October 31, 2008

Editorial - Now, the $2 Billion Campaign - NYTimes.com

Editorial - Now, the $2 Billion Campaign - NYTimes.com

Yes, yes, money is the mother's milk of politics. The Times opines about bringing spending under control and agree that their endorsed candidate, Obama, reversed course after agreeing to accept public financing. That's one definition of 'change.'

October 30, 2008

Op-Ed Columnist - The Behavioral Revolution - NYTimes.com

Op-Ed Columnist - The Behavioral Revolution - NYTimes.com- David Brooks:

I read the "Black Swan" by Taleb earlier this year and recall how taken I was with the potential cataclysmic nature of the events he suggested could happen because of human frailties in perceiving and quantifying risk in financial markets. He was after all, a 'quant' on Wall Street and knew the business and the mindset inside out.

I should have listened and acted on it. That would have been the time to move to cash. He has been proven right. I highly recommnd his book, salews of which I suspect are booming.

Brooks is right to give Taleb credit for seeing and writing about the coming crisis.

"In “The Black Swan,” Taleb wrote, “The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup.” Globalization, he noted, “creates interlocking fragility.” He warned that while the growth of giant banks gives the appearance of stability, in reality, it raises the risk of a systemic collapse — “when one fails, they all fail.”

Taleb believes that our brains evolved to suit a world much simpler than the one we now face. His writing is idiosyncratic, but he does touch on many of the perceptual biases that distort our thinking: our tendency to see data that confirm our prejudices more vividly than data that contradict them; our tendency to overvalue recent events when anticipating future possibilities; our tendency to spin concurring facts into a single causal narrative; our tendency to applaud our own supposed skill in circumstances when we’ve actually benefited from dumb luck.

And looking at the financial crisis, it is easy to see dozens of errors of perception. Traders misperceived the possibility of rare events. They got caught in social contagions and reinforced each other’s risk assessments. They failed to perceive how tightly linked global networks can transform small events into big disasters.

Taleb is characteristically vituperative about the quantitative risk models, which try to model something that defies modelization. He subscribes to what he calls the tragic vision of humankind, which “believes in the existence of inherent limitations and flaws in the way we think and act and requires an acknowledgement of this fact as a basis for any individual and collective action.” If recent events don’t underline this worldview, nothing will.

If you start thinking about our faulty perceptions, the first thing you realize is that markets are not perfectly efficient, people are not always good guardians of their own self-interest..."

October 29, 2008

Microsoft Word, Excel and PowerPoint in the Cloud

Google Docs has me captured. Well, Writely captured me and Google Docs inherited me when the bought Writely. I have >1000 documents on Docs. Also use Microsoft live spaces and have played with Live Mesh, but so far I come back to Google.

However, if MS delivers a much richer browser interface and an easy way to move my documents over, I surely would consider Office Live particularly with the rich interface shown above.

But Google won't stand still and let MS eat their online lunch. Yet, what will they do? The have no desktop app, only the ability to work offline. I don't think that's enough.

Obama's 'Redistribution' Constitution - WSJ.com

Obama's 'Redistribution' Constitution - WSJ.com

One meaning of Obama's 'redistribution' plans Both political parties seek to enforce their ideologies via appointments to the bench. The difference this time is that the Republicans may not have the votes to block judicial appointments in the Senate.

October 28, 2008

Like it or not, cloud computing is the wave of the future - MarketWatch

Like it or not, cloud computing is the wave of the future - MarketWatch

In this piece about 'cloud' computing, Therese Poletti presents the arguments of Richard Stallman against cloud computing and those of Nicholas Carr for the concept now being deployed by heavyweights Amazon, Google, Microsoft and others. Stallman argues that those embracing it give up control, privacy and security. Carr compares cloud computing with the electrical grid and the efficiencies for computing are equivalent to the electrical grid that developed shortly after widespread on premise electrical power generation. My guess is that Stallman is more or less a control freak and distrusts 'BIG' enterprise.

I believe the cloud will eventually win out, but not to the total exclusion of premise based computing. We'll see a mixture just as we see a mixture of premise and grid power generation. I have already embraced the cloud in that my use of Google services, especially Docs and Spreadsheets, but many others, too is rising dramatically.

Now that Microsoft announced Windows Azure 0n October 27, 2008, there's absolutely no doubt that cloud computing has a future in the enterprise. MS has committed huge resources to the cloud concept to make it usable for present software developers and the applications they already have built.

The huge risk I see is global catastrophe or war on a massive scale that interrupts the global fiber network of several data centers at the same time. Given the reliance the global economy and culture will eventually place on this massive infrastructure, the consequences of catastrophic failure is mind-boggling.

October 26, 2008

Op-Ed Columnist - If Larry and Sergey Asked for a Loan ... - NYTimes.com

Op-Ed Columnist - If Larry and Sergey Asked for a Loan ... - NYTimes.com:

Friedman talks sense about capitalism and risk-taking. Will Congress, a major catalyst causing this crisis, and a new President listen? I certainly hope they do.

