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  • Archive for August, 2003

    Ten Tips for Governing an Empire, and a Heckler in the Back …

    Posted by Lexington Green on 31st August 2003 (All posts by )

    I will at some point put up in detail why I don’t think that what America is in the process of building or becoming is an empire.

    But, whatever you call it, Robert Kaplan’s essay, “Supremacy by Stealth” on the subject is insightful. (It came out in July but has not been on the Net very long, so maybe it is not ancient news to all our readers.) This passage sounds typical of much that one finds on the conservative/libertarian side of the blogsphere:

    The purpose of power is not power itself; it is the fundamentally liberal purpose of sustaining the key characteristics of an orderly world. Those characteristics include basic political stability; the idea of liberty, pragmatically conceived; respect for property; economic freedom; and representative government, culturally understood. At this moment in time it is American power, and American power only, that can serve as an organizing principle for the worldwide expansion of a liberal civil society.

    This, less so:

    Two or three decades hence conditions may be propitious for the emergence of a new international system—one with many influential actors in a regime of organically evolving interdependence. But until that time arrives, it is largely the task of the United States to maintain a modicum of order and stability. We are an ephemeral imperial power, and if we are smart, we will recognize that basic fact.

    Near the end he re-emphasizes this point:

    In many ways the few decades immediately ahead will be the trickiest ones that our policymakers have ever faced: they are charged with the job of running an empire that looks forward to its own obsolescence.

    Kaplan also notes that liberal empires undermine their own power:

    Precisely because they foment dynamic change, liberal empires—like those of Venice, Great Britain, and the United States—create the conditions for their own demise. Thus they must be especially devious. The very spread of the democracy for which we struggle weakens our grip on many heretofore docile governments: behold the stubborn refusal by Turkey and Mexico to go along with U.S. policy on Iraq. Consequently, if we are to get our way, and at the same time to promote our democratic principles, we will have to operate nimbly, in the shadows and behind closed doors, using means far less obvious than the august array of power displayed in the air and ground war against Iraq.

    Problem here is that acting deviously is even more antithetical to democratic practices. So, you can’t do what Kaplan says you need to do to keep a real empire going, if you have to answer to a democratic electorate back home. But, putting that insurmountable issue aside, Kaplan provides a comprehensive “users manual” for US global power.

    Oh yeah, in case you were wondering, the ten “Rules for Managing the World” are:

    1. Produce More Joppolos
    2. Stay on the Move
    3. Emulate Second-Century Rome
    4. Use the Military to Promote Democracy
    5. Be Light and Lethal
    6. Bring Back the Old Rules
    7. Remember the Philippines
    8. The Mission is Everything
    9. Fight on Every Front
    10. Speak Victorian, Think Pagan

    And if that still leaves you scratching your head, you are going to have to read the whole thing.

    Kaplan has been all over the place and seen a lot and talked to everybody. He focuses on the mechanics rather than the ethics of global governance by the USA. I don’t think he’s always right, but he is never wrong for light or trivial reasons.

    Kaplan’s interview regarding the article is also good and adds further interesting details.

    As noted above, the great defect in Kaplan’s vision is that democracies don’t like devious, hard-nosed world empires enforced by small cadres of tough, professional legionaries and operatives. Democracies don’t like to run such empires, and they don’t like it when other people do. The public gets suspicious, or sentimental, or has moral qualms or worries about its civil liberties, etc.

    War Nerd,provides a good counterpoint to Kaplan on Joe Sixpack’s willingness to bear the burdens of empire, or hegemony, or whatever it is. As usual, he minces no words: “You Pussies!” To paraphrase: First you are baying for blood, now you are whimpering about losing a soldier a day, make up your minds, if you want an empire, face what it takes to have an empire. But no synopsis can do him justice. Don’t let the sarcastic or nihilistic or jeering tone fool you. War Nerd always raises real issues.

    Posted in Uncategorized | 3 Comments »

    They don’t like Jews? They don’t like Catholics, either.

    Posted by Lexington Green on 31st August 2003 (All posts by )

    It just depends on who the “they” is. There’s always somebody. Sometimes it’s the same people, even. (Lex will add here, as an aside, that it gave brought genuine joy to his Roman Catholic heart to see that David Warren has swum the Tiber.)

    Our long-time readers are well aware that we Chicago Boyz celebrate diversity, amongst ourselves, comprising as we do a delightful array of strongly held religious and philosophical perspectives. And we get along fine. Civility, so sadly lacking in our world, is in surplus on this blog. (And of course we expect it and usually get it from our most of our esteemed visitors.)

