"Restore(s) a little sanity into current political debate" - Kenneth Minogue, TLS "Projects a more expansive and optimistic future for Americans than (the analysis of) Huntington" - James R. Kurth, National Interest "One of (the) most important books I have read in recent years" - Lexington Green
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Posted by Kevin Villani on 24th September 2016 (All posts by Kevin Villani)
When testifying in 2010 before the Financial Crisis Inquiry Commission into the financial crash, then Federal Reserve Board Chairman Ben Bernanke recommended only one reference, Lords of Finance: The Bankers Who Broke the World (2009), presumably for the narrative that insufficient money printing in the aftermath of the Great War lead to the next one. Right idea, wrong narrative!
The US homeownership rate peaked at a rate well above the current level almost a half century ago mostly funded by a system of private mutual savings banks and savings and loans. The historical justification for federal “secondary market” agencies was political expediency – exemption from now obsolete federal, state and local laws and regulations inhibiting a national banking and mortgage market. Now government-run enterprises account for about 90% of all mortgages, with the Fed their primary funding mechanism, what the Economist recently labeled a de facto nationalization.
The Historical Evolution
How did the private US housing finance system repeatedly go bankrupt? To quote Hemingway: Gradually, then suddenly. The two competing political narratives of the cause of financial market crises remain at the extremes – either a private market or public political failure – with diametrically opposite policy prescriptions. The politician-exonerating market failure narrative has not surprisingly dominated policy, with past compromises contributing to the systemic financial system failure, the global recession of 2008 and subsequent nationalization.
The Great Depression stressed the S&L system, but the industry’s vigorous opposition to both federal deposit insurance and the Fannie Mae secondary market proved prescient as the federally chartered savings and loan industry eventually succumbed by 1980 to the federal deposit insurer’s perverse politically imposed mandate of funding fixed rate mortgages with short term deposits and competition from the government sponsored enterprises.
The S&Ls were largely replaced by the commercial banks. To make banks competitive with Fannie and Freddie, politicians and regulators allowed virtually the same extreme leverage, in return for a comparable low-income lending mandate – CRA requirements leading to a market dominating $4 trillion in commitments to community groups to whom the Clinton Administration had granted virtual veto power over new branch and merger authority.
The Financial Crisis of 2008 and the aftermath
The Big Short by Michael Lewis and more recent movie portrayed not just banker greed but the extreme frustration of those shorting the US mortgage market stymied by a housing price bubble many times greater than any in recorded US history that refused to burst. The reasons: 1. the Fed kept rates low and money plentiful, and 2. whereas banks would have run out of funding capacity, the ability of Fannie and Freddie to continuously borrow at the Treasury’s cost of funds regardless of risk and their HUD Mission Regulator requirement to maintain a 50% market share kept the bubble inflating to systemic proportions.
The Obama Administration fully embraced the alternative private market failure narrative in Fed policy, regulation and legislation:
To partially ameliorate the effects on the real economy of disruption to the global payments mechanism the Fed had to bail out the banking system. QE1/2/3/4 and ZIRP (zero rates), now NIRP, did this by re-inflating the house price bubble, postponing defaults while allowing banks risk-free profits. The Fed – and taxpayers – would lose more than the entire S&L industry did should rates rise by a comparable amount if it marked its balance sheet to market.
Regulators had to appear to punish the banks. In response to paying hundreds of billions of dollars in what the Economist labeled “extortion” – some of which ironically went to populist political action groups – and the subsequent oppressive regulatory regime, U.S. commercial banks are exiting the US mortgage market in spite of ongoing profits enabled by extreme leverage.
One legislative centerpiece, the Dodd Frank Act passed in July 2010 in direct response to the financial crisis, doubled down on political control of financial markets without addressing the future of Fannie and Freddie. The other, Obamacare, enacted four months earlier, was similarly premised on regulating private health insurers to make health insurance simultaneously cheaper and more widely available.
The Long Term Consequences
Bernanke’s focus on choosing the narrative was useful, but the political choice of the market failure narrative appears to reflect convenience rather than conviction. The direct taxpayer costs of implicit or explicit public insurance and guarantees come with both a whimper – tax savings amounting to tens of billions annually due to the deductibility of interest costs – and a bang – future taxpayer bailouts generally delivered off-budget.
Fannie and Freddie conservatorship deftly avoided debt consolidation while dividends reduced reported federal deficits. The student loan market has also been de facto nationalized, with potential unbudgeted losses totaling hundreds of billions. Obamacare was similarly premised on regulating private health insurers to make health insurance simultaneously cheaper and more widely available, but under-budgeted health insurance subsidies predictable caused massive losses and health insurers are now withdrawing from the market.
Monetary policies caused household savings to stagnate as returns to retirement savings evaporated. Defined obligation public pension funds were all rendered technically insolvent when funding is valued at current market returns rather than the assumed rate as much as ten times that. The failure of the economy to grow per capita was explained as the “new normal”. But politicians made no attempt to reflect the implied technically insolvency of public pensions or Social Security and Medicare.
