Author Archive

Big day tomorrow in Massachusettes.

I have been trying to map the physical progress of Xenophon through the Middle East and back to the Greek cities in Anatolia. His starting point is relatively easy to find: the city of Sardis, now called Sart, still exists, although now it is just a village near the ruins. The city was destroyed several times by earthquakes.
The next city mentioned, Colossae, was located near what is now Denzli (Turkey). They went on to Celaenae, near the present-day town of Dinar, where they remained for 30 days. While looking at the area in Google Earth, I noticed some landscape features that look like they might be the outlines of ancient buildings under the plowed fields. Have a look for yourself.

I usually read articles about business management the way my dog watches us eat dinner: with hope – never quite crushed, no matter how seldom fulfilled – that some toothsome morsel will come to me. This one was a nice meaty steak, fresh from the grill. If you have anything to do with corporate IT, whether as a member, manager, or customer, read it. The premise is that geeks value competence, logic, and contribution, and reward these attributes with respect. Looking at that statement logically, you can see that the contra-positive must also be true: if you are not getting respect from your IT department, you should look to yourself to see why not. If you ask a good IT person to do something dumb, illogical, or counter-productive, he will object. If you force the issue, you may get compliance but you will certainly forfeit respect. This is where a good IT department will start to rot. IT people tend to view management incompetence as a bug, and if they cannot fix it, they will come up with a work-around. If the bug is in corporate management, the IT department will pursue paths that they believe are better for the company’s interests than what they were told to do. If the bug is in IT management, there will be subversion, factionalism, and low morale, since the IT staff knows that IT management is not effectively representing them to the rest of the company. Either situation causes a split between IT and the rest of the company which may not even be recognized until there is a major failure.

Read the rest of this entry »

On the one hand, we have the Obama administration’s grand plans for universal health care, investment in our infrastructure, reducing our atmospheric carbon output, and world-wide reduction in sea levels. On the other, we have the requirement to pay for it, assuming the Chinese would like to have some significant portion of their money returned to them. Currently, the administration seems to favor increased taxes (sorry, “contributions”) on those with the highest incomes. The problem is that there are not enough rich people to go around. Even at a tax rate of 100%, there is still not enough money to pay for all the urgently needed good stuff. What to do, what to do…

A possible remedy comes from the Internal Revenue Code, which starts with this:

§ 61. Gross income defined
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.

The definition is broad enough to encompass just about anything that could be construed as income; that is, anything that would result in the improvement in the economic situation of a person or entity. Cash need not be involved. Income can be recognized, and taxes must be paid, on the unrealized gains of certain derivatives (§ 1256, § 988), on bonds that do not pay anything at all until they mature (§ 1272), and even in some situations where you pay too little for something (§ 1274). This is a marvelously flexible idea, and suggests that we can close our budget deficits not by raising the tax rates, but by discovering and taxing previously undiscovered sources of income.
Read the rest of this entry »

It looks like Al Franken is going to be the junior Senator from Minnesota. Does this mean we can stop taking Democrats seriously? Or should the Republicans nominate someone like Ann Coulter for the Senate to ensure that the bozo factor is evenly distributed between the parties? Floppy shoes and red rubber noses all around! Good grief, why did I even bother to register to vote? I could have enjoyed the spectacle without having to participate. I’m almost ashamed of giving a s**t.

Here is some encouraging news: “On April 29, 2008, Franken released a statement noting that he will pay about $70,000 in back income taxes in 17 states dating to 2003″ (link). Since Timothy Geithner had to pay only $34,000 in back taxes, Franken is about twice as qualified as Geithner to handle the fiscal affairs of our country. Senate Appropriations Committee, here comes a fellow who knows which end of a calculator is up, if not much more. Maybe someone can teach him what those symbols on the buttons mean.

My grandparents came here because their continent had gone insane. May they rest in peace, never having known what happened here later.

It was a vital national industry, employing many thousands. The plants, although state of the art when built, were outdated. Years of poor management and outright hostile labor relations had not helped. Foreign competitors were taking market share, and US companies were belatedly moving production facilities south or offshore. Would you like to contribute your tax dollars reviving this industry?

Read the rest of this entry »

Design by Michelle Yang. Thank you!
I couldn’t really hear what was going on, but you can read more about it at GOP Mom. The inevitable tricorne hats and other 18th century finery were there, and there were some people with other issues (returning to the gold standard, abolishing the Federal Reserve, etc.), but most of the crowd seemed like normal people fed up with the shenanigans in Washington. My guess is that a couple of hundred people were there at any one time. Michelle points out that she distributed 1,000 postcards like the one above, so my estimate is probably too conservative. More pictures after the break.

Update, courtesy of Michelle Yang again: I missed it, but there was another demonstration today across town, down by the water at Christopher Columbus Park in the North End. The harbor has been getting cleaner in recent years, even to the extent of supporting living fish. The tea dumped there today is not likely to harm them. This second demonstration was sponsored by the local FM talk radio. There was even a third gathering in the morning on the Common. Unfortunately, I was unable to attend that one, either. I spent the morning struggling with extensions for Massachusetts income taxes. Let me just point out that (1) if you put a telephone number in the instructions, you should probably do better than have the answering machine tell callers that they cannot use that number; (2) if you require your victims to use the website and forbid them to use paper forms, it is not really a good idea for all your site search results to point to the paper forms; and (3) if a CPA with web development experience can’t figure out what is going on in your website, your website probably sucks and your web developer should be firmly disciplined. “Bad codemonkey! No donut!”
Read the rest of this entry »

Many of you – far too many – will shortly receive an invitation to be my “friend” on a site called Mylife.com. I am so sorry to have caused you this inconvenience. The sign-up for this “free service” (only the useful parts require payment) ask you to import your email contacts. In my case, that included a lot of Chicago Boyz correspondents. Only later did I realize that instead of using them to search, it blasted spam to all of you. Again, my profound apologies. Please avoid this awful site.