    Believing that the Vatican is secretly manipulating all kinds of things, that it secretly pulls the strings behind major world events, is an old and disreputable (to say nothing of demonstrably false) form of anti-Catholic conspiracy theorizing. It is deeply-rooted in this country in the frontier Protestantism which preceded and to a large degree still permeates Jacksonian America. You can still see it on cable TV from time to time — clean-cut people from the Heartland who know darn well that the Pope is the Antichrist and secretly behind this or that. Ho hum. Same old thing. Click to the figure skating trials.

    The British still have a deep streak of this kind of thing. In fact, we got it from them. One friend, an American expat and lapsed Catholic, was struck by the chants on “No Popery” on Guy Fawkes day. How un-PC. Other than that annual outburst, these sentiments seems to only be vocalized out on the right-wing fringe even in England. So I was a little surprised when the Spectator, which I like very much, recently published an extraordinary article entitled “Render unto the Pope” which shows what I suppose is the cutting edge of British anti-Catholic “thinking“. The author is a person named Hilton, whom we are assured by the Spectator is “an approved candidate for the Conservative party.” Wow. I guess the Catholic vote is not up for grabs in the UK. A friend whom I’ll call Francophile Pundit (“FP”) sent me the link, and I responded pretty much as follows:
    Read the rest of this entry »

    Posted in Uncategorized | 4 Comments »

    No Elvis, Beatles or the Rolling Stones in 1977

    Posted by Lexington Green on 31st August 2003 (All posts by )

    Punk’s not dead. Or maybe it is. Anyway, for those of you who were or still are devotees of first-wave British punk rock, this is a really great site. I’ve only looked at maybe 15% of it, and it is loaded with good facts and pictures. The “punk store” has some absolutely jaw-dropping material, live shows by the Jam, live Buzzcocks, rarities by Patti Smith. It looks I’ll be spitting out a hefty British Pound denominated international money order pretty soon. And one neat thing — the front page has a picture of Jeff Connally, better known as Monoman, of DMZ and the Lyres. An odd selection for a mostly Brit-punk site, but what the Hell, its a cool photo.

    Another cool site is this collection of “New Wave Photos by Philippe Carly”. Philippe shot photos of a phenomenal number of bands, in the 1977-78 period, basically all the punk acts of that era who came through Belgium — the big names like the Clash, Jam, Ramones, Devo (in the yellow jumpsuits) as well as half-forgotten names from the dim past like SpizzEnergi, the Au Pairs, the Mo-Dettes (I had all their singles — where are they now?). A labor of love. Check it out.

    Posted in Uncategorized | Comments Off

    Faulty Business Model (II)

    Posted by Jonathan on 27th August 2003 (All posts by )

    Kevin Brancato has a new post in our ongoing discussion of the single-use digital-camera business model.

    My earlier post on this subject.

    Kevin’s response to my earlier post.

    Posted in Uncategorized | Comments Off

    We’re Not Anti-Semitic, We Just Think the Jews Israelis Had It Coming

    Posted by Jonathan on 26th August 2003 (All posts by )

    Instapundit links to Al Giordano, who is peeved because NY Indymedia censored a cartoon by his friend Latuff. Perhaps the Indymedia people are too sensitive to accusations of anti-Semitism against Latuff?

    Latuff’s cartoon is here.

    Is it anti-Semitic? It’s not very good, partly because I can’t figure out precisely what the cartoonist was trying to say, but mainly because of its mean-spirited use of tragedy to make a heavy handed political point at the expense of the victims. But taken by itself it doesn’t seem anti-Jewish. And why should I care if Indymedia, to which I rarely pay attention, is or isn’t consistent in following its stated posting policy?

    But it gets more interesting when Giordano interviews Latuff:

    Bigleftoutside: Let’s talk about the controversial cartoon. I can’t for the life of me figure out what is supposedly anti-Semitic about this cartoon. Seems to me that this cartoon speaks an undeniable reality: that the buses inside the Israeli-occupied zones often result to be coffins, as a result of bombings. To me, that cartoon is as accurate as a news photo, in some ways more accurate. There’s nothing in the cartoon that cheers the idea of bombings. It simply addresses their root cause: the occupation of Palestinian lands. It’s a cartoon that makes me think. I presume it therefore makes others think. And that is always good, in my book. Has anybody offered a coherent argument as to why that cartoon is somehow not publishable at NYC Indymedia?

    Latuff: Not ’til now. I tried to express in this cartoon that due occupation of Palestinian territories, the security wall, the settlements and shit, to take a bus in IsraHell can be deadly. That’s all. But you know, my slanderers will always try to find a reason for bashing me. If I make a cartoon with a baker putting breads in an oven, people will call me anti-Semitic because Jews were thrown into ovens and such. Everything can be a good excuse.