Private firms fail, but private markets rarely do. Public protection and regulation makes firms “too big to fail” until markets fail systemically. The current and projected future public debt bubble is unsustainable, and financial markets will eventually ignore the accounting deceptions and pop it. The relative weakness of other sovereign debt is delaying the inevitably, making The Really Big Short a good title for a Michael Lewis’s sequel. Politicians and central bankers will again say “nobody saw this coming”. What then?
==== Kevin Villani, chief economist at Freddie Mac from 1982 to 1985, is a principal of University Financial Associates. He has held senior government positions, been affiliated with nine universities, and served as CFO and director of several companies. He recently published Occupy Pennsylvania Avenue on the political origins of the sub-prime lending bubble and aftermath. This article was originally published at FFE.org
The drop in homeownership is largely due to a delay in homebuying by the millennials, who have the lowest ownership rate of their age group in history. Millennials are not only burdened by student loan debt, but they have also delayed life choices like marriage and parenthood, which are the primary drivers of homeownership.
Why have today’s young people, as compared to young people in the recent past, delayed buying property, marrying and having children?
“While the millennial homeownership rate continues to decline, it’s important to note that the decrease could be just as likely due to new renter household formation as it is their ability to buy homes,” wrote Ralph McLaughlin, chief economist at Trulia. “Certainly low inventory and affordability isn’t helping their efforts to own, but moving out of their parents’ basement and into a rental unit is also a good sign for the housing market.”
Why are many of today’s young families choosing to rent rather than buy their homes?
One thing I have noticed over the years is when there is a crisis, it’s a really bad time to pass sweeping legislation. The momentum and justification for legislation comes from fear. “We don’t want that to happen again”, supporters say. For example, 9/11 happens and we get the Department of Homeland Security which is mostly a waste of money and allows the government to pry into all kinds of places it shouldn’t.
Dodd-Frank is a result of the financial crisis. There are so many bad actors in this crisis that it’s hard to list them all, but the root cause was the implicit backing government gave Fannie Mae and Freddie Mac-along with legislation and regulation that encouraged bad behavior. Sure, the ratings agencies were paid by the big banks and slanted the playing field. The big banks knew exactly what they were doing with the mortgages. But, without the implicit backing of government, the game never gets played.
Here are some data points:
Before Dodd-Frank 75% of banks offered free checking
After Dodd-Frank 25% of banks offered free checking
Small business costs are up 15% to comply with new regulation
15% less credit card accounts, and a 200 basis points more in cost
Remember, many small businesses get started by using credit cards. You might think they are stupid. But why should you import your financial/moral compass on them. Maybe they see the annual percentage rate credit card companies charge as cheap compared to the opportunity that lies ahead of them.
In the state of Missouri, there were 44 banks with less than $50M in assets. Prior to Dodd-Frank they were profitable. Post Dodd-Frank, 26/44 are losing money and will either go out of business or be consolidated. Your local community bank which is often the lifeblood of local capital is dead. How many other states are like Missouri? It’s no wonder small town rural America is having a tough go in the Obama epoch.
Dodd-Frank tried to make central party clearing mandatory for all transactions in the OTC market. Professor Craig Pirrong has blogged brilliantly about this and other aspects of Dodd-Frank. It works for a few, but not for all. This makes it more expensive to hedge risks. Businesses pass along the cost to consumers. In many cases, clearinghouses have to become the actual counterparty to the hedge. This stops commerce and more importantly has created more too big to fail institutions. Those too big to fail clearinghouses are now backed by the full faith and credit of the American taxpayer, you.
These are great points and Jeff’s post is worth reading in full.
In his Foundation series of books, Isaac Asimov imagined a science, which he termed psycho-history, that combined elements of psychology, history, economics, and statistics to predict the behaviors of large population over time under a given set of socio-economic conditions. It’s an intriguing idea. And I have no doubt much, much more difficult to do than it sounds, and it doesn’t sound particularly easy to begin with.
Behavioral modeling is currently being used in many of the science and engineering disciplines. Finite element analysis (FEA), for example, is used to model electromagnetic effects, thermal effects and structural behaviors under varying conditions. The ‘elements’ in FEA are simply building blocks, maybe a tiny cube of aluminum, that are given properties like stiffness, coefficient of thermal expansion, thermal resistivity, electrical resistivity, flexural modulus, tensile strength, mass, etc. Then objects are constructed from these blocks and, under stimulus, they take on macro-scale behaviors as a function of their micro-scale properties. There are a couple of key ideas to keep in mind here, however. The first is that inanimate objects do not exercise free will. The second is that the equations used to derive effects are based on first principles, which is to say basic laws of physics, which are tested and well understood. A similar approach is used for computational fluid dynamics (CFD), which is used to model the atmosphere for weather prediction, the flow of water over a surface for dam design, or the flow of air over an aircraft model. The power of these models lies in the ability of the user to vary both the model and the input stimulus parameters and then observe the effects. That’s assuming you’ve built your model correctly. That’s the crux of it, isn’t it?
