Tungsten Fluff

Random thoughts

I’m learning to choose NOT to do certain things and be OK with the decision – I don’t have to place equal importance on every task or fix every problem.  That’s why the blog has sat and collected dust for a while.  I’m still paying for it because I want to log my thoughts periodically but other people and things take precedence.

School is pretty intense right now.  I’m half-way through a course in business law and two things jump out at me: 1) every stupid corporate policy or government law is due to a lawsuit and 2) it scares the crap out of me that people conduct business for corporations without a basic understanding of the things I’ve learned in the past 6 weeks.  It’s a wonder businesses don’t get sued MORE.

Segue: I’ve been following the disclosure of the CIA torture memos via RSS feeds from Andrew Sullivan.  I have to admit, I delete every other torture-related post because it’s just too much to take in.  He posted a link to this gem by Philip Zelikow that outlines the legal connection between the Geneva Conventions and our own constitutional protections.  The bottom line seems to be if someone in law enforcement – CIA or county sheriff – thinks you're planning an attack, they can legally suspend your constitutional protection against unreasonable search and seizure (4th amendment), rights of due process and protection against self-incrimination (5th amendment), cruel and unusual punishment (8th amendment) and civil rights guarantees (14th amendment).  His closing comment:

So the Office of Legal Council must argue, in effect, that the methods and the conditions of confinement in the CIA program could constitutionally be inflicted on American citizens in a county jail.  In other words, Americans in any town of this country could constitutionally be hung from the ceiling naked, sleep deprived, water-boarded, and all the rest -- if the alleged national security justification was compelling.

Speaking of Sullivan, he’s been running an interesting series of posts called The Cannabis Closet in which readers send in their personal experiences with cannabis, good or bad, past or present.  A couple of posts were keepers including this from a widower who bought it for his dying wife.  My favorite line in the series came from this one:

Drug addiction is never about the drug, it’s about people coming to grips with the pain of existence.

The original entry is here.  Radley Balko has a keeper on the lethality of current marijuana laws here.

All of this has happened before...

My current read is War of the World by historian and Harvard professor Niall Ferguson.

I know, some people get toys and clothes for Christmas, I get malt extract kits and books on war.  To each his own, I suppose.

The book opens with John Maynard Keynes' description of Britain in 1901: one could read a morning paper containing dispatches from around the world, could invest in any number of commodities or securities on any number of world exchanges, could travel with relative ease to any country on earth in a matter of days, could mail-order luxuries and necessities from numerous suppliers the world over, etc.  Keynes’ introductory words in his Economic Consequences sound a lot like the world today.  The eerie thing was that it was all shattered by the short-minded thinking of a few hundred well-connected politicians and bankers in key countries – resulting, of course, in World War I in 1914.  It wasn’t until the fall of the Soviet Union in 1989 that the world began to recover fully.  Now, twenty years later (has it really been that long?) I note with increasing frustration how little is understood about the history and context of this latest international unraveling.  Even though a world war is unlikely, it looks like the decisions of a few hundred powerful idiots in Washington and New York will sink the global economy for the sake of their own short-term gain.  I’m genuinely upset about the scope of our country’s financial problems and the apparent lack of capable and willing leadership.

I came across this rant last week that summed up my feelings pretty well:

“I am tired of being told that I, and my daughter when she grows up, should pay taxes so that bankers can get $70 billion in bonuses, so banks can use my tax money to buy other banks up like vultures feasting on road kill and so that the guy down the street from me who took out an exotic mortgage to buy a house he couldn't afford can extract $200,000 or more from me and the rest of us in this nation - and keep his house.”

And when you see an investor of Jim Rogers’ experience telling reporters that he’s completely out of the stock market – and staying out – and liquidating his position in the dollar in return for investing in “agricultural commodities,” you know it could get bad. 

 

Agricultural commodities…that’s food folks.  Guys like Rogers, Schiff, Denninger, Paul are all talking on a different, more fundamental level than anyone in media.  I would bet those two capable Asian reporters have never seen anything but economic boom-times in their lives.  The idea of a subsistence society in the West is foreign to them.