"Don’t get me wrong. I am not criticizing the decision to shore up the banks. And we must prevent a repeat of the reckless bundling and securitizing of mortgages, and excessive leveraging, that started this mess. We need better regulation. But most of all, we need better management.

The banks that are surviving the best today, the ones that are buying others and not being bought — like JPMorgan Chase or Banco Santander, based in Spain — are not surviving because they were better regulated than the banks across the street but because they were better run. Their leaders were more vigilant about their risk exposure than any regulator required them to be.

Bottom line: We must not overshoot in regulating the markets just because they overshot in their risk-taking. That’s what markets do. We need to fix capitalism, not install socialism. Because, ultimately, we can’t bail our way out of this crisis. We can only grow our way out — with more innovation and entrepreneurship, which create new businesses and better jobs.

So let’s keep our eyes on the prize. Save the system, install smart regulations and get the government out of the banking business as soon as possible so that the surviving banks can freely and unabashedly get back into their business"

Op-Ed Columnist - Ceding the Center - NYTimes.com

Op-Ed Columnist - Ceding the Center - NYTimes.com:
Published: October 26, 2008

David Brooks explains some political realities in this excellent piece. I find myself firmly in the "third tendency." It partly explains why I have been unhappy with the both presidential candidates. While Brooks makes the case that McCain is also of this "third tendency," I don't fully agree because he chooses to style himself as a maverick, without describing the positions/beliefs about which he is a maverick. If he were truly of the "third tendency," he would have taken musch stronger stands on the principles that Brooks lays out.

I understand that Brooks is trying to let McCain down softly, but if he was so misshapen by his campaign handlers, that does not speak to his leadership. He certainly is less gifted with rhetoric than Obama, but he has far more substance. It's clear to me that American voters have swallowed the rhetoric.

"There are two major political parties in America, but there are at least three major political tendencies. The first is orthodox liberalism, a belief in using government to maximize equality. The second is free-market conservatism, the belief in limiting government to maximize freedom.

But there is a third tendency, which floats between. It is for using limited but energetic government to enhance social mobility. This tendency began with Alexander Hamilton, who created a vibrant national economy so more people could rise and succeed. It matured with Abraham Lincoln and the Civil War Republicans, who created the Land Grant College Act and the Homestead Act to give people the tools to pursue their ambitions. It continued with Theodore Roosevelt, who busted the trusts to give more Americans a square deal.

Members of this tradition have one foot in the conservatism of Edmund Burke. They understand how little we know or can know and how much we should rely on tradition, prudence and habit. They have an awareness of sin, of the importance of traditional virtues and stable institutions. They understand that we are not free-floating individuals but are embedded in thick social organisms."

October 25, 2008

Greenspan Concedes Error on Regulation - NYTimes.com

Greenspan Concedes Error on Regulation - NYTimes.com:

I have long maintained that Greenspan was a key mover of the ideology that has resulted in this fiscal crisis and until this past week seemed to be let off the hook. He now admits he was wrong. Certainly, this is a time when the normal human emotional reaction is to find scapegoats, most of it under the guise of finding out 'what went wrong.'

Yet we would be foolish to let Congress off the hook here. The buck stops with them. They, with some exceptions, were responsible for the excesses of Fannie and Freddie because they failed to act when warned. It's clear that former leaders of Fannie (Franklin Raines and others) were crooks. And this administration clearly supported a climate of less regulation.

Nevertheless, if I were at a different point in life, I would be buying value stocks for the long run. The U.S. and world economies will ultimately rebound after this shakeout.

"But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry."

October 24, 2008

Capitalism Revisited - Forbes.com

Capitalism Revisited - Forbes.com

A commentary on the motives that are encouraged at today's business schools who had best rethink their curriculum and culture of educating bright young business people. In my opinion the schools are a significant driver of today's fiscal mess.

"Indeed, we have arrived at a point in history when grooming leaders capable of creating, building and growing sustainable enterprises is no longer the central objective of the nation's premier academic institutions. Furthermore, rather than reinforcing a leadership-driven value system, business schools today promote a value system driven by avarice and opportunism.

The finance and consulting industries are full of people with MBA degrees who have never "done it before" but reap grandiose salaries by moving money from here to there, or by dispensing high-level, arm-waving "advice" that is hardly actionable or rooted in practicality.

Judy Estrin, one of Silicon Valley's beloved entrepreneurs, is also troubled by this phenomenon. In her new book Closing the Innovation Gap, she points out the same problems around short-term thinking, opportunism and unbridled gold digging that has taken control of some of the most promising young minds of America."

