like they've been tricked into something horrible.

If you've seen it, notice the progression of TV interviews and where it ends up: politics, and not the sanitized kind.

Warning

2009-03-05T16:33:00.000-08:00

The NY Times explains:

“Watchmen” is rated R (Under 17 requires accompanying parent or adult guardian). It has extreme violence, a naked blue man and some superhero sex.

And apparently it's not very good, either.

The world needs more Hegel jokes

2009-01-28T09:20:00.000-08:00

If you're in a certain subset of the population this little essay about Charles Stross' Accelerando is hilarious:

Hegel is, of course, the original theorist of singularity. (He’s Kurzweil, minus the technology.) True, Prussian bureaucracy is a very weak, weak AI, but close enough for government work.

Recycled history paper: Legislative Initiative and State Finances in the 18th Century

2009-01-23T09:19:00.000-08:00

Between 1614 and 1789, the Estates General, representative of the elites of France, was never called by the absolutist French monarchy. When it was finally called in 1789, due to the pending bankruptcy of the state, the results were revolutionary. In England, on the other hand, Parliament was repeatedly called (excepting Charles I's personal rule in the 1630s). From 1688 Parliament met on a yearly basis. In Nicholas Henshall's essay “The Myth of Absolutism” this difference is de-emphasized. Henshall describes a system where kings rule with the co-operation of the nobles, with court factions branching out into networks of patronage and clientage binding local elites and the monarchy together. According to Henshall, the legislative system did not distinguish the systems of government in France and England, as in both legislation was a joint effort on the part of monarch and and the elites. Henshall argues that the whole concept of “Absolutism” is meaningless, as the prerogatives of royalty were accepted in both limited and non-limited monarchies, and in both the elites were respected partners of the monarchy. While this view does have merit, Henshall has over-emphasized the similarities between England and France. The existence of Parliament in England and its legislative initiative had a profound impact on relationship between monarch and elites and on the functioning of the state. Specifically, during the 18th century the financial well-being of England and France, dependent on taxes and increasingly on public debt, was strongly affected by the fact England had a Parliament representing the propertied class and that France did not.

When discussing the legislative systems in England and France Henshall does explain the essential difference between them. The English Parliament (the Commons and the Lords) created the laws, which were then approved by the king. The king had the right of veto, but after 1688 it was rarely used. According to Christopher Hill, “William vetoed five Bills before 1696, but they all subsequently became law; after that date he used the veto no more. Anne's solitary veto in 1708 is the last in English history.” Of course, many of the bills passed by Parliament were initiated by the monarch's ministers. But not all laws passed by Parliament were to the monarch's liking, even when the veto was not used. For example, in 1698 Parliament resolved that the all forces in the standing army beyond 7000 men were to be disbanded, and though strongly opposed to the measure William complied. In France, on the other hand, Henshall notes that the “French monarch had the exclusive right of initiating laws.” The legal institutions known as parlements only had the role of promulgating the laws (which they could use to delay the application of the law), though they had the right of sending a remonstrance to the king. The English Parliament, representative of the elites, had the right to initiate legislation, and the king could initiate legislation via his ministers, whereas in France only the king could initiate legislation.

A significant area affected by this difference was the raising of taxes. According to John Brewer, “... by the first quarter of the eighteenth century Englishmen were paying 17.6 livres per capita in annual taxes, while the equivalent figure in France was 8.1 livres” a difference which grew by the 1780s to 46 livres in England vs. 17 in France. How did this difference come about? After 1688, confronted with the price of William's wars against France, Parliament chose a land tax over the government's plan to impose a general excise, choosing a tax which affected the landed wealth represented in Parliament rather than one that affected the general public. According to Brewer, the reason for this choice was that the land tax allowed the Commons to exert control over the collection of taxes, unlike a general excise which would involve a large bureaucracy above and beyond that necessary for existing excises. Not only did the Commons control the king's revenue by the necessity of having it approved every year by the Parliament, but Parliament also controlled the monarch's ability to raise money via extraordinary means. At this point in time Parliament took the initiative in choosing the type of taxes the English would pay, and took control of at least some of the process of taxation. Members of Parliament could request papers and accounts from treasury departments when deciding about financial legislation, and this information was presented even for routine legislation such as the annual bill of supply. Parliament reached an accommodation with the need for a centralized state, balancing between the state's needs and the dangers to their control.