I was listening to a lecture on the work of a Swiss team of astrophysicists the other day called the Quantum Origins of Space and Time. They made an interesting prediction based on the modeling they’ve done of the structure of spacetime. In a result sure to disappoint science fiction fans everywhere, they predict that wormholes do not exist. The reason for the prediction is simply that when they allow them to exist at the quantum level, they cannot get a large scale universe to form over time. When they are disallowed, the same models create De Sitter universes like the one we have.
It occurred to me that it would be interesting to have the tools to run models with societies. Given the state of a society X, what is the economic effect of tax policy Y. More to the point, what is cumulative effect of birth rate A, distribution of education levels B, distribution of personal debt C, distribution of state tax rates D, federal debt D, total cost to small business types 1-100 in tax and regulations, etc. This would allow us to test the effects of our current structure of tax, regulation, education and other policies. Setting up the model would be a gargantuan task. You would need to dedicate the resources of an institute level organization with expertise across a wide range of disciplines. Were we to succeed in building even a basic functioning model, its usefulness would be beyond estimation to the larger society.
It’s axiomatic that anything powerful can and will be weaponized. It is also completely predictable that the politically powerful would see this as a tool for achieving their agenda. Simply imagine the software and data sets under the control of a partisan governing body. How might they bias the data to skew the output to a desired state? How might they bias the underlying code? Might an enemy state hack the system with the goal to have you adopt damaging policies, doing the work of social destruction at no expense or risk to them?
Is this achievable? I think yes. All or most of the building blocks exist: computational tools, data, statistical mathematics and economic models. We are in the state we were in with regard to computers in the 1960s, before microprocessors. All the building blocks existed as separate entities, but they had not been integrated in a single working unit at the chip level. What’s needed is the vision, funding and expertise to put it all together. This might be a good project for DARPA.
Our own country is caught by all this, as it was in the first half of the 19th Century and in the middle decades of the 20th. We were able to adapt to survive: in the 19th by extending the franchise and in the 20th by expanding public services and mass prosperity. As a result British governments regained the authority to govern. They did so by reforming the institutions of representative government the country already had, thereby responding to the demands of an electorate emboldened and liberated by technological change.
Today, governments are once again losing the authority to govern, and for similar reasons. Another major financial crisis might lose them it completely; but a new crisis might not even be needed. Whitehall’s failure to control immigration, its puny efforts to tackle the housing question, the feebleness of our defences, the incompetence of our transport and energy policies might, whether jointly or severally, tip us over.
In the past, the country has been sustained in times of crisis by a solid body of electors who felt they had an interest in the existing structures which kept them, on the whole, safe and relatively prosperous. That body’s support is no longer so solid. The IT revolution is largely responsible. The speed of communications make governments and Parliamentary procedures look flat-footed. Increasingly the public is at least as well-informed as the Whitehall departments who are telling them what to do. It is virtually impossible to keep anything secret and anyone who betrays a confidence is regarded as heroic. The more rules we have, the more the public feels they are used as a means of flouting their spirit.
Worst of all, social media stimulate one issue politics and make the simple solution credible. You and I know that competent administration is boring and usually demands compromises. We also know that effective legislation needs careful preparation, much internal and external debate, a mind-numbing command of detail and a lively warning mechanism against the law of unintended consequences. The same applies to parliamentary scrutiny.
Any sensible electorate would be only too pleased to delegate this necessary day-to-day grunt to a Whitehall and Westminster it trusted and, although interested and argumentative, get on with the rest of its life.
Sadly, that is not where we are.
The candidacies of Trump and Sanders are in large part responses to public concerns about the problems Salisbury describes. They are inadequate responses, likely to fail politically and on their own terms and eventually to be superseded by other responses. The pot will continue to boil at greater or lesser intensity depending on who gets elected and what follows. It seems unlikely that the underlying problems will begin to be solved unless the voters develop a realistic understanding of what needs to be done, and start electing politicians who are both willing and competent to do it. It may be a while.
I’m currently doing background work on creating an oversight site for the White House press briefings. It’s an interesting, small project with the potential for outsized visibility because of who it is aimed at and will be covering. But there’s a good bit of research that needs to be answered before a site goes up:
1. I don’t know what all the stakeholders in the White House Press Briefing consider to be a successful press conference.
2. I don’t know who asks good questions.
3. I don’t know what constitutes a good question, or a good answer.
4. I don’t know how to get a day pass.
5. I don’t know how to get a hard pass.
6. I don’t know who shows up.
7. I don’t know how question opportunities are distributed.
8. I don’t know how it all matters to the task of informing the public.
If you’ve got insight into these questions or additions I should put on my research agenda, please let me know in comments.
After 240 years of relative quiescence, at 4:53 PM local time on Tuesday 12 January 2010 the Enriquillo fault system ruptured near 18°27’ N, 72°32’ W in an M 7.0 earthquake, followed by numerous aftershocks, mostly westward of the mainshock hypocenter. Institutional functionality, or the lack thereof, in Haiti prior to the earthquake was such that there was no local seismometer network in place, so nuances of slip in the 2010 earthquake involving several associated faults have had to be inferred from kinematic models.