October 23, 2008

Op-Ed Contributor - From Beirut to 9/11 - NYTimes.com

Op-Ed Contributor - From Beirut to 9/11 - NYTimes.com

While McFarlane may have some axes to grind, both presidential candidates must take to heart his admonition:

"Since 9/11 we have learned a lot about the threat from radical Islam and how to defeat it. Our commitment to Iraq is now being vindicated and, if sustained, will enable us to establish an example of pluralism in a Muslim state with a flourishing economy.

First, however, we must win in Afghanistan — truly the decisive battleground in this global struggle. Never has there been a greater need for experience and judgment in the White House. Unless our next president understands the complexity of the challenge as well as what it will take to succeed, and can lead his cabinet and our country in resolute execution of that strategy, we will lose this war."

October 22, 2008

Op-Ed Columnist - Bailout (and Buildup) - NYTimes.com

Op-Ed Columnist - Bailout (and Buildup) - NYTimes.com

Thomas is wringing his hands because gasoline prices are falling. Please tell us, Thomas, what you think the 'correct' price should be for the 'green' future you advocate.

I agree that we need to move much, much more of our energy to renewable sources under our control, but that mix MUST include nuclear. You include it in your ideas, but unless you are willing to advocate strongly for that, all the rest, to use a term from an energy newsletter I receive, are merely 'piddle power.'

If an energy source does not pay its own way over the long term, it won't work. Governments cannot be expected to subsidize the energy industry forever. People should pay for energy like any other purchase, not through a tax.

October 21, 2008

Alternative Energy Suddenly Faces Headwinds - NYTimes.com

Alternative Energy Suddenly Faces Headwinds - NYTimes.com:

Now that the hysteria for renewables has been dampened by the financial crisis, government will face the choice to back off the high-sounding campaign rhetoric by McCain and Obama or attempt to 'mandate' renewable energy development. And if he (the winner) holds to his plan, where will the capital come from? As I posted yesterday, Presidents are not in control of the economy no matter what they or people may think.

A higher % of renewables, now at 7% in the U.S., may be warranted if economic realities justify expansion, but some renewable projects, like corn to ethanol for gasoline, deserve to die.

Here in Vermont, Democrat candidate for Governor Symington proposes 20% of Vermont's electricity from wind within 10 years, presumably from in-state wind turbine farms. For that dream to become reality, I suggest she must take the next step and support Vermont exercising a right of eminent domain to take the land and build the roads that will be needed for such a massive projectin Vermont (200-250 400' turbines). That little piece of reality seems to be missing from her energy proposal. Ah well, her dreams are now confronting reality as capital dries up for massive wind projects, at least temporarily.

While I haven't been watching TV closely, have Mr. T. Boone Pickens' ads for BIG WIND to replace natural gas for electricity also dried up? Perhpas reality affects billionaires, too.

"Wall Street analysts say most utilities and other builders can profitably choose big wind projects over gas-fired plants only when gas prices are $8 per thousand cubic feet or higher. Natural gas settled Monday at about $6.79 per thousand cubic feet, down from about $13.58 on July 3.

“Natural gas at $6 makes wind look like a questionable idea and solar power unfathomably expensive,” said Kevin Book, a senior vice president at FBR Capital Markets.

Government mandates already on the books, including state rules requiring renewable power generation and federal requirements for production of ethanol, ensure that to some degree, alternative energy markets will continue to exist no matter how low oil and gas prices go. But the credit crisis means some companies that would like to build facilities to meet that demand are going to have problems. “If you can’t borrow money, you can’t develop renewables,” Mr. Book said."

October 20, 2008

Metrics - Can a President Tame the Business Cycle? - NYTimes.com

Metrics - Can a President Tame the Business Cycle? - NYTimes.com:

Presidents are usually ascribed or take far too much responsibility or too much credit for the economy and business cycles. The reality is they are not in control of the economy, but voters believe otherwise. Unfortunately, perception is reality in politics

"As important as the economy may be for voters when they go to the polls, many economists contend that presidents have little power over general economic performance during their terms of office, even though some things, like the minimum wage, are set by the government."

Deficit Rises, and the Consensus Is to Let It Grow - NYTimes.com

Deficit Rises, and the Consensus Is to Let It Grow - NYTimes.com

Profligate spending in the past will now overwhelm the federal budget. Obama is likely to preside over the largest deficit and national debt in the history of the world. This cannot go on for long without inflation kicking in when the government spends money like there's no tomorrow.

"Confronted with a hugely expensive economic crisis, Democratic and Republican lawmakers alike have elected to pay the bill mainly by borrowing money rather than cutting spending or raising taxes. But while the borrowing is relatively inexpensive for the government in a weak economy, the cost will become a bigger burden as growth returns and interest rates rise.

In addition, outlays for Medicare and Social Security are expected to balloon as the first baby boomers reach full retirement age in the next three years.

“The next president will inherit a fiscal and economic mess of historic proportions,” said Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee. “It will take years to dig our way out.”"

What sort of economic miracle can fix this massive government mess? None. We are a country in decline. What set of circumstances could make it different?