No pun intended.

Big head alert: Maybe I’m experiencing a small taste of what Jeremiah felt while watching ancient Israel head down their chosen course.  Seriously, I’ve felt a weight on my conscience over the last couple of weeks and it’s become more of a burden than I can reasonably explain.  I went to a movie with Julie the other weekend (Taken with Liam Neeson – really good, BTW) and I remember leaving the theatre and realizing for a split-second I had not thought about any of this for two hours.  I felt mentally relieved.  Of course, once I realized the hard questions had been gone, they immediately rushed back in to fill the void.

Something about Heisenberg at work there.  Really now, does anyone know how to shut down the brain and stay conscious?

Solution to Economic Crisis

The big question regarding the $1 trillion stimulus package is, "Who is going to buy the debt?"

Once the global market is flooded with those treasuries, and the value of existing treasuries (dollars) in the reserves of other nations starts to drop, only one solution seems likely:

"The world economy can just borrow from another rich planet looking for an investment."

(Comment #2 on this article at Huffington Post.)

This caught my eye because I'm currently reading Niall Fergusun's War of the World.  An eye-opening read about the global run-up to World War II.  I'm continually amazed at our ability to talk ourselves into the idea that there are benefits to destroying the lives of others.

The case for more government

I discovered thirtythousand.org a while back and have become quite a fan of their ideas.

Why exactly is the number of congressmen in the House of Representatives fixed at 435?  Why not more?  The best thing that could happen to our country right now, besides repealing the 17th Amendment, would be to implement a 1:30,000 "representative-to-people" ratio for the House.  With a population of 300 million, that means a House with 10,000 members.

"Then they'd NEVER get anything done!"

And this would be a problem why?  Because what they do now is working so well?

Imagine the House the way the founders envisioned it.  Citizen legislators; people from the community sent for two years to represent their communities at the national level.  Doctors, farmers, shopkeepers...engineers, accountants and teachers replacing the ranks of lawyers running Washington now.  Imagine, if you will:

Barney Frank's House Financial Services Committee, staffed with bankers, real estate agents, mortgage lenders, home owners and retirees grilling Ben Bernanke and Secretary Geitner on the effects of monetary policy on home ownership.

Charlie Rangle's Ways and Means Committee, equipped with accountants, auditors, family law attorneys, doctors, nurses, patients and business owners, questioning the Social Security administration about the reality of their future funding.

(My favorite) Ike Skelton's Armed Services Committee, stacked with military retirees, engineers, logistics experts, military historians and military spouses, asking hard questions about defence budgets, late programs and extended deployments.

So what if they all can't fit into the Capitol?  Does anyone think it would be a bad idea to distribute our representatives around the country in regional centers or...gasp...have them work from their districts?  The technology exists to allow congressmen to 'telecommute' or 'teleconference' to get things done.  A move like this would begin to undo the damage done to our country when air conditioning allowed the government to be in session year-round in that formerly mosquito-infested swamp.

William Demming, the father of the modern quality movement, once said that recurring problems aren't fixed by replacing people, they are repaired by changing the system.  I firmly believe that it doesn't matter who goes to Washington or what proposal they issue.  Our system of government is in need of repair at the most fundamental level.  All that is needed is for us to work within the constitutional framework to change it.

Unintended Consequences

Banks and investment firms that are too large to fail are bailed out with tax dollars.

Consequence:  No bank runs or failures.

Unintended consequence:  Poor business decisions are rewarded with government subsidies and the incentive to make good market decisions is punished through higher taxes and deflated currency.

GM and Chrysler keep their doors open thanks to federal bailout money.

Consequence:  The American auto industry “stays alive.”  Whatever that means.

Unintended Consequence:  Again, bad decisions are rewarded and inefficient, unproductive use of resources continues.  Creative people with new, innovative business models & auto technology are hindered from putting those factories, assembly lines, people and dollars to better use.