The Enriquillo fault itself forms the boundary between the Gonâve Microplate and the Caribbean Plate, but seismic activity along it is driven by collision with, and subduction of, the North American Plate. The entire fault system may have begun a new cycle of large earthquakes similar to those of the 18th century, in which case there will be several more such events with significant effects in Haiti and the Dominican Republic through, very roughly, 2080.
Around half the entire US population donated money for Haitian earthquake relief in 2010. I may not have been among them, but as initially recounted in this forum in April of 2011, I was drawn into restoration work in a computer lab and fixed-wireless network in Petit-Goâve, and have subsequently assisted in similar efforts in Musac (Mizak), La Vallée-de-Jacmel. Paging through the visa section of my passport, I now find an astonishing number of red ENTRÉE and blue SORTIE stamps from the Ministere de l’Interieur et des Collectivites Territoriales / Direction de l’Immigration. My God, I’ve been down there 16 times. What was I thinking?
Something like this …
Posted by Kevin Villani on 2nd March 2016 (All posts by Kevin Villani)
The G20 leaders recently called upon the leaders of the developed nations to employ more massive amounts of debt financed government spending to ward off the current economic stagnation and in some instances the early stages of recession. That fits Einstein’s definition of insanity: “doing the same thing over and over again but expecting a different result”. The pursuit of so-called “macroeconomic (fiscal and monetary) policies” has produced a quarter century of economic stagnation in Japan, a $30 trillion debt bubble in China with little to show, and stagnation and looming recession in Europe and increasingly in the US.
Einstein was a genius who remains relevant today. Just within the last few weeks evidence was reported of gravitational waves predicted by Einstein almost a century ago. Proving Einstein’s theories has been the focus of physics during the past century, but he maintained that had he been able to get an academic appointment instead of a position at the Swiss patent office he never would have been able to develop and publish his new path-breaking theories.
In his recently released biography The Courage to Act (2015), former Federal Reserve Chairman Ben Bernanke describes how, initially failing physics, he turned to macroeconomics as an outlet for his mathematical skills. This was auspicious. In physics, when your equations don’t fit the reality it is the equations that must be changed unless there is new evidence to change the understanding of reality. Einstein’s biggest error was rather than waiting for better data when his equations predicted an expanding universe, he fudged the equation (introducing the Max Planck constant) to fit the current understanding of a stagnant universe, then disagreed for most of his lifetime with the next generation of quantum physicists who proved he had gotten it right in the first place. Einstein’s one mistake is the modus operandi of modern macroeconomists.
This Theodore Dalrymple post is a variation on a conventional argument whose unstated main premise is that medical cost decisions should be evaluated from a public-health perspective.
The annual medical is a kind of ceremonial or ritual which, according to its critics, is without rational foundation despite the fact that so many patients, and perhaps a majority of doctors, believe in it. This proves that superstition is not dead: but perhaps that is no fatal criticism of the annual medical after all, because superstition will never be dead. If it does not attach to one thing, it will attach to another.
[. . .]
In fact, most medicals are bureaucratic procedures rather than exercises in getting-to-know-you (as The King and I put it). The doctor asks a few questions, ticks some boxes on a computer screen, performs a perfunctory physical examination equivalent to examining a cubic inch of haystack to find a pin, and does a few selected blood tests, the interpretation of whose abnormal results (if any) will be far from straightforward. In fact, what has been done and measured in annual medicals over the years has changed, without any change in their ineffectiveness.
Ineffective for whom?
The answer depends on who is paying the bill. If it’s third parties such as govts or insurance companies then the conventional argument has merit: maximizing system utility is an important goal. However, if patients control their own medical spending then the main goals should be whatever the individual customers want them to be.
Dalrymple’s analyses are usually much better than this one. Perhaps his frame blindness in this case is a function of his background with the NHS.
According to the team’s analysis, seven states, including Arkansas, Georgia, Idaho, and Kansas, all had similar laws on the books. Similar bills were being considered in states like Maryland and Oregon, and had already died in Florida and Minnesota. In total, very similar bills had been introduced 73 times around the country. The video below shows one of the earliest examples showed up in South Carolina in 2010.
Like a plagiarism detector, the prototype can detect similar language in different bills. Yet unlike in a college class, this isn’t always a bad thing. “We avoided using the word plagiarism,” says Joe Walsh, an assistant professor at the University of Chicago and mentor to the Data Science for Social Good team. “If a bill can save lives, I would want that bill passed all 50 states.”
The 100-year threshold is also a statistical guess based on data on past storms and assessments of whether they’ll occur in the future. That means the models change every time a new hurricane strikes. The numbers being used as guidelines for construction are changing as time passes.
The standard also does not mean—can’t possibly mean—that a 100-year storm will occur only once per century. It means that such a storm has a 1 percent chance of happening in any given year. So for example, it’s technically possible for several 100-year floods to occur in just a few years, although it’s highly unlikely.
One way to look at it is that the engineers need to estimate how high a wall New Orleans needs to protect itself against a reasonably unlikely flood — say, a 1-in-1000-year event. This is the line of discussion pursued in the CNBC article.