October 16, 2008

Why We Vote

This perspective was published on Thursday, October 16, 2008 in the Colchester Sun and The Essex Reporter, local weekly newspapers.
Why We Vote

This is the season for decisions about what we believe is important in our country and in Vermont. Our democracy grants us the privilege to cast a ballot for people who bring a package of ideologies, beliefs and policies that we think will improve our lot. We will cast our votes for a plethora of reasons, but this year the people we elect face intense challenges.

In Vermont our Legislature ultimately decides how our taxes will be raised and spent.The members and their leaders are the people who ultimately set the policies that we live with. Many of us have talked with the candidates in person. We will soon elect these 180 people who, thankfully, are willing to serve in a General Assembly facing a mammoth budget problem.

We will cast those ballots based on hopes, fears, expectations, loyalties and sometimes sound thinking. The rational among us will vote because we believe certain candidates will tackle the issues responsibly. Thinking voters will evaluate and choose candidates because we believe their values and ideas make sense. We trust their ability to implement those ideas in sound policy and spending.

Many of us will vote because we know the persons seeking office as friends, neighbors or relatives. We believe they are good people, trusting them because they are bright, articulate or affable. We may be clueless about the issues facing them, but trust they'll do the right thing if elected.

Others will vote for people because of the letter beside their names on the ballot. These party-line voters are numerous and those votes are based on loyalty, ideology or because they inherited a belief system from their parents or relatives.

Some voters will cast a ballot based on the candidate's gender, sexuality, ethnicity or race. Hopefully, these voters will be few and far between. Nevertheless, the pollsters constantly categorize and remind us how we think about issues. Ignore the pollsters.

Still others will vote out of anger or bitterness toward incumbents, a "throw the bums out" view. Sometimes, a new broom is needed to sweep away the promoters of bad policies or those unduly favoring special interests.

Vermont faces a crucial period in the next few years because government expenditures have outpaced the tax base that can support them and the chickens are coming home to roost. Without a healthy economy and private sector job growth, Vermont simply cannot afford its past spending appetite.

While many legislators see a revenue shortfall as a problem, leaders and thoughful lawmakers should see it as an opportunity to set proper priorities for state spending and policies. We should vote for people who will bring rational leadership for the common good. Satisfying the special interest promoters who wander the Capitol seeking funding for their 'essential' cause only serves to inflate spending. Only more private sector jobs that pay well can generate a tax base to support government expenditures for the common good. A healthy Vermont economy is not a 'special interest.'

Casting a ballot is serious business and should be a thoughtful process. A vote simply because a person is D, R, P, I, black, white, male, female, gay or straight does not create good government with sound leadership. Instead, we should take the time to understand the issues, know which candidates best grasps them and have rational ideas for improving our Vermont economy, thus all our lives.

One mistake we should avoid is believing that the General Assembly can solve all our problems. So, with that caveat, please vote responsibly on November 4.

David Usher lives in Colchester and is on the advisory board of Vermonters for Economic Health, a group promoting a sound economy and fiscal responsibility in Vermont government.

Op-Ed Columnist - Why How Matters - NYTimes.com

Op-Ed Columnist - Why How Matters - NYTimes.com

Thomas Friedman has become the counselor to the greedy.

Charles Mackay wrote a classic history of financial crises called “Extraordinary Popular Delusions and the Madness of Crowds,” first published in London in 1841. “Money ... has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. To trace the history of the most prominent of these delusions is the object of the present pages. Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

And so it must be with us. We need to get back to collaborating the old-fashioned way. That is, people making decisions based on business judgment, experience, prudence, clarity of communications and thinking about how — not just how much.

Charles Mackay's observation in 1841 makes as much sense today. Friedman's concluding sentence is wise counsel. What are business schools teaching today? If not laced with this sage advice, they remain part of the problem.

October 15, 2008

If Elected ... - From 2 Rivals, 2 Prescriptions - Series - NYTimes.com

If Elected ... - From 2 Rivals, 2 Prescriptions - Series - NYTimes.com:

Finally someone is asking the right question: How are we going to pay for all this? The backstop of last resort, the U.S. Government does not have unlimited resources. I must search to find what my fiscal hero, David Walker has to say.

"“Before the crisis, neither of them was telling how it really was going to be,” said the economist Robert D. Reischauer, president of the Urban Institute and a former director of the Congressional Budget Office. “Now one really doesn’t know how it’s going to be because we seem to have blown away any notion of fiscal limitations.”

“At some point,” Mr. Reischauer added, “we as a nation are going to have to ask, ‘Where are we going to get the money to do all this, and at what price?’ That’s the question no one can answer.”"

This CBS News story suggests that we taxpayers had better watch the Washington pols and regulators closely, particularly when so much money is sloshing around. It's a magnet for corruption and unethical behavior.