    Most of the bombings have been on buses inside Israel proper, so what does Giordano mean by “Israeli-occupied zones” — does he consider downtown Jerusalem an “Israeli-occupied zone”? Is Tel Aviv “Palestinian land”? If so, why should we treat him as a reasonable journalist rather than dismiss him as an Arab propagandist? Or is he merely being sloppy — in which case we should probably regard skeptically the rest of his argument about the fine points of cartoon interpretation.

    And the cartoonist himself, for someone who is sensitive to being “bashed” by “slanderers,” is oddly insensitive to his slanderous use of the term “IsraHell.” If he had used a parallel term — such as (to paraphrase Diane) “Paleostine” — to characterize the Palestinian Authority, I would conclude that he was just another moral-equivalence idiot who gets off by carping at both sides. But he doesn’t, he singles out Israel for this treatment. (Elsewhere in the interview he uses the term “IsraHell/Palestine issues.” He treats Palestine, which isn’t a current political entity, respectfully, but makes a point of not using the State of Israel’s name.)

    So maybe Al and his pal Latuff aren’t anti-Semites in the classical sense, but what do you make of someone who casually implies that Israel’s capital city is an “Israeli-occupied zone”? And what can you call a person who won’t use the word “Israel” without distorting it in an ugly way, as anti-American leftists once used the term “Amerika”? Classical anti-Semites have a double standard for Jews as individuals, denying them legitimacy. Modern anti-Semites are more likely to deny the legitimacy of the Jewish state.

    I may be misreading Giordano. He could be using language sloppily in attempting to support his friend. But he is a professional journalist and should know better. Latuff seems to fit my definition of a modern anti-Semite. And his quickness to adopt a defensive stance against accusations of anti-Jewish bias suggests either that his accusers are correct or that he enjoys baiting them, which is almost the same thing.

    UPDATE: Al Giordano replies in the comments.

    Posted in Uncategorized | 58 Comments »

    War Nerd

    Posted by Jonathan on 25th August 2003 (All posts by )

    The Poor Man links to an interview with Gary Brecher, AKA War Nerd at the exile (browse his columns here). The interview is worth reading, as are his columns, which Lex turned me on to.

    Posted in Uncategorized | Comments Off

    Announcement

    Posted by Andy B on 22nd August 2003 (All posts by )

    Wanted: New or lightly used high-capacity, high-voltage, scalable national electrical transmission system. Will pay in U.S. government agency bonds. Call 800-BROWNOUT, ask for Spencer.

    August 14, 2003

    August 14, 2003

    Posted in Uncategorized | 3 Comments »

    Oh, You Americans!

    Posted by Jonathan on 21st August 2003 (All posts by )

    I find this chart oddly compelling.

    Euro vs. US dollar daily chart

    Posted in Uncategorized | 10 Comments »

    Thought for the Day

    Posted by Lexington Green on 20th August 2003 (All posts by )

    “It’s a complex fate, being an American, and one of the responsibilities it entails is fighting against a superstitious valuation of Europe.” –Henry James

    Posted in Europe | Comments Off

    “The Allende Myth”

    Posted by Jonathan on 19th August 2003 (All posts by )

    Val Dorta’s masterful historical essay on this topic is not to be missed. Lex blogged on it earlier, as did a few other bloggers, but somehow it never gained the attention it deserves. Go and read it.

    (Note that Val’s site appears to be down as of early afternoon EST, but keep trying. He may be having some temporary server issues.)

    UPDATE: The site is up again.

    Posted in Uncategorized | 12 Comments »

    Faulty Business Model

    Posted by Jonathan on 18th August 2003 (All posts by )

    I just watched CNBC interview the CEO of a company that has introduced a disposable digital camera. The camera is inexpensive, and the idea is that you take pictures, then bring the camera to a Ritz Camera store to have the images printed and copied to CD.

    Reviews (e.g., here and here) have been skeptical. The CNBC interviewer, who for a change knew what he was talking about, pointed out that the digital disposable combines the worst features of digital and film: the camera lacks an LCD preview/review window, is costly to use and still has to be taken to a store to have the pictures developed. The CEO, when questioned on these issues, replied with marketing spin.

    The apparent idea behind this product, which seems generally inferior to conventional digital cameras and even disposable film cameras, is to make money for the retailer by forcing the consumer to pay to have his photos printed. (Given the flimsiness of the camera, I suspect there is also substantial markup built into its price.)