The French government on the other hand had systemic problems with taxes in the eighteenth century. Henshall cites Machault's Twentieth tax as an example of how taxes would be negotiated with institutions such as the parlement of Paris. Even so, Machault dissolved the Languedoc Estates for their opposition to the tax. Colin Jones notes that “the secrecy in which the royal finances were immired meant that the government was unable to demonstrate the fiscal prudence of the measure.” Only in 1781 did Necker publish an account of French royal finances that provided “more transparency ... than any previous ruler or minister had dreamt of.” The fact that the tax had to be negotiated with multiple bodies --- parlements, local Estates, the Assembly of the Clergy for taxes on the Church --- also demonstrates the problems faced by the government, the lack of a centralized national institution to negotiate with. According to James Riley, “the most important feature in French finances ... at every point in the eighteenth century is this: the French detested the tax.” The French government “could not overcome [its] subjects' aversion to paying taxes, and they could not overcome their subject's feelings that their liberties were at stake.”

In addition to taxes, the other source of revenue for the state was public debt, used to finance the increasingly expensive wars of the 18th century in both England and in France. Hilton Root argues that the existence of Parliament in England strongly affected the government's expense in raising loans. In England after 1697, the Bank of England had a monopoly on loans to the government, increasing the government's penalties if it defaulted on loans. In 1715, “a political agreement with Parliament established that a specific loan had to be secured by Parliament's vote of a specific tax designed to fund the loan's repayment. As a result of Parliament's backing interest rates on English government bonds fell from 10 percent in 1689 to 3 percent during the eighteenth century.” Root notes that private interest rates in England were about 4 or 5 percent, i.e. the government debt was seen as more secure than private debt. In contrast France paid interest rates twice as high as England, in the period after 1720 when they were actually lower than in the past. In England, where Parliament controlled the debt, it also had less of an interest in repudiating it, as many MPs and their constituents were government creditors. In France, where the debt was directly controlled by the monarch, the government had a motivation to default on its debt, balanced by the lack of trust this would engender in lenders. As Hilton explains, "creditors took into account the king's reputation for repudiating debts and therefore demanded higher interest rates than would otherwise have been needed to elicit loans. Actually, because he was above the law, the king had to pay more for loanable funds than did his wealthy subjects." Necker in 1781 cited the nature of England's government and the access to information about the government's finances as reasons for England's ability to raise immense sums of money.

In both England and France taxes and public loans were necessary ways to raise money to pay for the government's expenses; the king could no longer live on his own. But only in England was the legislative initiative possessed by Parliament. As a representative body of the propertied elites it was able to actively bring about their agreement to financially support the state, a crucial difference from the system in France. Negotiating rights with a variety of corporate groups, while simultaneously claiming unquestionable authority, the French government was unable to raise as much taxes as the English. Furthermore, France had to pay far higher interest rates on loans than did the English government. There were less restrictions on the French government's ability to default on loans, and information about the government's finances and ability to pay interest were considered a state secret, both raising the perceived risk to creditors. The difference between the legislative systems in England and France was thus an important factor in the financial well-being of the state. Paradoxically, the weaker status of the English government led to a stronger fiscal position.

Bibliography

Brewer, John. The Sinews of Power. New York: Knopf, 1989.

Hill, Christopher. The Century of Revolution (2nd edition). New York: W. W. Norton, 1980.

Jones, Colin. The Great Nation. New York: Columbia University Press, 2002.

Jones, J.R.. Country and Court. Cambridge, Massachusetts: Harvard University Press, 1978.

Riley, James C.. The Seven Years War And The Old Regime In France. Princeton: Princeton University Press, 1986.

Root, Hilton L.. The Fountain of Privilege. Berkeley: University of California Press, 1994.

Roadkill on the path to victory

2009-01-16T06:01:00.000-08:00

From the Washington Post, Jan 16 2009:

Many Afghans are furious over some actions taken by foreign troops, especially airstrikes that kill unarmed civilians and night raids where unidentified foreigners burst into homes, terrifying families. While the Taliban has swiftly capitalized on such incidents, U.S. and NATO officials tend to initially deny or minimize them, and then fail to publicize investigations or findings.

President Hamid Karzai, the coalition troops' official host, has recently stoked this anger with a series of critical comments about foreign forces, saying they should deploy along the border with Pakistan instead of in Afghan villages. Critics say Karzai is pandering to popular emotion in hopes of winning reelection this year.

I don't get these silly Afghans and their so-called "popular sentiment"; don't they know we're killing them for their own good?

"When the foreign troops first came, every Afghan child said thumbs up, but now, nobody likes them. People have lost their trust," said Fazlullah Mojadeddi, 52, a legislator and former governor of Logar. "They don't want the Taliban back, but they are silent because nobody can guarantee their security. If one or two Taliban fighters come, the people don't inform the authorities for fear the foreigners will start killing innocent people."

The Great Mall in the Sky

2009-01-11T14:52:00.000-08:00

If you want a bird's eye view of the American consumer, SkyMall is the place to start. Trapped on a plane with nothing to do, cramped, cranky and completely bored, sooner or later almost every airline passenger turns to the SkyMall catalog, handily provided in the seat pocket compartment. But what makes this catalog unique?