October 14, 2008

Op-Ed Columnist - Big Government Ahead - NYTimes.com

Op-Ed Columnist - Big Government Ahead - NYTimes.com

With this gloomy scenario portrayed by Brooks, what does the "full faith and credit of the United States government' mean. Why should foreigners buy our debt in the face of this gloomy scenario? What happens if they don't? Is the U.S. economy headed for a shrink time? We live in perilous times (how many times in history has that been said?)

Now we should be on the watch for a sizable terrorist attack as frosting on the cake.

Here's another view from Declan McCullagh on the government's ability to deal with this mess.

We're all to blame for this financial mess - MarketWatch

We're all to blame for this financial mess - MarketWatch

Here's another author playing the blame game. He spreads it around most generously!

October 13, 2008

U.S. gasoline price marks biggest drop ever: survey | U.S. | Reuters

U.S. gasoline price marks biggest drop ever: survey | U.S. | Reuters

I traveled in Maine last week and on Saturday regular gas in the Ellsworth area was under $3.00/gallon and diesel was $3.60, lowest it's been in a long time (a price war perhaps?). Back in Vermont regular gas was $3.35 and diesel in Plainfield was 3.70. My oil dealer filled my tank a few days ago and fuel oil was $3.20, again lower than in a long time.

The world financial crisis is nasty indeed, but has this one tiny redeeming value. Petroleum prices are dropping quickly.

Reasons Behind the Financial Crisis

Frank Mazur's letter to the editor of the Burlington Free Press published on October
succinctly portrays the root causes behind the financial mess. There are other
reasons, too, including the greed of the mortgage brokers and home buyers who
were flipping (speculating) properties in the runup of housing prices in the the past decade encouraged by low interest rates sponsored by then-"saint" Alan Greenspan.


Bailout Rewards Bad Behavior

"Deception and greedy lenders forced the federal government to intervene and rescue Wall Street from a financial meltdown. Most of the blame rests on political meddling in the decisions of lenders.

The problem started in the Carter years and exacerbated in the Clinton administration when lenders were encouraged to give loans to people with poor credit and low income levels. Congress clearly advocated the importance of minority and low-income home ownership. This helped create the market for risky sub-prime loans that were bundled and sold with the expectation of being paid back. Many defaulted and the current crisis emerged.

In 2003 President Bush presented reform measures which Congress ignored. John McCain also sponsored a strong reform bill in 2005, but Democrats opposed it because it would mean fewer loans to poor people.

It's not the failure of capitalism that caused this meltdown. It's political interference and regulators who promoted bad loans, and greedy lenders who ignored common sense in approving them. Freddie and Fannie were also mismanaged by Clinton cronies who overstated earnings and shifted losses so senior executives could earn big bonuses. These quasi-governmental agencies are also big political contributors to Sens. Dodd, Obama, and Clinton who contributed to the current trillion dollar federal bailout by succumbing to affordable housing lobbyists.

When Enron defaulted and caused financial pain to the market, a special prosecutor was created immediately. We need a special prosecutor to investigate what laws were broken and by whom. Under no circumstances should they profit by taxpayers absorbing this debt."

South Burlington


Here is Rich Tarrant's take on the mess (Rich ran unsuccessfully against Senator Bernie Sanders in the last election)

Government meddling, not deregulation, caused the financial meltdown

by Rich Tarrant

"The United States is facing a very serious financial crisis. While we need
both sides of the aisle to put politics aside and work together to craft a way
forward, it is also important to examine how we came to be in this mess in the
first place. If we are serious about a real and lasting fix to our economy, we
must first be committed to separating facts and records from partisan spin.
Otherwise, we are doomed to allowing the same people to make the same mistakes
all over again at our considerable expense.

A popular theme in the media is that the financial meltdown was a failure of
the “free market.” A careful look at events, however, shows that this is not
true. In fact, the origins of this crisis can be traced back to the exact
opposite of free market principles: government meddling in which politics
trumped sound business practices.

This started with The Community Reinvestment Act in 1977. Jimmy Carter signed
this bill into law, caving in to grassroots political pressure for more
affordable housing in low-income communities, which sounds nice and is very
politically correct. However, it ignored the staunch opposition of the banking

Far from jumping into the sub-prime market with dollar signs in their eyes
and greed in their hearts, banks wanted nothing to do with this scheme. In fact,
ACORN (Association of Community Organizations for Reform Now) liberal activist
Martha Talbot noted proudly that her organization and political allies were
"dragging banks kicking and screaming" into making these loans – hardly the free
market at work. For voicing what turned out to be very legitimate concerns,
banks were labeled “racist” by the same political opponents who are now blaming
them as “greedy.”

More government meddling occurred in 1999 under President Bill Clinton in
regard to the Government Sponsored Enterprises (a concept antithetical to the
free market), Fannie Mae and Freddie Mac. As The New York Times reported,
“Fannie Mae, the nation's biggest underwriter of home mortgages, has been under
increasing pressure from the Clinton Administration to expand mortgage loans
among low and moderate income people.” Again, this was government
intervention and political motives prevailing over and distorting the
free-market. Just recently, Bill Clinton himself said the Democrats who opposed
reform during his administration were at fault.