    This business model won’t work, for the same reason FedEx’s ZapMail business model didn’t work. In both cases the merchant attempts to rent technology that consumers find more advantageous to own outright. Once you own a fax machine you eliminate any need to rent someone else’s. Once you own a digital camera and printer you remove the photo finisher from the print-production loop. There is no reason to go back, and attempts to convince people to go back — via gimmicks like “single use,” which has little if any benefit for digital cameras — are doomed to fail.

    Clay Shirky wrote a brilliant essay about ZapMail and similar schemes. The gist of his argument: businesses that set themselves up to compete with their own customers are not likely to succeed. I think this argument applies perfectly to the business model here.

    UPDATE: Kevin Brancato posts a thoughtful response to my argument. He is less skeptical than I am about the viability of this business model. I have some thoughts about his response and will post them later.

    UPDATE 2: Here are my thoughts on Kevin’s argument.

    Kevin argues that disposable digicams compete mainly with disposable film cameras, and that

    There are two ways I see that Ritz can make money with the digital disposable model–both require lowering the total costs of disposable camera renting and printing. The first cost savings will come from the elimination of film development. The second could come if inspecting and reusing the “disposable” camera is cheaper than making a film throwaway.

    Certainly there is a benefit from eliminating film development and from reusing cheap digital cameras. The problem for Ritz is that it can’t prevent consumers from capturing this entire benefit for themselves by buying their own digicams and printers. All that is necessary is for someone to introduce a cheap reusable digicam, which is surely not more difficult to develop than a cheap digicam that is fitted with devices to prevent consumers from downloading their photos on their own. (There are already $20 reusable digicams. Image quality is low, but there is no reason to think price and quality won’t improve.)

    Kevin continues:

    I think this will be profitable only when they 1) upgrade the picture quality to meet disposable film camera standards, and 2) get enough volume to pay off their fixed investments in technology.

    Any technological improvements here will apply to cheap reusable digicams as well, so it’s unclear to me what Ritz’s edge is.

    Kevin finds my argument — that a business model, based on merchant attempts to rent technology that consumers find more advantageous to own outright, will probably fail — unconvincing in this case because many consumers already show a preference to rent cheap camera equipment that they could own:

    Consumers are already renting a particular technology (disposable film cameras) because they find it cheap and convenient to do so. The existence of digital cameras that people can own has not changed their minds. (In fact, since 19% of all film developed is from single-use cameras, customers demand to rent disposable technology is high).

    Do customers who want the convenience of a disposable camera care how their pictures are stored inside the camera?

    If you have to bring the camera to a store for processing, single-use film cameras still produce better results than does Ritz’s digital. They also take more pictures (27 vs. 25) and you can get the film developed anywhere, not just at Ritz. Against these advantages, the Ritz disposable digicam allows you to delete and retake the last picture, a minor benefit. But, as Kevin points out, it lacks the LCD preview/review screen that digicam users find so important (though there seems to be no reason why this feature won’t eventually be added).

    But the big question, still, is not whether consumers will prefer single-use digicams to single-use film cams — it’s why anyone would pay for a single-use digicam if similar reusable digicams are available for comparable cost, as will inevitably become the case. Single-use is an artifact of film: the fact that inexpensive film cameras are cheaper to make and easier to use if they are not reloadable. Digicams face no such constraints, so why would consumers prefer to rent when they can buy at around the same price?

    Once you have a choice to buy a cheap reusable digicam and download the photos to your own computer and print them (or bring them in to be printed), or repeatedly buy single-use digicams and have no choice but to bring them to a particular shop for printing, why would you continue to buy disposables? Ritz’s scheme may work for a while but seems unlikely to succeed in the long run. Simple reusable digicams of snapshot quality are going to cost $3 in a few years. It’s inevitable. Ritz might be smarter to go into the ink-cartridge business.

    Posted in Tech | 11 Comments »

    The California ACLU and the Gubernatorial Recall

    Posted by Jonathan on 18th August 2003 (All posts by )

    The Left supports flexibility when its goals are unpopular — e.g., using the courts to override elected legislatures that won’t support gay marriage or abortion on demand or other holy causes. But let voters threaten the influence of the political class, as with the California recall, and lefties are suddenly for interpreting procedures in the strictest, most literal manner conceivable.

    Ignore the words and watch the behavior. It’s all about power.

    CORRECTION & UPDATE: Rereading this post I see that its argument is illogical, since in the first paragraph I impute different responses by the Left to essentially identical political situations. I think it would be better to argue that the Left is consistent in using any means at its disposal to oppose challenges to the power of the political class.