Another way to look at it is to observe that the odds of another Katrina, or worse, within a specified period are highly uncertain. In this case a radical course of action might be called for. You do something like: take the best estimate for the wall height needed to protect against a 1000-year flood and then double it. Building such a levee would probably be extremely expensive but at least the costs would be out in the open. Or you might decide that it’s not the best idea to have a coastal city that’s below sea level, and so you would discourage people from moving back to New Orleans, rather than encourage them by subsidizing a new and stronger system of walls.
In this kind of situation the political incentives are usually going to encourage public decisionmakers to ignore radical solutions with high obvious costs, in favor of the minimum acceptable incremental solution with hidden costs: probably subsidies to rebuild the levees to, or perhaps a bit beyond, the standard needed to protect the city in the event of another Katrina. And it’s unlikely that any local pol is going to advise residents to move out and depopulate his constituency. Thus, eventually, a worst case will probably happen again.
A Declaration of the Representatives of the UNITED STATES OF AMERICA, in General Congress assembled.In Congress, July 4,1776. The unanimous Declaration of the thirteen United States of America.
When in the Course of human events,it becomes necessary fora People to advance from that Subordination, in which they have hitherto remained, one people to dissolve the political bands which have connected them with anotherand to assume among thePpowers of theEearth theequal and independant Stationthe separate and equal stationto which the Laws of Nature and of Nature’s God entitle them, a decentRrespect to the opinions of Mmankind requires that they should declare theCcauses which impel them to theChange separation.
We hold these truths to be self–evident, that all men are created equal and independant, that from that equal creation they derive rights inherent and inalienable,that they are endowed by their Creator with certain unalienable rights, among which that among these are the Preservation of Life,andLiberty,and the Pursuit of Happiness. tThat to secure theseEndsrights, Governments are instituted among men, deriving their just powers from theCconsent of the governed; t.—That whenever any Form ofgGovernment shall becomebecomes destructive of these ends, it is theRright of the People to alter or to abolish it, and to institute new Government, laying itsFfoundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transientCcauses; and accordingly all Eexperience hath shown, that mankind are more disposed toSsuffer, while Eevils areSsufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of Aabuses andUusurpations, begun at a distinguish’d Period and, pursuing invariably the same oObject, evinces aDdesign to reduce them under absolutePowerdDespotism, it is theirRright, it is their Dduty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient Ssufferance of these Colonies; and such is now theNnecessity which constrains them to expungealtertheir former systems of government. The history ofhis present Majesty,the present king of Great Britainis a history of unremittingrepeatedinjuries and usurpations, among which no one Fact stands Single or Solitary to contradict the uniform tenor of the rest,all of which havehaving in direct object the Eestablishment of an absolute Ttyranny over these Sstates.To prove this let Ffacts be Ssubmitted to a candid Wworld., for the Truth of which We pledge a Faith, as yet unsullied by falsehood.
He has refused his assent to laws the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his assent should be obtained; and, when so suspended,he has neglected utterly to attend to them.
He has refused to pass other Laws for the accomodation of large Ddistricts of Ppeople unless those Ppeople would relinquish the right of Representation in the Legislature, aRright inestimable to them, and formidable toTtyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public rRecords, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedlyand continually,for opposing with manlyFfirmness hisIinvasions on theRrights of thePpeople;
He has refused, for a long Space of Ttime after such Ddissolutions to cause others to be elected, whereby the lLegislative Ppowers, incapable of aAnnihilation have returned to the People at large for their Eexercise, the sState remaining, in the mean Ttime meantime, exposed to all the Ddangers of Iinvasion from without, and Convulsions within.
He has endeavoured to prevent the Ppopulation of these States; for that purpose obstructing the Laws for nNaturalization of fForeigners; refusing to pass others to encourage their Mmigrations hither, and raising the Cconditions of new Appropriations of Lands.
He has sufferedobstructed the Administration of Justice totally to cease in some of these Colonies,by refusing his Assent to Laws for establishing Judiciary Powers.
He has made our Judges dependent on his Will alone, for the Ttenure of their offices, and the amount and payment of their Ssalaries.
He has created a Mmultitude of nNew oOffices by a Self-assumed Power, and sent hither swarms of oOfficers to harass our Ppeople, and eat out their Ssubstance.
He has kept among us, in Ttimes of Ppeace, Standing Armies and Ships of War without the cConsent of our legislatures..
He has affected to render the mMilitary independent of and Superiour superior to the cCivil Ppower.
He has combined with others to subject us to a Jjurisdiction foreign to our Cconstitution, and unacknowledged by our Llaws; giving his Assent to their pretended Acts of pretended Legislation:
fFor quartering large Bbodies of armed Ttroops among us:
fFor protecting them, by a Mmock TryalTtrial from Ppunishment for any Murders which they should commit on the Inhabitants of these States:
fFor cutting off our Ttrade with all Pparts of the Wworld;
fFor imposing Taxes on as without our Consent—fFor depriving Uus in many cases of the Bbenefits of Trial by Jjury;
fFor transporting us beyond Seas to be tried for pretended offences:
fFor abolishing the free sSystem of English Llaws in a neighbouring Province, establishing therein an aArbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these cColonies:
fFor taking away our Charters, abolishing our most valuable lLaws, and altering fundamentally the Forms of our Government:
fFor suspending our own Legislatures, and declaring themselves invested with Ppower to legislate for us in all Ccases whatsoever.