As for the charges that “deregulation” of the banking industry by Republicans
led to this mess, the facts again do not back up the charge. President Bush
raised red flags as early as April 2001, warning that the situation with Fannie
and Freddie could “cause strong repercussions in financial markets.” In 2003, it
was Bush who called for a new federal agency to regulate and supervise Fannie
& Freddie. In 2005, Alan Greenspan testified, “Enabling these institutions
to increase in size … we are placing the total financial system of the future at
a substantial risk.”

It was Senator John McCain who co-sponsored S.190, the Housing Enterprise
Regulatory Reform Act of 2005. Among other measures, this would have established
a Federal Housing Enterprise Regulatory Agency. Had it passed, this organization
could have stopped the current crisis in its tracks. But, S.190 didn’t pass.

Why? According to the records, Democrat opposition fueled by millions of
dollars in lobbying and campaign contributions by Fannie and Freddie Mac,
coupled with left-wing activist pressure from organizations like ACORN.
According to Open Secrets’ review of FEC records, Barrack Obama received more
campaign contributions from Fannie Mae and Freddie Mac than any other politician
except Christopher Dodd. However, Obama amassed his pile of cash in just three
years, whereas Dodd accumulated his loot over two decades. Today, two of
the Fannie/Freddie executives under investigation are advisors to the Obama

This crisis has elicited a massive political smokescreen to hide and protect
some influential politicians. But, we as voters and citizens have a
responsibility to cut through the rhetoric, look at the records, and reward
those who showed insight, foresight, and took action to attempt to fix this
problem before it became a problem. "

October 10, 2008

RVing on Mt. Desert Island, ME

The color here on the coast of Maine is superb, as is the weather.

We met up with an old Army buddy (He jumped into Normandy with the 101st Airborne Division at 17 years old!) who was my battalion commander in Germany. He and his younger wife were on a Eurodam (Holland America Line) cruise that began in Quebec City and will end at Fort Lauderdale. We joined their tour of Acadia and Cadillac Mountain that included a lobster bake. Two cruise ships were anchored yesterday with 5000 descending on Bar Harbor!!

We're hanging out at the RV park just taking it easy today watching the ducks and gulls on Frenchman's Bay here.

Here's a slideshow

Business Feed Article | Business | guardian.co.uk

Business Feed Article | Business | guardian.co.uk

This piece suggests that a carbon tax applied at the source of the carbon supply, the wellhead or the refinery is a better tool to combat global warming than cap and trade schemes. I am no fan of cap and trade as a solution to anything. It's merely a way to apply an indirect cost on producers of carbon emissions.

If governments are serious about taxing carbon, they should apply the tax directly to carbon consumers. The tax should be voted by elected representatives or a direct ballot initiative so the direct pain of carbon taxation is felt by the people and not cast as a 'big oil' or 'big carbon' problem. Let the people decide if a 'save the planet' tax is something they agree with.

Tax dairy and meat products because ruminants produce methane. Tax gasoline and fuel oils and lubricants. Tax fossil fuel produced electricity, but not nuclear, hydro, wind or solar. But if we do, we must insist that the tax goes to ameliorating carbon emissions and nothing else.

Of course, any tax or payment scheme assumes that human activities are the cause of climate change. I doubt it, but the direct consumer carbon tax approach will test the 'consensus' that climate change fanatics claim.

President Bush Statement October 10, 2008

This sounds perfunctory, desined, I'm sure to elicit confidence. To me it's simply a recitation of the actions already taken. I want the best financial thinkers in our country gathered to sort this out. Whatever has been done is apparently insufficient to create confidence to reverse the slide.

Meanwhile, Osama Bin laden and his cronies are undoubtedly watching all this with glee. It must be time for a statement from him telling the West we are heading in the direction he wants and to keep it up.

Here is the president's statement:

Good morning. Over the past few days, we have witnessed a startling drop in the stock market -- much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people. Many of our citizens have serious concerns about their retirement accounts, their investments, and their economic well-being.

Here's what the American people need to know: that the United States government is acting; we will continue to act to resolve this crisis and restore stability to our markets. We are a prosperous nation with immense resources and a wide range of tools at our disposal. We're using these tools aggressively.

The fundamental problem is this: As the housing market has declined, banks holding assets related to home mortgages have suffered serious losses. As a result of these losses, many banks lack the capital or the confidence in each other to make new loans. In turn, our system of credit has frozen, which is keeping American businesses from financing their daily transactions -- and creating uncertainty throughout our economy.