    Posted in Uncategorized | 4 Comments »

    Blog Changes

    Posted by Jonathan on 17th August 2003 (All posts by )

    -Added two more Chicago boys to the blog header. Also linked the photos there, so now you can click and learn more.

    -Reorganized slightly the “Frequently Viewed” links.

    -Updated my photo links with a bunch of new images, organized in Photoshop galleries that are easier to look at than my home-made html pages. I also re-edited some of the better pics in the archives, most of which I initially posted before I knew anything about Photoshop. I’ll probably eventually re-edit more of these older photos.

    -Made a change in the blog’s style sheets, in response to a suggestion, to make the blog easier to look at in Netscape 6X and 7X. I initially coded the blog’s template by kludging together a lot of stuff without really knowing what I was doing. So if you see anything that could be easily improved, I would be grateful if you would share this information with me.

    Thanks, and thanks for reading.

    Posted in Uncategorized | 3 Comments »

    Photo

    Posted by Jonathan on 17th August 2003 (All posts by )

    just baked

    Posted in Uncategorized | 5 Comments »

    “Chicago is an intellectual and moral cesspool.”

    Posted by Jonathan on 17th August 2003 (All posts by )

    Holy cow! No wonder the world is falling apart. The above quote and many similar bons mots are found in this steaming pile of verbal dung (thanks to Jay Manifold for alerting us).

    Chicago routinely trained me and numerous other students to become ruthless and unprincipled Machiavellians. That is precisely why so many neophyte Neo-con students gravitated towards the University of Chicago or towards Chicago Alumni at other universities. The University of Chicago became the “brains” behind the Bush Jr. Empire and his Ashcroft Police State. Attorney General John Ashcroft received his law degree from the University of Chicago in 1967. Many of his “lawyers” at the Department of Injustice are members of the right-wing, racist, bigoted, reactionary, and totalitarian Federalist Society (aka “Feddies”), which originated in part at the University of Chicago.

    Although miseducated at Yale and Harvard Business School, the “Ivies” proved to be too liberal for Bush Jr. and his fundamentalist Christian supporters, whose pointman and spearcarrier in the Bush Jr. administration was Ashcroft, a Fundie himself. The Neo-cons and the Fundies contracted an “unholy alliance” in support of Bush Jr. across the board. For their own different reasons, both groups also worked hand-in-hand to support Israel’s genocidal Prime Minister Ariel Sharon, an internationally acknowledged war criminal. Strange bedfellows indeed.

    According to his own public estimate and boast before the American Enterprise Institute, President Bush Jr. hired about 20 Straussians to occupy key positions in his administration, many holding offices where they could push American foreign policy in favor of Israel and against its chosen enemies such as Iraq, Iran, Syria, and the Palestinians. . .

    The Left once again demonstrates that the art of self-parody is alive and well.

    Posted in Uncategorized | 13 Comments »

    What Do Iraq and the California Governor’s Recall Have in Common?

    Posted by Jonathan on 12th August 2003 (All posts by )

    They are both mainly about accountability. Sure, there are plenty of problems in the new Iraq. But such issues are secondary to the main goal of our invasion, which was to depose Saddam Hussein. We understood that making Hussein accountable for his threats and depredations was the key, not only to pacifying Iraq but also to reducing the threat (by increasing the expected cost) of aggression by North Korea, Iran and other hostile opportunists.

    Similarly, recalling CA Gov. Gray Davis isn’t mainly about finding a replacement with better policy ideas. It’s about making Davis accountable for his incompetence and thereby encouraging elected officials to behave better in the future. It’s unfortunate if Arnold Schwarzenegger (assuming he’ll be Davis’s replacement) doesn’t have a good program but that’s secondary to punishing Davis. CA voters who support the recall in large numbers seem to understand this, as do members of the political class who oppose it.

    In situations like these, often the fastest way to figure out whether to support a particular course of action is to look at who opposes it. You can’t go far wrong with a foreign policy whose opponents are mainly dictators, anti-American European politicians and leftist whackos. Nor as a rule will you go wrong backing domestic policies that are opposed by incumbent pols, establishment journalists, unions and big-business go-along-to-get-along types.

    Posted in Uncategorized | 26 Comments »

    Françoise Hardy and Other Groovy 60s Gals

    Posted by Lexington Green on 10th August 2003 (All posts by )

    Françoise Hardy

    I was riding in a cab from the airport, and I had a Francophone African cab driver. He had a lot of trouble figuring out where Oak Park was. But I forgave him because he had a totally excellent tape of some French women singing pop songs and country western songs. I tried to get him to tell me who it was singing and his linguistic debility was a real obstacle. I tried to write down what he was trying to tell me. The one name I correctly got out of him was Françoise Hardy. I looked her up and bought The Vogue Years. It is a good record, with a nice period sound. (I may buy another one from her late ’60s period — any tips?)

