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  • Archive for December, 2009

    Watch What He Does, Not What He Says

    Posted by Jonathan on 5th December 2009 (All posts by )

    Obama’s lonely decision” may have been the right one — if that’s really what he decided, if he really did decide. That’s the problem. You don’t know with this guy. What he does is so often unrelated to what he says that it’s usually most productive to watch what he does and ignore what he says. Kagan makes the classic error of evaluating Obama based on words. I don’t think we’ll be able to evaluate Obama’s handling of Afghanistan until we see how he follows through on his speech. That will take some time. All we can say now is that he avoided the issue for months while our position in Afghanistan deteriorated, and then when backed against a political wall finally asserted a policy. Only time will tell if he means what he said. The optimistic interpretation — Kagan’s — is that political pressure not to screw up will keep him honest. I’m skeptical. Obama’s history is that of a man who believes he can talk his way out of anything and has succeeded so far. Why would he behave differently now? He might — people can change. But that’s not the way to bet.

    One of the problems with being a liar is that nobody believes you when you tell the truth. I hope that Obama really does show backbone in Afghanistan and commits to victory, but he’ll have to act like it (not merely talk like it) before reasonable people will believe him.

    Posted in Afghanistan/Pakistan, Politics, War and Peace | 9 Comments »

    Job Killing Regulations

    Posted by TM Lutas on 4th December 2009 (All posts by )

    The President of the United States presides over a government that employs a huge number of people who write regulations that either slow down job creation or are actual job killers. In these times of high unemployment, the President could, by executive order, instruct these employees to use their existing discretion in favor of the interpretation that would save or create the most jobs.

    There would be no need to wait for the Congress. There would be no need to spend the public’s money on this initiative. This executive order would be entirely ‘shovel ready’ and its impact on the deficit is overwhelmingly likely to be positive. So far as I know, President Obama has not signed such an order, nor has he given any evidence that he is even considering it.

    Why?

    Posted in Economics & Finance, Political Philosophy | 12 Comments »

    “What?” Said the Chinchilla

    Posted by Shannon Love on 4th December 2009 (All posts by )

    The Daily WTF is a site that collects programmers’ horror stories. I thought the following horror story [it’s the second story on the page] provides a good example of why it’s important to double-check the code of scientific software.

    Long ago, I worked as a programmer at a university’s hearing research lab. They were awarded a large government grant to study the effects of different kinds of noise on hearing. For the really loud and really faint noises, the researchers used animal subjects with ears that are similar to human ears. Specifically, chinchillas.
     
    Read the rest of this entry »

    Posted in Science | 6 Comments »

    The Identity of the Enemy

    Posted by David Foster on 4th December 2009 (All posts by )

    Chris Matthews of MSNBC, commenting on Obama’s choice of a West Point venue for his Afghanistan speech:

    “He went to–maybe–the enemy camp tonight)”

    (video clip here)

    Does Matthews himself consider the U.S. Military Academy to be “the enemy camp?” If a commentator with a strong reputation for neutrality had said something like the above, then we might believe he was stating a conclusion about the beliefs of others, rather than an opinion he himself necessarily agreed with. But it would be hard for anyone to argue that Matthews is “a commentator with a strong reputation for neutrality.”

    Whatever Matthews’ personal beliefs may be, I think his comment reflects the belief of a substantial part of the “progressive” movement which represents Obama’s core support. These people are very reluctant to use words like “enemy” in talking about America’s terrorist adversaries. They are primarily concerned with instigating conflict within American society itself, and in achieving victory in such conflict–and the American military, along with many other important parts of American society, does indeed in their view constitute an enemy.

    Here are some relevant thoughts from Neptunus Lex, which I’ve previously quoted because they are so insightful:

    The innate character flaw of the political right, with its thrumming appeals to the logic of blood and soil, is its lamentable tendency to go in search of enemies abroad. The left, on the other hand, with its own appeals to the politics of envy and class warfare, is content to find mortal enemies closer to hand.