“Shameful” CEO pay is capped at $500,000 for troubled banks receiving federal funds.

Consequence:  We all feel better that poor performance is not rewarded with taxpayer-funded bonuses.

Unintended consequence:  Institutions needing the most help from capable leaders suffer under poor management while more talented executives go to banks without pay caps that didn’t get TARP money.

Lawmakers decide that more people should have access to home ownership and lean on lenders to relax loan standards.

Consequence: The housing market booms.  People borrow against the ever-increasing values of their homes without a care.  New investment vehicles are created to make even more money off the American dream.

Unintended Consequence:  People who should have never qualified for a loan step into ARMs they can barely pay for.  The slightest uptick in interest rates sends hundreds of thousands into foreclosure.  The resulting drop in home prices adversely affects everyone; even those who pay on time every month.

 

Intel reports a terrorist leader in a neighborhood.  F-16 rolls in and drops a 500lb-er on him.

Consequence:  Bad guy is taken out and his organization is crippled.

Unintended Consequence:  Every family member of the 30+ people who were also injured in the blast ‘convert’ from supportive or indifferent to our cause to hostility…should’ve used Spooky.

Gas drops to under $2/gallon as economy stagnates.

Consequence:  High gas prices are no longer a factor for most families and America takes to the road.

Unintended consequence:  The incentive to drive less is removed and the idea of a peak oil or an energy shortage, now or in the future, is shelved.

Oh dear...aka Economics Update

This is not good news (H/T Lew Rockwell Blog).

For anyone smart enough to ask, "Where are we getting the $700B for the bailout?" the answer has become, "Well, not China."

Although not scientific, I think this poll is accurate:

Gas Crunch

Everyone in the area hit the gas pumps on Friday in anticipation of Hurricane Ike slamming Galveston this weekend and disrupting gas supplies. The result was not high gas prices but no gas prices. Every Tom Thumb/Citgo station for 50 miles on the main highway has been out of gas since Saturday morning and it’s been an eerie sight.

In my own way, I’m trying to figure out if the market screwed up or if some suppliers used the storm to gain a brief price advantage. Here’s what I mean: on Thursday afternoon, 11 September, the landfall predictions firmed up and people started buying gas. I filled up on my way into work Thursday night – which for me is a whole $20 – but interestingly, the price was holding at $3.55. It had been steady at this price for two weeks – since Gustav hit Louisiana. Even with the increase in demand and decreasing supply on Friday, gas held at $3.55 until it was gone.

Murphy Oil, on the other hand, increased it’s price to $3.69 and $3.74 on Friday. Murphy is WalMart’s gas supplier. By Friday night, WalMart was driving the market price for gas for the few remaining gas stations along a 25-mile stretch of highway. This morning, Monday, Murphy was at $3.94 and Citgo was still out of gas.

Would I have preferred that gas go up to $3.99 on Friday? Again, I didn’t care. My car was full at 8 PM on Thursday night the van was still at ¾ tank. But my personal feelings aside, there was a run on gas here and the market did not correct for it. With the price unresponsive in the face of such demand, the supply ran out. People who did not need to fill up did anyway – because everyone else was doing it. I have not heard of anyone who could not get gas and needed it. That, to me, would be the interesting part of the story. If the Citgo trucks don’t show up soon, we might start to hear it.

Russia and The End of Poverty

I mentioned the other day that I was struggling through Jeffrey Sach’s The End of Poverty again.  Actually, the book is cruising along at the same clip as last year’s attempt.  The first chapter of the book describes the state of several countries on increasingly prosperous rungs of the economic ladder: Malawi, Bangladesh, India, China.  After just a few pages, you realize how blessed we are to have 3 meals a day (plus snacks), shelter, cars, air conditioning, vaccinations, roads, phones, TV.

The rest of the first half of the book describes Sach’s experience in troubleshooting economies which are in trouble.  He details his involvement in ending hyperinflation in Boliva and implementing market reforms in Poland, Russia and China in the late 80s and early 90’s.  This part of the book is fascinating and engaging.  As he describes his plan for pulling a billion people out of extreme poverty, though, he loses me.  We’ll see if I make it through this time.