He has abdicated Government here withdrawing his Governors, and by declaring us out of his Allegiance andpProtection,and waging war against us.
He has plundered our Sseas, ravaged our Coasts, burnt our towns, and destroyed the Lives of our Ppeople.
He is at this Ttime transporting large Armies of foreign Mercenaries to completecompleat the Wworks of death, Ddesolation, andTtyranny, already begun with Ccircumstances of Ccruelty and Pperfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized Nnation.
He has excited domestic insurrection among us,and has endeavoured to bring on the Iinhabitants of our Ffrontiers, the merciless Indian Savages, whose known Rrule of Wwarfare is an undistinguished Ddestruction of all Aages, Ssexes, and Cconditionsof existence.
He has incited treasonable Insurrections of our Fellow Citizens, with the allurement of Forfeiture and Confiscation of our Property.
He has constrained othersour fellow citizens taken cCaptive on the high sSeas, to bear arms against their cCountry, to become the executioners of their friends and bBrethren, or to fall themselves by their hHands:
He has waged cruel War against human Nature itself, violating its most sacred Rights of Life and Liberty in the Persons of a distant People who never offended him, captivating and carrying them into Slavery in another Hemisphere, or to incur miserable Death, in their Transportation thither. This piratical Warfare, the opprobrium of infidel Powers, is the Warfare of the Christian King of Great Britain.
He has prostituted his Negative for Suppressing every legislative Attempt to prohibit or to restrain an execrable Commerce, determined to keep open a Market where Men should be bought and sold, and that this assemblage of Horrors might want no Fact of distinguished Die.
He is now exciting those very People to rise in Arms among us, and to purchase their Liberty of which he has deprived them, by murdering the People upon whom he also obtruded them: thus paying off, former Crimes committed against the Liberties of one People, with Crimes which he urges them to commit against the Lives of another.
In every stage of these oOppressions wWe have pPetitioned for rRedress, in the most humble tTerms: oOur repeated Petitions have been answered by repeated Iinjury.
A Prince whose Ccharacter is thus marked by every Aact which may define a Tyrant, is unfit to be the Rruler of a People who mean to be free people. future ages will scarce believe, that the Hardiness of one Man, adventured, within the Short Compass of twelve years only, on so many Acts of Tyranny, without a Mask, over a People, fostered and fixed in the Principles of Liberty.
Nor have wWe been wanting in Aattentions to our British Bbrethren. We have warned them from Ttime to Ttime of attempts of by their Llegislature to extend aan unwarrantedJjurisdiction over these our Statesus. We have reminded them of the Ccircumstances of our Eemigration and Ssettlement here no one of which could warrant so strange a Pretension. That these were effected at the expense of our own Blood and Treasure, unassisted by the Wealth or the Strength of Great Britain; that in constituting indeed, our Several Forms of Government, we had adopted one common King, thereby laying a Foundation for Perpetual League and Amity with them; but that Submission to their Parliament, was no Part of our Constitution, nor ever in Idea, if History may be credited; andwWe have appealed to their Nature,nativeJjustice and Mmagnanimity and we have conjured them byas well as to the Tties of our common Kkindred to disavow these usurpations which were likely towould inevitably interrupt our Correspondence and Connectionconnection and correspondance. They too have been deaf to the Vvoice of Jjustice and of Cconsanguinity.and when occasions have been given them by the regular Course of their Laws of removing from their Councils, the Disturbers of our Harmony, they have by their free Election, re-established them in Power. At this very Time too, they are permitting their Chief Magistrate to send over not only soldiers of our common Blood, but Scotch and foreign Mercenaries, to invade and deluge us in Blood. These Facts have given the last Stab to agonizing affection, and manly Spirit bids us to renounce forever these unfeeling Brethren. We must endeavour to forget our former Love for them, and to hold them, as we hold the rest of Mankind, enemies in War, in Peace Friends. We might have been a free and a great People together but a Communication of Grandeur and of Freedom it seems is below their Dignity. Be it so, since they will have it: The Road to Happiness and to Glory is open to us too; we will climb it, apart from themWe must thereforeand acquiesce in the Nnecessity which denounces our eternalSseparation andhold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the United States of America, in General Congress aAssembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by the Authority of the good People of these StatesColonies, reject and renounce all Allegiance and Subjection to the Kings of Great Britain, and all others, who may hereafter claim by, through, or under them; We utterly dissolve and break off, all political Connection which may have heretofore subsisted between us and the People or Parliament of Great Britain, and finally we do assertsolemnly publishand declare, that theseUnitedColonies are, and of Right ought to befFree and iIndependent States;that they are Absolved from all allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved;and that as fFree and iIndependent States, they shall hereafter havefullPower to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which independent States may of Right do. —And for the Ssupport of this Declaration, we mutually pledge to each other our Lives, our Fortunes, and our Sacred HonourHonor.