SkyMall is defined by the breadth of its target audience. Most advertising mediums aim for as much specialization as possible: why spend precious advertising money to reach the wrong audience? Even TV shows allow specialization: one can advertise to MythBusters viewers in Boston, or General Hospital viewers in Boise. SkyMall is different. Most anyone is likely to fly sooner or later, excepting the bus-traveling poor. As a result, very little can be said about the readers of the catalog: they have some minimal amount of spending power, and they are likely to be Americans, since most flights in the United States are domestic. An advertiser in SkyMall is targeting the broadest possible audience, an undifferentiated mass of the archtypical American Consumer.

The advertisers in SkyMall are similarly diverse. Those large-scale events that do reach a broad audience are far too expensive for most advertisers. The Super Bowl is the domain of megacorporations able to afford the vast sums required for a 30 second ad slot. SkyMall is far more affordable, including advertisements from a large number of merchants, ranging from the fairly large Sharper Image to small, single-product retailers. As a result, the catalog cannot allow the slightest whiff of provocative, controversial or offensive advertising that might be acceptable in a more specialized medium, since other advertisers will also be implicated.

SkyMall products are sanitized, wholesome mirror images of the everyday desires of the American consumer. And if there is one iconic product that summarizes everything one can learn about the American consumer from reading SkyMall, that product can only be the Creo Mundi Intentional™ Hoody. Also available as a T-shirt ($36), the $79 hoodie is printed with "over 200 positive words in 15 different languages" on the inside. "Fact: Research shows that written words on containers of water can influence the water's structure for better or worse depending on the nature or Intent of the word. Fact: The human body is over 70% water. What if positive words are printed on the inside of your clothing?"

This is what Creo Mundi, which as it turns out is a Canadian company, has taught me about American consumers: they are impressed by science, but aren't educated or smart enough to tell bullshit from the real thing. They are perennial optimists, fervent believers in the power of positive thinking. They are willing to spend money to improve their lives, though that money is often not well spent. In short, nothing much has changed since 1922, when Sinclair Lewis wrote the classic novel Babbitt:

The advertisements were truly philanthropic. One of them bore the rousing headline: "Money! Money!! Money!!!" The second announced that "Mr. P. R., formerly making only eighteen a week in a barber shop, writes to us that since taking our course he is now pulling down $5,000 as an Osteo-vitalic Physician;" and the third that "Miss J. L., recently a wrapper in a store, is now getting Ten Real Dollars a day teaching our Hindu System of Vibratory Breathing and Mental Control."

Ted had collected fifty or sixty announcements, from annual reference-books, from Sunday School periodicals, fiction-magazines, and journals of discussion. One benefactor implored, "Don't be a Wallflower—Be More Popular and Make More Money—YOU Can Ukulele or Sing Yourself into Society! By the secret principles of a Newly Discovered System of Music Teaching, any one—man, lady or child—can, without tiresome exercises, special training or long drawn out study, and without waste of time, money or energy, learn to play by note, piano, banjo, cornet, clarinet, saxophone, violin or drum, and learn sight-singing."
...
"Well—well—" Babbitt sought for adequate expression of his admiration. "I'm a son of a gun! I knew this correspondence-school business had become a mighty profitable game—makes suburban real-estate look like two cents!—but I didn't realize it'd got to be such a reg'lar key-industry! Must rank right up with groceries and movies. Always figured somebody'd come along with the brains to not leave education to a lot of bookworms and impractical theorists but make a big thing out of it. Yes, I can see how a lot of these courses might interest you. I must ask the fellows at the Athletic if they ever realized—But same time, Ted, you know how advertisers, I means some advertisers, exaggerate. I don't know as they'd be able to jam you through these courses as fast as they claim they can."

"Oh sure, Dad; of course." Ted had the immense and joyful maturity of a boy who is respectfully listened to by his elders. Babbitt concentrated on him with grateful affection:

"I can see what an influence these courses might have on the whole educational works. Course I'd never admit it publicly—fellow like myself, a State U. graduate, it's only decent and patriotic for him to blow his horn and boost the Alma Mater—but smatter of fact, there's a whole lot of valuable time lost even at the U., studying poetry and French and subjects that never brought in anybody a cent. I don't know but what maybe these correspondence-courses might prove to be one of the most important American inventions.

"Trouble with a lot of folks is: they're so blame material; they don't see the spiritual and mental side of American supremacy; they think that inventions like the telephone and the areoplane and wireless—no, that was a Wop invention, but anyway: they think these mechanical improvements are all that we stand for; whereas to a real thinker, he sees that spiritual and, uh, dominating movements like Efficiency, and Rotarianism, and Prohibition, and Democracy are what compose our deepest and truest wealth. And maybe this new principle in education-at-home may be another—may be another factor. I tell you, Ted, we've got to have Vision—

So what are you waiting for? Buy yours now!