What jumped off the pages this time was his discussion on Russia – considering it’s current war with Georgia.  With Poland, the international bankers and western governments acted decisively with to establish a currency stabilization fund, loan guarantees, cancellation of 50% of it’s Soviet-era debts and words of support to encourage free market reforms.  The results were miraculous and Poland quickly became integrated into the European community.

However, the west failed to act similarly with Boris Yeltsin’s Russia following the breakup of the USSR in early 1992. No fund to stabilize the ruble, no debt cancellation, no foreign aid.  By the time the G7 countries decided to start making these contributions in 1997, the hopeful outlook of the Russian people for democracy had been squelched, the reformers in the Russian government were booted out and much of Russia’s natural resources had been privatized by the oligarchs – too little, too late.  Putin’s consolidation of power followed and the country has gotten back on it’s feet on it’s own.

What do western leaders think Russia’s obligation to the international community is, exactly?  They needed help in 1992, but it was an election year.  It’s in their interests to defend the separatists in South Ossetia and there’s not much the west can do to stop them.  When Russia leveled Grozny a few years ago, there was a lot of outcry but no real action.

What’s my point?  Looking at the world right now, are there places in Africa, South America or eastern and southern Asia that could benefit from some economic assistance now that could stave off violence later?  If we forgive the foreign debt of a post-Mugabe Zimbabwe  or develop a Marshall Plan for Kenya what would be the long-term benefit for people all over the world?  We lose more money to Medicare fraud every year in the US that some African countries have in their health care budgets.  How much debt has been written down in the mortgage crisis because house flippers have mailed the keys back to the bank?  In light of this western waste, is it really that bad to write off a debtor-nation’s obligations or back a developing currency with dollars?  Surely, the benefits of such policies outweigh the risks.

I agree with Sachs that we have an opportunity unique in the history of the world to eradicate extreme poverty around the world.  Will we take it?

Fay Update

Oh yeah...we're gonna get it.

Of course, I was going to post a picture of how beautiful it has been here over the past couple of days with the headline Florida Suffers Fay's Wrath.  I'll try to get some video this weekend as the storm goes by.

Funniest Fay-related topic heard on TWC last night, "Snakes and Alligators Seen in Flooded Neighborhoods."  Guess what?  Those snakes and gators have been there the whole time.  It's FLORIDA!

Friday Brain Dump

I finished London: The Novel by Edward Rutherford yesterday. What a great read. I picked up one of his other stories, Sarum, at the suggestion of my (now) late Great Aunt a few years ago. He picks a city, exhaustively researches it’s history then writes a fictional account of several families over the course of, in London’s case, 2000 years. Russka is the next on my list.

Watched I Am Legend and The Brave One this week with the neighbors. I’d highly recommend both. Will Smith’s post-apocalyptic thriller started to drag on after a bit but I liked seeing New York three years after mankind’s disappearance. After reading The World Without Us and watching Aftermath: Population Zero on NGC the other week, this rounded out the Armageddon fixation quite well. Jodi Foster’s movie about vengeance was great – regardless of critical reviews. As my other neighbor said (spoiler alert), “Everyone that needs to get killed, gets killed and everyone that needs to live, lives.” Agreed.

One of the better shows on TV ended a 2-season run the other week without much fanfare. And last night, we watched the finale of Jericho we had recorded. What a cool show – lots of well-grounded libertarian content with enough room to examine some of the implications of governance. Oh, it's borderline post-apocalyptic, too...is this a trend? Is that disturbing? Anyway, rumors abound that SciFi channel will pick it up and make more episodes but, if even if they don’t, the series wrapped up really well.

Which brings us to the absolute best show on TV right now (next to Lost and House): Battlestar Galactica starts it’s final season tonight. At 9:00 the world will grind to a halt and I’ll watch it in real-time, commercials and all. I haven’t looked forward to a show like this one since the first season of Heroes.