    Posted in Leftism, Military Affairs, Politics, War and Peace | 12 Comments »

    Conservative Overconfidence

    Posted by Jonathan on 4th December 2009 (All posts by )

    Anyone who is unclear on this point should compare the hopefulness of many online conservatives and libertarians with the sobering election odds displayed on Intrade. Republicans may score big gains in the coming election cycles, but they may not. And even if they win big there is no guarantee that they will behave better in office than they did during the Bush years. Meanwhile the Left, having rampaged through the universities and media, is now very deliberately restructuring the federal bureaucracies and writing legislation whose destructive effects won’t be fully apparent for years. You can bet that the inept Loony Left appointees who have garnered public attention are only the tip of the iceberg. Thousands of others, less flamboyant but equally committed, are doing their best behind the scenes to entrench themselves in power and make it difficult for their ideological opponents to reverse the changes.

    Posted in Conservatism, Politics, Predictions | 5 Comments »

    The Beards, T.S. Eliot

    Posted by Lexington Green on 3rd December 2009 (All posts by )

    Posted in Music, Video | Comments Off on The Beards, T.S. Eliot

    Fat Tails

    Posted by Jonathan on 2nd December 2009 (All posts by )

    From a WSJ column:

    To be fair, the Orszags and Mr. Stiglitz acknowledged that “the extremely rare events located in the tail of a distribution are often quite difficult to analyze accurately.” Even so, they noted that White House budget gnomes had tested Fan and Fred’s capital against “the financial and economic conditions of the Great Depression.” The result: “[G]iven 1990 levels of capital, both Fannie Mae and Freddie Mac had sufficient capital to survive.”
     
    […]
     
    The crucial point is that assessing systemic risk is difficult to impossible—and the likelihood of coming to a reliable consensus about it is even lower. Both Orszags and Mr. Stiglitz were officials in the Clinton Administration and saw the debates about Fan and Fred that the Clinton Treasury began in the late 1990s, only to get clobbered by the companies’ lobbying machine. Yet the three amigos still saw fit to put their names to a paper dismissing any risk of failure.
     
    Why should anyone think that regulators—or economists—will predict the next systemic debacle any better? We only know better about the past. When the next problem erupts, as in 2002, smart people will be on both sides of the argument. And when large, systemically important companies are threatened with curbs on their business, they will pay Nobel laureates to write studies that explain away the dangers, and hire lobbyists to block any reform. A future Treasury secretary may also dismiss critics of a future Fannie Mae, or Goldman Sachs, as “ideologues,” as Hank Paulson did in 2007-2008.
     
    The very existence of a systemic risk regulator, or council of regulators, will assist the largest and riskiest firms by creating an illusion of stability in a world made less stable by the implicit guarantee that this regulator would convey. It would be an accident waiting to happen, and one made inevitable by the institution created to prevent it.

    Clever people rationalizing away risk destroyed Long Term Capital Management and countless other leveraged financial businesses. (As the column suggests, the incentives facing bureaucrats and politicians make this problem even more acute for government-managed enterprises.) The idea is generally: we’ve looked at all the angles and done simulations and the odds of a ruinous meltdown are so small we’re not going to worry about it. The problem is that the models used to estimate risk are sensitive to errors in the assumptions. That’s what “extremely rare events located in the tail of a distribution are often quite difficult to analyze accurately” means. If the distribution is statistically abnormal the tails of the distribution might be fatter than you think, in which case those extremely rare events might not be so rare. For businesses that deal with statistically normal returns distributions, such as casinos and life-insurance companies, the risks are relatively easy to determine. Those are well understood businesses with almost no risk of failure as long as they are well capitalized and well managed. By comparison, the risks for a highly leveraged negative-gamma financial scheme are much more difficult to pin down. Fannie Mae was essentially a colossal short-put position on the mortgage industry. Was the risk of ruin 1 in 1,000,000 or one in a hundred? Who knows. A cursory look at the history of financial debacles suggests that such events happen much more frequently than many models have predicted. A reasonable person with extensive private-sector financial experience as a trader or fund manager would know better than to bet the ranch on the accuracy of a model whose worst-case outcomes involve unknown probability of unbounded loss. More likely he would want to be on the other side of that trade. Yet Congress jumped right in and kept doubling down when it should have been cutting its losses, and is now repeating the error with the FHA. Orszag and Stiglitz apparently didn’t understand this back in the day. Do they understand it now?