This with this.

Discuss the role of civil society when it is healthy, and the role of the state when it is weak or damaged.

If the 1930s are really back, it won’t be long now before they remake Confidence, starring Oswald the Lucky Rabbit as an economist. Sorry, embedding was disabled.

Notes on the cartoon: Oswald was originally drawn, but not owned, by Walt Disney. A few tweaks and a change of species later, Mickey Mouse was born. Take a good look at the mice on drums in the band – it was probably an in-joke. Also, check the credits: Tex Avery (Bugs Bunny) and Walter Lantz (Woody Woodpecker), among others.

This is the first Veterans’ Day without my dad. He didn’t talk about it until he knew he was dying, and even then he didn’t say much. Smart-ass street kids from the Bronx without high school diplomas did not go to OCS. Usually, they were assigned to the infantry, but since he had volunteered for the Army Air Corps, they did the next best thing: they made him a ball turret gunner in a B-24. He was sent to the China-Burma-India theater on a troop ship to Calcutta (Kolkata), then flew over the hump to Chungking (Chongqing). In the hospital, he said a few words about being hauled out of the turret by his crew-mates before the plane bellied into a swamp, said a little about shooting at Japanese fighter planes and being shot at, talked a bit about flak, and mentioned strafing runs on Japanese trains, much too close to the ground. The only exit from the B-24 was at the rear of the plane, which was bad enough, but since he could not wear a parachute harness in the turret, let alone the parachute itself, his situation was essentially binary.

He must have been pretty good at it, though, because they promoted him and brought him back as a gunnery instructor. Nevertheless, he says he hated every minute of every day of the war. That may have saved his life, because they were offering early discharges to anyone who would sign up for the reserves; but he had decided that once he was done, he was done. It was 30 years before he would get on another airplane. As he said later, it was much nicer when no one was trying to kill him. The guys who took that offer went to Korea a few years later. Instead, Dad came back to the states to serve out his full enlistment, weighing 135 lbs., bright yellow from the malaria drugs, and bearing a heartfelt dislike of authority. All seven of his kids seem to have inherited that last characteristic.

Thank you, Dad, and good-bye. I hope we always have more like you when we need them.

Tuesday, October 21, 2008 is likely to be a decisive day in the credit crunch. That day is when credit default swaps (CDS) on Lehman Brothers debt will be settled.

Credit default swaps are sort of like insurance. One party offers, for a fee, to guarantee a certain bond against a “credit event,” usually something like a default, missed interest payment, restructuring, etc. If that happens, the insurer (seller) pays the difference between the bond’s face value and what it is worth after the event. In the case of Lehman Brothers, the company’s bankruptcy means that the sellers of the CDS will have to pay about $91 for every $100 of par value insured, since those bonds were selling for $8.65 per $100 par value at auction on October 10. Because there is no central market or clearing house for CDS trading, no one has a complete story on who will be paying and who will be trying to collect. The gross notional amount of credit default swaps on Lehman Brothers debt is believed to be approximately $300 billion to $400 billion. One hopes that the net amount is a lot less, maybe less than $10 billion after offsetting positions are netted out. One hopes, but one does not know.

(Update 10/19/2008: SEC Chairman Christopher Cox has a piece on the CDS issue in the New York Times.)

Read the rest of this entry »

A paraphrase of Beowulf (starting around line 1383).

Beowulf said “We must mourn our friends later; they have died, but we have not yet avenged them. While we live, we win whatever victories we can; so now let us hunt the monster, whether its trail lead through the middle of the earth or the bottom of the sea.”

The monster is hiding, but heroes are hunting it.

Link

Sry!

LGF is having way too much fun finding crazies in Barack Obama’s blog community. It looks like it was inspired by Daily Kos’s community of like-minded progressives, where everyone gets his own little sublease to part of the real estate. The problem is that Obama’s campaign has attracted all kinds of crazies. The people running and moderating the little bloglets are way out of their depth; they don’t catch some of the real poisonous things until Charles or one of his lizard minions finds it and publicizes it. Shortly after, the offending blog is removed and the archives are deleted.

Maybe it’s unfair to judge a candidate by his supporters. If it were just one or two, I might go along with that. In this case, though, there is a whole ward of drooling loonies who think Obama is their kind of guy, and Obama’s campaign furnishes them with a soapbox and a microphone.

Before this is through, nearly everyone on the planet will have expressed an opinion on the sub-prime mortgage crisis. It’s a little late, but I thought I should get mine in. Here are some points about the issue that I don’t think have been given much discussion.

Mortgage-backed derivatives are not new. Some 20 years ago, FNMA introduced the REMIC (Real Estate Mortgage Investment Conduit). These were pools of mortgages that were split into various tranches or classes of maturity and quality, which were then sold separately, similar to the way today’s collateralized debt obligations (CDOs) are sold.

There were some important differences between this first generation and its descendants. I would like to point out some of the differences, since they may highlight the reasons behind the collapse.

Read the rest of this entry »

One reason the effect of the US subprime loan crisis has spread so far and so quickly is that financial institutions have many ways of participating in the debt market other than issuing or buying debt instruments. Most of the financial news I have read omits explanations of how it happens, other than generic references to “derivatives.” Here are some of the other ways to have a loss without touching a mortgage.

Read the rest of this entry »

“We have not released giant badgers in Basra, and nor have we been collecting eggs and releasing serpents into the Shatt al-Arab river,” Major David Gell told reporters.

Cue the Monty Python references.