    As it happens, she was a hugely popular figure in the ‘60s, and I’m surprised I never heard of her. She was apparently the Queen of French pop. The site I linked to above, “All Over the World” is absolutely smashing, a real labor of love. See for example the page of Magazine covers. (The picture above is from there.) How much effort must have gone into pulling that collection together? Mlle Hardy was clearly one of the great beauties of the age, in addition to making some pretty fine records. Her cool, unsmiling, aloof look, to say nothing of her understated but hip fashion sense, goes along well with her her musical style. Moreover, she was part of a scene which is well documented on the ye-ye girls website. This site, too is an incredible thing, another labor of love. After poking around on the Net a little bit, I think I’m going to get a France Gall (and here) record next. (Again, any tips?)

    While I’m at it, if you are a fan of 60s style and pop culture, you must check out the Swinging Chicks of the ‘60s website. Lots of cool stuff. It reminded me of the altogether wonderful Julie Newmar — whose chief claim to fame was playing Catwoman on the old Batman TV show. Damn she was beautiful. I thought so when I was about six years old, and I think so now. TV has really declined since those days, baby.

    Posted in Uncategorized | 8 Comments »

    Muffs, Lisa Marr

    Posted by Lexington Green on 10th August 2003 (All posts by )

    So Fannie Mae is going to go down the toilet, bring on a global depression and put us all in the bread line. I hate that. Especially since I don’t understand it.

    So, turning away from cosmic disaster, let us briefly consider some pleasant news, however trivial, for a change.

    The Muffs have a new website up. It is pretty cool. It’s got a bunch of videos and several complete songs on it. It also contains the bittersweet news that their new album won’t be out until February 2004. “Oh, OK. I see. (sniff).” The pain of the wait is partly assuaged by the two snippets of new songs. (Go to Muffs media, audio, down the bottom labeled “web exclusives”). These two delectable musical morsels entitled “Feel It” and “Just the Beginning” demonstrate that Ms. Kim Shattuck has got her pop mojo working red hot again. Woo hoo. These samples bode well for the new album. The message board is filling up with the usual silliness. One detail is that Ms. S. posted, assuring her fans that she would in fact unleash her legendary scream on the new record. It’s been a while.

    Meanwhile a (reliable) little red bird tells me that despite various severe but unspecified travails the new Lisa Marr record will be out in September. Fingers crossed on that one. Lex is one of her more fanatical fans, and eagerly awaits this one — which no less a critic than Kim Shattuck says is going to be her best one yet. Watch this space for further news on these critical developments.

    (Captain Mojo had a post here — to which I appended an even longer comment, praising Ms. Marr’s last record.)

    Posted in Uncategorized | 4 Comments »

    Photo

    Posted by Jonathan on 9th August 2003 (All posts by )

    what they're not making like they used to

    Posted in Uncategorized | 3 Comments »

    A Financial North Korea?

    Posted by Jonathan on 9th August 2003 (All posts by )

    Ted Harlan emails about this NYT article about Fannie Mae (and about this discussion of it on the Mises.org blog). The NYT article is quite good in pointing out the extent to which FM is a financial black hole in which business-as-usual has consisted of sweeping interest-rate risk under the rug and hoping for the best. This isn’t news, but the enormous extent of the risk, illuminated in the NYT article by an ex-FM employee, and earlier over a long period by the WSJ’s editorial page, has only recently become a mainstream issue.

    Essentially, what Fannie Mae is doing, from a risk standpoint, is not much different from what Long-Term Capital Management did (though FM probably uses less leverage). In both these and numerous other cases following a similar pattern, an institution develops sophisticated mathematical models to exploit apparent relationships between financial instruments. The success of such models tends to depend critically on the accuracy of the underlying statistical assumptions about markets. The people who develop the models think they know what market normality — in both the conventional and statistical senses of the word — means. They are often wrong, though their main error is in designing trading systems that depend too much on the accuracy of these assumptions. In plain language: they are fitting their models to a limited data history without taking adequate account of unlikely events, the financial equivalent of hurricanes. Things go well for a while, maybe for years, much money is made, and then the unexpected happens and the firm loses in a brief period more than it made during its entire history. (Better traders design more accurate models, or design models whose success is not so closely tied to the accuracy of their statistical assumptions about markets, or both.)