So, OK, my employer made me burn off some vacation days before the end of the fiscal year, in the form of a cap on the number of PTO hours that can be carried over from FY14 into FY15, which boundary has shifted by 3 months due to our recent change of ownership. Much lower down, my management intimated that due to certain software-release and testing milestone dates, no significant block of time off in February or March would be approved. But thanks to an unrelated M&A a few years back (a spectacularly problematic one, destined to be a business-school case study for decades to come), we now get the MLK holiday off. I decided to take the whole week and head southwest in search of sunlight. After a swing through New Mexico, I am spending a few days at Crow’s Nest, a 10-minute hike from the 6+ acres I own near Bloys Camp. It’s my first visit in four years.
Mitre Peak (1887m/6190’) as seen from my lot
This is what I would write if somebody made me enter one of those hoary MLK essay contests that middle- or high-school students get sucked into. The entries that I’ve read over the years have seemed pretty unimaginative, but it’s hardly realistic to expect much historical perspective from a teenager. The tone I’m aiming for here is, of course, originality combined with some mildly discomfiting assertions, while avoiding stereotypical politics. The structure is a simple three-parter: past, present, and (near) future.
-Stop using script-based popup menus. Go back to old-style Microsoft-standard (c. 2003) clickable nested menus emanating from a static menu bar, with standard headings (FILE, EDIT, etc.) plus the unique headings needed for each piece of software. If you are using script menus as a workaround for complexity you should redesign your user interface. If you are using script menus for any other reason you should stop.
-Knock it off with the icons. Use text buttons instead. The point of software it to economize on human effort, not to appear stylish. A trash-can icon is probably OK, but much more than that and users are forced to waste time mouse-hovering over your icons or (worse) looking things up in the online help.
-Hire focus groups of 75-85 year-old occasional computer users and turn them loose on your products. They may not understand the fine points but they will tell you quickly if your products have any gross UI deficiencies that people like you who use software all day may be overlooking.
The world weighs on my shoulders, but what am I to do?
You sometimes drive me crazy, but I worry about you
I know it makes no difference to what you’re going through
But I see the tip of the iceberg, and I worry about you …
Reading through background material on the UN’s recent request for $16.4 billion in humanitarian aid in 2015, I find that the number of displaced people was already at its highest since World War II at the end of 2013, and has risen by several million since then. Nearly all are somewhere inside or on the perimeter of the Muslim world, with Ukraine the only sizeable exception. My sense, in which I am hardly alone, is that we are reliving the mid-1930s, with aggression unchecked and chaos unmitigated by morally exhausted Western institutions. That “low dishonest decade” ended in global war with a per capita death toll around 1 in 40. A proportional event a few years from now would kill 200 million people.
While we’re honoring America’s veterans, I thought it would be interesting to see what it is the were doing to earn that honored status.
There is a site on the Internet called the Joint Electronic Library (and it’s slightly restricted cousin the JEL+). It’s where the American military officially plans what is to be done when the job’s big enough that sometimes different military services are going to be doing it next to each other.
What military people do is essentially a task list. The military publishes an unclassified universal task list every three months. It currently has 1,285 tasks. They each have performance indicators. The whole list looks very little like how civilians discuss war or think of all the things that go into the military. Exploring this disconnect and how it makes the lives of our military harder and even increases casualties is a post for another time. This is Veterans Day, not Memorial day.
Time is running out, the man explains, speaking calmly and confidently, in the manner of a university professor. A deadly disease, spread by primitive tribespeople through dead bodies, will kill vast numbers of Americans unless the Federal government uses its powers to stop it.
As I write this, the most widely-read individual blog in the English-speaking world, written by a genuine university professor, is infested with (invariably pseudonymous) commenters not readily distinguishable from Weston; we can only hope that none of them will act on their impulses as he did. Read the rest of this entry »
Posted by Lexington Green on 29th October 2014 (All posts by Lexington Green)
“The core problem in our society is political correctness.”
“We’ve become a more risk-averse society,” he said, “we’ve lost hope in the future.” The problem isn’t one of intelligence, but of character. “We live in a world in which courage is in less supply than genius.”
Posted by Kevin Villani on 17th October 2014 (All posts by Kevin Villani)
This year marks a century since the outbreak of WW I and coincidently the initiation of US Federal Reserve System operations. Prior to these events, politics were democratizing, economic growth was booming, economies were liberalizing and global trade and finance were growing, all at a pace not seen again for almost another century. Recognizing that achieving these mutual benefits required an externally imposed political discipline, all of the countries participating in this happy situation voluntarily followed a set of rules governing domestic and international trade and finance for automatic and continuous adjustment to changing economic reality, then provided by the gold standard.
It was during this enlightened period that philosopher George Santayana wrote: “those who cannot remember the past are condemned to repeat it.” Hedge fund manager and Brookings Director Liaquat Ahamed set out to remind us why countries failed to recapture this economic dynamism after the Great War with the publication of the Pulitzer Prize winning Lords of Finance: The Bankers Who Broke the World in 2009. This book took on greater significance when in 2010 Federal Reserve Board Chairman Ben Bernanke recommended only this historical account in response to the Financial Crisis Inquiry Commission’s request for a book reference explaining the 2008 financial crisis. What history had this most recent financial crisis already repeated and what was Chairman Bernanke determined to avoid repeating in the aftermath?