    When people like these are in business and miscalculate they go out of business. If they’re lucky they then get to go to work for someone who has a better understanding of risk than they did. But when they’re in government and miscalculate they may pay no penalty or even be promoted, and the risks they rationalize may be ignored until institutions fail. I don’t mean to single out Orszag and Stiglitz, who probably meant well and were not responsible for Fannie Mae (Congress was). But the public sector is full of such people, and as the government expands they become more influential and their mistakes become more costly.

    Posted in Economics & Finance | 8 Comments »

    For Today’s Anniversary

    Posted by Jay Manifold on 2nd December 2009 (All posts by )

    We are great and we are grand; we make bombs beneath our stands!

    We are great and we are grand; we make bombs beneath our stands!

    Posted in Academia, Chicagoania, Diversions, Energy & Power Generation, History, Humor, International Affairs, Japan, Military Affairs, National Security, Quotations, Science, Tech, USA, War and Peace | 5 Comments »

    Bad Night Animated

    Posted by Dan from Madison on 2nd December 2009 (All posts by )

    A few days ago I put up a post that showed exactly how important it is for Americans to know their rights under the Fifth Amendment. The post had to deal with the Tiger Woods incident. Today, not so serious. This animation of the incident, even though it may or may not be true, is pretty funny to me (I actually laughed out loud at my desk here at work, which is very unusual for me). I am guessing it is from Taiwan, but maybe some of our more knowledgable readers could clue me in better than that. (HT Lou).

    Posted in Humor, Video | 1 Comment »

    Unsung Technological Advances

    Posted by Carl from Chicago on 1st December 2009 (All posts by )

    One truism on Technology is that the initial media splash and the early adopters skew trends by making them seem to have more impact than they actually do. It is often the slower, longer “tail” of a trend that causes the most significant change, even if by then the media has passed the story by because it is no longer “hot”.

    Two items happened last week that show a profound technology advancement that is by now ubiquitous and thus rarely commented on by the media. These two items are 1) the vast scope of online gaming and 2) Craigslist and its impact on retail.

    While watching the Bears get killed on Sunday during half time, my nephew put on Call of Duty – Modern Warfare 2 which just got released in November, 2009 for Xbox. Already, there were masses of individuals online playing the game – there were over 800,000 users online AT THAT MOMENT. He joined a game, which was simple, and the intelligence split up the team members based on their levels so that the two teams were balanced. It is just amazing how easy it is to join these games and play infinitely, against other human opponents – this used to be hard to do (Dan and I played online a long time ago) and now it is not only a snap but there are hundreds of thousands of opponents ready to play a huge variety of missions at any time day or night. Also, Xbox, which was viewed as behind Wii and PS3, is now a leader in online gaming which is a huge differentiator against the other consoles, while this wasn’t viewed as a critical factor at the time the consoles all emerged.
    Read the rest of this entry »

    Posted in Business, Internet | 9 Comments »

    Climatologists Need Porsches Too!

    Posted by Shannon Love on 1st December 2009 (All posts by )

    This post on the economics of global warming research puts me in mind of the classic Bloom County cartoon below. Just substitute “climate change” for “defense”.

    opusporche

    We like to think of scientists as secular monks who don’t care for material things, but they have the same desires and temptations as the rest of us.

    Read the rest of this entry »

    Posted in Academia, Science | 8 Comments »