    The recent huge break in the U.S. government bond market (see chart below) may reflect in part a discounting of the risk that Fannie Mae will default on significant obligations and have to be bailed out by Uncle Sam. (An alternative hypothesis, the possibility that the interest-rate increase represents mainly a return of inflationary expectations, is apparently belied by the fact that the price of gold in U.S. dollars has been stable. How much of the bond market’s fall was due to new economic-growth expectations, how much to the fact that the bull market in bonds was overdone, and how much to Fannie Mae’s problems, is the question. Whatever the answer, the FM situation didn’t help.)

    Fannie Mae and other big holders of mortgages and mortgage-backed securities chronically underestimate the odds of a big move in interest rates that could devastate the value of their portfolios, said Nassim Nicholas Taleb, a hedge fund manager and the author of two books about risk and the financial markets. In general, he said, Fannie Mae and other companies rely too much on computer models that do not account for rare but devastating breaks in markets.

    “The fact that they have not blown up in the past doesn’t mean that they’re not going to blow up in the future,” said Mr. Taleb, who is also an adjunct professor of mathematics at the Courant Institute of New York University. “The math is bogus.”

    Taleb is mainly right. Perfect storms do occur every once in a while. When it happens, finely tuned trading models that are optimized to exploit marginal relationships (and which almost by definition don’t predict extreme outliers) tend to fail catastrophically. Fannie Mae may not fail, but the risk is there and we shouldn’t be complacent about it.

    collapse of bull mkt in U.S. treasuries

    UPDATE: I should have linked to my June 25 post on the bond market (press F11 key if post doesn’t display correctly). I had the market’s direction right but, in hindsight, was excessively concerned about inflation. The fact that interest rates have gone up while gold hasn’t rallied much from the US$350/oz level suggests that inflation is not a significant concern for the markets now.

    Posted in Uncategorized | 8 Comments »

    (Almost) Free At Last

    Posted by Jonathan on 6th August 2003 (All posts by )

    To replace an old cell phone that suddenly became incompatible with Sprint’s network required:

    -3 phone calls to Sprint’s customer-service line.

    -3 trips to two different Sprint stores. Each visit involved a long wait and at least one unpleasant interaction with a testy employee.

    -Approximately 7 hours.

    Sprint’s wireless service has improved over the years but it’s still worse than it should be. It’s consistently bad enough that the problem must be systematic. At first I used it because it had the best set of features for my needs. Now other companies offer similar plans. The only reason I continue with Sprint is that I don’t want to change my phone number. But U.S. cell numbers are about to become portable, so I’ll look into taking my business elsewhere. I imagine a lot of other customers have similar ideas. It will be interesting to see what happens — it’ll be good for consumers, that’s for sure.

    bye

    Posted in Customer Service | 8 Comments »

    Conspiracy theorists revving up

    Posted by Ralf Goergens on 4th August 2003 (All posts by )

    Not this is a real eye-opener:

    BERLIN, July 23 (Reuters) – Almost one in three Germans below the age of 30 believes the U.S. government may have sponsored the September 11, 2001, attacks on New York and Washington, according to a poll published on Wednesday.

    And about 20 percent of Germans in all age groups hold this view, a survey of 1,000 people conducted for the weekly Die Zeit said.

    Asked whether they believed that the U.S. government could have ordered the September 11 attacks itself, 31 percent of those surveyed under the age of 30 in the poll answered “yes”, while 19 percent overall gave the same answer.

    Die Zeit said widespread disbelief about the reasons given by the United States for going to war in Iraq and suspicion about media coverage of the conflict had fostered a climate in which conspiracy theories flourished.

    Granted, huge events like 911 are bound to generate conspiracy theories, especially if they happen this unexpectedly. The anti-globalization crowd and anti-American press (not the majority of publications, but certainly the loudest ones) around the world have done everything they can to capitalize on the situation, but there really is no excuse for this. It seems that about 20% of Germans and about 30% percent of Germans under 30 badly need a reality check. Americans who heard of the poll rightly reacted incredulously; Rachel Lucas summed up very well why:

    “They obviously can’t wrap their brains around the concept of transparency – you can get away with certain things in America, but you can’t get away with much. Especially if you’re a politician – everyone watches everyone else, everyone’s out to get everyone else, and that creates an environment where it would be impossible to keep the kind of secrets that would be necessary to hide something like the federal government’s sponsorship of 9/11”.