This uncertainty has led to anxiety among our people. And that is understandable -- that anxiety can feed anxiety, and that can make it hard to see all that is being done to solve the problem. The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy. Fellow citizens: We can solve this crisis -- and we will.
Here are the problems we face and the steps we are taking:

First, key markets are not functioning because there's a lack of liquidity -- the grease necessary to keep the gears of our financial system turning. So the Federal Reserve has injected hundreds of billions of dollars into the system. The Fed has joined with central banks around the world to coordinate a cut in interest rates. This rate cut will allow banks to borrow money more affordably -- and it should help free up additional credit necessary to create jobs, and finance college educations, and help American families meet their daily needs. The Fed has also announced a new program to provide support for the commercial paper market, which is freezing up. As the new program kicks in over the next week or so, it will help revive a key source of short-term financing for American businesses and financial institutions.

Second, some Americans are concerned about whether their money is safe. So the Federal Deposit Insurance Corporation and the National Credit Union Administration have significantly expanded the amount of money insured in savings accounts, and checking accounts, and certificates of deposit. That means that if you have up to $250,000 in one of these insured accounts, every penny of that money is safe. The Treasury Department has also acted to restore confidence in a key element of America's financial system by offering government insurance for money market mutual funds.

Thirdly, we are concerned that some investors could take advantage of the crisis to illegally manipulate the stock market. So the Securities and Exchange Commission has launched rigorous enforcement actions to detect fraud and manipulation in the market. The SEC is focused on preventing abusive practices, such as putting out false information to drive down particular stocks for personal gain. Anyone caught engaging in illegal financial activities will be prosecuted.

Fourth, the decline in the housing market has left many Americans struggling to meet their mortgages and are concerned about losing their homes. My administration has launched two initiatives to help responsible borrowers keep their homes. One is called HOPE NOW, and it brings together homeowners and lenders and mortgage servicers, and others to find ways to prevent foreclosure. The other initiative is aimed at making it easier for responsible homeowners to refinance into affordable mortgages insured by the Federal Housing Administration. So far, these programs have helped more than 2 million Americans stay in their home. And the point is this: If you are struggling to meet your mortgage, there are ways that you can get help.
With these actions to help to prevent foreclosures, we're addressing a key problem in the housing market: The supply of homes now exceeds demand. And as a result, home values have declined. Once supply and demand balance out, our housing market will be able to recover -- and that will help our broader economy begin to grow.

Fifth, we've seen that problems in the financial system are not isolated to the United States. They're also affecting other nations around the globe. So we're working closely with partners around the world to ensure that our actions are coordinated and effective. Tomorrow, I'll meet with the finance ministers from our partners in the G7 and the heads of the International Monetary Fund and World Bank. Secretary Paulson will also meet with finance ministers from the world's 20 leading economies. Through these efforts, the world is sending an unmistakable signal: We're in this together, and we'll come through this together.

And finally, American businesses and consumers are struggling to obtain credit, because banks do not have sufficient capital to make loans. So my administration worked with Congress to quickly pass a $700 billion financial rescue package. This new law authorizes the Treasury Department to use a variety of measures to help bank [sic] rebuild capital -- including buying or insuring troubled assets and purchasing equity of financial institutions. The Department will implement measures that have maximum impact as quickly as possible. Seven hundred billion dollars is a significant amount of money. And as we act, we will do it in a way that is effective.

The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes. And it is big enough to work.
The federal government will continue to take the actions necessary to restore stability to our financial markets and growth to our economy. We have an outstanding economic team carrying out this effort, led by Secretary of the Treasury Hank Paulson, Federal Reserve Chairman Ben Bernanke, SEC Chairman Chris Cox, and FDIC Chair Sheila Bair. I thank them and their dedicated teams for their service during this important moment in our country's history.

This is an anxious time, but the American people can be confident in our economic future. We know what the problems are, we have the tools we need to fix them, and we're working swiftly to do so. Our economy is innovative, industrious and resilient because the American people who make up our economy are innovative, industrious and resilient. We all share a determination to solve this problem -- and that is exactly what we're going to do. May God bless you.

Moral Authority to Help Financial Crisis

I'll be a tad cynical today. Schuman suggests an investment of moral authority to help us out of our financial mess. And, sir, where do you suppose this will be found? It's an attribute in short supply in Congress or on Wall Street.

Perhaps the Pope can help?


"...The government steps taken to stanch the credit crisis, each more extraordinary than the last, have done little to unfreeze the flow of capital among banks and to businesses and consumers who need the borrowed cash, prompting investors to keep fleeing the stock markets and bet against the economy. With each tumultuous day judged by market reaction -- and often investor desperation -- any solution may require more than technical intervention at the system's weak points, and perhaps an investment of moral authority that can counter the nihilistic outlooks that help sustain crisis."

Oops, here's today's dose of moral authority:
"Soon after the U.S. markets open this morning, President Bush plans to address the nation and tell Americans why they should still be "confident," White House spokeswoman Dana Perino said yesterday, as Bloomberg reports. Chances are that the all-news cable networks, and the big four broadcast networks should they choose to air the address, will be running live stock market reaction to the speech under the footage of the president."