[Readers needing background may refer to the first member of this series, Don’t Panic: Against the Spirit of the Age, posted last month. This post, unlike that one, was hastily written due to time constraints involving, perhaps ironically, international travel to a Third World country.]
Constructive foreword: suggested case studies in disruption are the Chicago blizzard of 1/13-14/1979 (~3 million commuters immobilized) and the Milwaukee Cryptosporidiosis outbreak of 3/23-4/8/1993 (~400k residents sickened simultaneously).
Thesis: I argue that, at least with Ebola, inept and overwrought responses pose far greater risks to American society than the disease itself. With regard to managing the risks associated with Ebola in the US, it is vital that we identify easily disrupted institutions and design our processes intelligently to avoid creating bottlenecks, mostly by resisting the urge to overreact; likely candidates include … Read the rest of this entry »
Cold and misty morning, I heard a warning borne in the air
About an age of power where no one had an hour to spare …
– Emerson, Lake & Palmer, “Karn Evil 9, 1st Impression, Part 1”
Imagine that you just stepped out of a time machine into the mid-1930s with a case of partial historical amnesia. From your reading of history, you can still remember that the nation has been beset with economic difficulties for several years that will continue for several more. You also clearly remember that this is followed by participation in a global war, but you cannot recall just when it starts or who it’s with. A few days of newspapers and radio broadcasts, however, apprise you of obvious precursors to that conflict and various candidates for both allies and enemies.
As mentioned several times in this forum, I adhere to a historical model, consisting either of a four-part cycle of generational temperaments (Strauss and Howe), or a related but simpler system dynamic/generational flow (Xenakis). That model posits the above scenario as a description of our current situation and a prediction of its near future: a tremendous national trial, currently consisting mostly of failing domestic institutions, is underway. It will somehow transform into a geopolitical military phase and reach a crescendo early in the next decade. It cannot be avoided, only confronted.
Nor will it be a low-intensity conflict like the so-called “wars” of recent decades, which have had US casualty counts comparable to those of ordinary garrison duty a generation ago. Xenakis has coined the descriptive, and thoroughly alarming, term genocidal crisis war for these events. Some earlier instances in American history have killed >1% of the entire population and much larger portions of easily identifiable subsets of it. Any early-21st-century event of this type is overwhelmingly likely to kill millions of people in this country, many if not most of them noncombatants. And besides its stupendous quantitative aspect, the psychological effect will be such that the survivors (including young children) remain dedicated, for the rest of their lives, to preventing such a thing from ever happening again.
I will nonetheless argue that no matter how firmly convinced we may be that an utterly desperate struggle, with plenty of attendant disasters, is inevitable and imminent, we must avoid both individual panic and collective overreaction.
Many thanks to the commenters on my review. I won’t be agreeing with all of you, but I value your input for increasing my understanding of what others think. I have some related ideas on how to think about the issues raised specifically by Lightning Fall and generally by “preppers” and, indeed, anyone anticipating a societally disruptive crisis in the near future.
NB: this is an essay in the original sense of “attempt.” It is unlikely to fully represent my thinking on these issues even a few years hence; and whether you agree with me or not, I encourage you to think these things through based on your own abilities and experience, and then act as your specific situation appears to require. Hayekian distributed local knowledge may save us. Central planning, as I hardly need admonish this audience, will not, and therefore any attempt by me to impose a uniform mental framework should (and undoubtedly will) be firmly rejected.
Real-life performance data shows that the most important and high-impact technologies are not the gold-plated, over-engineered wonder weapons that turn majors into colonels, colonels into generals, and young Jedi apprentices into Sith Lords. Instead, data suggest the real winners are humble, simple, low-cost products made by small, rapid innovation teams — the type of projects that don’t attract much attention from the press or from the brass because all they do is get the mission done without any fuss.
While this will not be a uniformly positive review, I must immediately note that the purely literary quality of Bill Quick’s Lightning Fall (subtitled either “A Novel of Destruction” or “A Novel of Disaster,” depending on whether one is looking at the spine or the cover of the paperback edition) ranks it alongside Pat Frank’s Alas, Babylon and comes within metaphorical striking distance of Larry Niven and Jerry Pournelle’s Lucifer’s Hammer. It is a classic page-turner and a serious threat to a good night’s sleep; I began reading it after awakening shortly before 3:00 AM one morning, expecting to drift off in a few minutes, and eventually noticed that I was somewhere around page 250 and the time was after 6:00 AM. This sort of thing has not happened to me more than a handful of times in a half-century of reading, and I read a lot.
Other reviews have included – well, not exactly spoilers, but more specifics about the events in the novel than I intend to provide here. I will mention three things that I think it useful for prospective readers to know, and then use the general thrust of the novel as a springboard for extended commentary of my own.