    Of course, claims (in the blogosphere and elsewhere) that France and Germany opposed the war on Iraq because they allegedly had armed Iraq with WMDs as a proxy against America were met here with similar incredulity, for the same reason. What goes for America goes for Germany and France, too. Both countries are democracies, with the same transparency that Rachel claims for America. No German or French government could have armed Iraq with a huge arsenal of nuclear, biological weapons without the opposition parties and the press getting on to them. Don’t forget, all those reports about German arms sales to Iraq were originally published by the German press, for example (something for which it got no credit from the bloggers who posted them). Europe’s economies may be more strongly regulated than the American one, but you couldn’t get away with bad craziness like this over here any more than you could in America. So, and no offense, but a reality-check in regards to this issue might also have been useful. ;)

    Posted in Europe | 14 Comments »

    Twisting history

    Posted by Ralf Goergens on 4th August 2003 (All posts by )

    This is a terrible idea:

    “…efforts are being made to commemorate the suffering of Germans driven from Eastern Europe. Led by the Association of the Banished, the plan is for a museum and centre dealing with the expulsion of Germans from countries which include the former Czechoslovakia and Poland.

    Erika Steinbruch, conservative MP and head of the association, told The Observer: ‘We want to make it clear what happened to these people, the 15 million who were thrown out of their homelands in the Baltics, Romania, so many countries. They were chased out because of their German ethnicity.

    ‘This discussion is necessary. Every life is equal. The Jews who suffered in Germany were German. There were Germans in the Balkans who lost their homelands after the Hitler-Stalin pact. These were Germans who suffered under Hitler.

    ‘There is a more relaxed discussion now. That’s necessary. It is part of the process of self-discovery, of the very complicated moral problems Germany has with itself. This is only just starting. I’m very optimistic we can do this.'”

    Yes, bad things have happened to Germans and ethnic Germans, during and after the war, not to mention those who went to the concentration camps even before the war. But the people heading the “Association of the Banished” have never really been able to understand that all this would never have happened without the holocaust and the other horrors of an aggressive war started by Germany. Many of those who suffered after the war had been among the active perpetrators of the Nazi atrocities, and also those who didn’t participate in them but approved of what happened, so indiscriminately commemorating them effectively amounts to an attempted white-wash. And saying that “The Jews who suffered in Germany were German” goes even further; it is simply repulsive because it lumps together the perpetrators and their victims (not that every German was a perpetrator, but she isn’t even trying to make a distinction between victims and victimizers).

    Having said all that I do disagree with the concept of collective guilt. Bill Quick links to the same article and approvingly quotes this comment at lucianne.com:

    Reminds me of the definition of CHUTZPA (ie nerves)– which is a man convicted of killing his parents asks the judge for mercy because he is an orphan.

    In my comment at Daily Pundit I wrote :

    “This is about individual suffering (and guilt). You basically say that German back then were collectively guilty and deserved whatever they got. There is no collective guilt, though, you have to look at individual cases to decide who was guilty or not. Remember, Hitler also wasn’t elected by a majority and seized power. Dissenters were sent to concentration camps, too, so many simply didn’t dare to speak up. For that reason it was simply wrong to indiscriminately drive out or murder people just because they were German.”

    Like I wrote above, it would never have happened without the holocaust and World War II, and its perpetrators needed to be punished. Also, it simply is human to want revenge, and not to look too closely if all of the people you are taking revenge on are guilty or not. It also is understandable that Poles and Czechs didn’t feel like living together with Germans anymore. But, looking back more than fifty years later it is not asking too much to differentiate instead of using a blanket-condemnation.

    Update: Bill has told me by now to read Daniel Jonah Goldhagen’s book “Hitler’s Willing Executioners”, on German collective guilt for the Holocaust. Well, here’s a choice quote on Goldhagen and his book:

    In his most recent book, Hitler’s Willing Executioners, Goldhagen asserted that blame for the Holocaust should be placed on ordinary Germans and their unique brand of anti–Semitism. When contemporary historians from both sides of the Atlantic challenged him on this point, he eventually conceded that he had underestimated how factors other than anti–Semitism helped lead to the Third Reich’s crimes. “I skirted over some of this history a little too quickly,”

    This is from a review of his article “What Would Jesus Have Done? Pope Pius XII, the Catholic Church, and the Holocaust” in the New Republic.

    Anti-semitism was an important factor, but in no way the only one, that contributed to the shaping of German society over the ages. I also can’t see why some people see his book as the only authoritative source of information on the issue.

    Posted in Uncategorized | 7 Comments »

    Back to blogging

    Posted by Lexington Green on 3rd August 2003 (All posts by )

    Due to problems with my computer and lack of spare time I had to take a long blogging break. I think I have sorted it all out by now and hope to be able to post again with some regularity.

    Posted in Uncategorized | 2 Comments »