October 9, 2008

The Reckoning - Taking Hard New Look at a Greenspan Legacy - Series - NYTimes.com

The Reckoning - Taking Hard New Look at a Greenspan Legacy - Series - NYTimes.com

Finally someone is taking a hard look at Greenspan's role in the present fiscal crisis. He was nearly canonized during the many years he was running the Federal Reserve and it now seems he may have been a BIG part of the crisis we are now enduring.

Vermont Wind Map

I wanted to capture this map and site because I just found it and it's really interesting. Each state's wind potential for electric generation is available on the windpoweringamerica.gov site. I wonder if there's a similar map for each state that shows the degree of resistance by environmentalists and others who think that 400' industrial scale wind turbines are not acceptable?

October 5, 2008

Vermont's Congressional Delegation Votes on the Bailout Bill

I have just read the views of Vermont's Senator Sanders, Senator Leahy and Representative Welch on why they voted the way they did on the bailout bill at the end of last week.

The pieces are mostly pandering political writings to make voters think well of them. Of the three, Welch's was the most cogent and sensible. Leahy's was predictable, but not very informative. Sanders' was worthless, nothing more than his usual rant against business. He is an embarrassment forVermont in Washington, but better there than Governor of Vermont.

Leahy voted for the bill. Welch voted against it first time around and for it on Friday. Sanders, predictably, voted against it because it didn't tax the rich. And the alternative he offered was nothing more than taxing the rich for $300 Billion

While I believe the jury is out on the real value or liklihood of success of the bill, realistically I don't think anyone knows what to do except find a way to create confidence in the financial system and stimulate the flow of credit.

Pressured to Take More Risk, Fannie Hit a Tipping Point - Series - NYTimes.com

Pressured to Take More Risk, Fannie Hit a Tipping Point - Series - NYTimes.com

This piece makes it clear that pressure from Congress on Fannie Mae, by Congressman Barney Frank in particular (Why is Senator Chris Dodd not mentioned??), but others too, including both Clinton and Bush administration officials, in no small measure led to the sub-prime mortgage debacle.

There is much blame to go go around and many bad decisions now being identified that led to this mess. Nevertheless, the worst may not be over.

As many have said, this won't unwind until housing prices, particularly in the 'bubble' areas of the Sunbelt like Nevada, Florida, Arizona and California, fall to reasonable levels. Trillions of dollars in real estate 'bubble' value will be lost, but millions of people made lots of money in this mess, too.

Politicians like Dodd and Frank should be tossed out on their ears for fostering this debacle.

And, oh yes, why has Alan Greenspan and his cohorts who were sponsoring the easy credit climate a decade ago been spared criticism?

There are books to be written about this mess, but one theme that underlies all all of it is out-of-control federal spending. This leads to the 'OKness' of an American debt culture all fostered by the drive for economic growth which is the only way the debt, both private and government, can be serviced. In all likelihood, the perpetual growth cycle cannot be sustained. And as it turns seriously negative, our dire financial mess will be worse, I fear.

McCain's call for a government spending freeze is a move in the right direction. I fear Obama promises no real solutions.

October 2, 2008

Google CEO: How to fix U.S. energy problems | Green Tech - CNET News

Google CEO: How to fix U.S. energy problems | Green Tech - CNET News

Google's vision for energy independence in 22 years is only an ivory tower dream without additional nuclear capacity. Nuclear energy must be a larger component of Google's and Obama's plan. To omit additional nuclear capacity is foolish.

October 1, 2008

David Brooks on the Leadership Meltdown

Op-Ed Columnist - Revolt of the Nihilists - Op-Ed

David Brooks is as frustrated as the rest of us that we find ourselves in this painful fiscal crisis. The credit markets are not operating because the basics of credit and risk have been ignored by the financial titans. Now they have no confidence and no solutions outside of massive government intervention to right their balance sheets. Brooks is not right in all respects, but this nugget should be heeded by people who consider themselves leaders (Many in Washington's leadership positions are anything but.).

We’re living in an age when a vast excess of capital sloshes around the world fueling cycles of bubble and bust. When the capital floods into a sector or economy, it washes away sober business practices, and habits of discipline and self-denial. Then the money managers panic and it sloshes out, punishing the just and unjust alike.

What we need in this situation is authority. Not heavy-handed government regulation, but the steady and powerful hand of some public institutions that can guard against the corrupting influences of sloppy money and then prevent destructive contagions when the credit dries up.

The Congressional plan was nobody’s darling, but it was an effort to assert some authority. It was an effort to alter the psychology of the markets. People don’t trust the banks; the bankers don’t trust each other. It was an effort to address the crisis of authority in Washington. At least it might have stabilized the situation so fundamental reforms of the world’s financial architecture could be undertaken later.