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TheBurningPlatform.com » Economy » SOCIALISM DEFINED:

SOCIALISM DEFINED

"Below is a blurb from the recent weekly newsletter put out by David Galand at Casey Research. It explains very simply why all of Obama's plans will fail. It explains why our country is failing. It is so simple, yet extremely smart people refuse to see the facts."

"An economics professor said he had never failed a single student before but had, once, failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said, okay, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little... The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased, as bickering, blame, name calling all resulted in hard feelings, and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away, no one will try or want to succeed.

I don’t think it can be any simpler than that..."

Thanks to James Quinn for the post!

In Cyberweapons Race, Questions Linger Over U.S. Offensive Capability - Series - NYTimes.com

In Cyberweapons Race, Questions Linger Over U.S. Offensive Capability - Series - NYTimes.com

The prospects of cyberwar are chilling. But the U.S. seems to fully understand the threat even though we may not yet have settled on the policies to guide our actions.

In any event, we seem to be devoting the necessary resources to both the offensive and defensive measures to successfully engage any enemy.

This is a non-stop effort. I certainly hope the very best minds are targeted at this endeavor. But think of the awesome risk we create when we have key people who know extraordinary details of this necessarily top-secret work. How can we ever insure the loyalty of our cyber geniuses? The very best minds tend to be quirky at best and potentially vulnerable to the lures on the enemy. Will we isolate them as did the British who created a top secret, highly successful code-breaking cadre in WWII?

“The fortress model simply will not work for cyber,” said one senior military officer who has been deeply engaged in the debate for several years. “Someone will always get in.”

That thinking has led to a debate over whether lessons learned in the nuclear age — from the days of “mutually assured destruction” — apply to cyberwar.

"...But in cyberwar, it is hard to know where to strike back, or even who the attacker might be. Others have argued for borrowing a page from Mr. Bush’s pre-emption doctrine by going into foreign computers to destroy malicious software before it is unleashed into the world’s digital bloodstream. But that could amount to an act of war, and many argue it is a losing game, because the United States is more dependent on a constantly running Internet system than many of its potential adversaries, and therefore could suffer more damage in a counterattack.

In a report scheduled to be released Wednesday, the National Research Council will argue that although an offensive cybercapability is an important asset for the United States, the nation is lacking a clear strategy, and secrecy surrounding preparations has hindered national debate, according to several people familiar with the report.

The advent of Internet attacks — especially those suspected of being directed by nations, not hackers — has given rise to a new term inside the Pentagon and the National Security Agency: “hybrid warfare....”

It describes a conflict in which attacks through the Internet can be launched as a warning shot — or to pave the way for a traditional attack.

Swine Flu: Current Status and Worst Case Scenario -- Seeking Alpha

Swine Flu: Current Status and Worst Case Scenario -- Seeking Alpha:

Here's one of the best descriptions of what we know now about the "Mexican Swine Flu" written by a physician at Seeking Alpha.

"...sometimes totally new viruses emerge: new combinations of swine, avian, and human influenza viruses. When this occurs, as is the case now, no previous vaccine or previous infection will afford any protection from the new virus. The 'Swine Flu' virus now spreading around the globe is a unique and novel combination of swine, bird, and human viruses.

Unlike SARS, which was an avian virus with relatively low human to human transmission, this new virus appears to readily transmit between humans. Fortunately, except in Mexico, this new virus has, so far, produced a relatively mild case of the flu. There is only one report of a hospitalization in the U.S., but no serious illness. Also, no increase in ER visits has been noted, which the CDC and local health departments monitor closely.

Fortunately, researchers report that this new virus does respond to Relenza (GSK) and Tamiflu (RHHBY.PK and GILD), the two anti-viral compounds that are readily available and in mass production. That's the good news, so far. A new virus that has produced a mild case of the flu outside of Mexico, but, does transmit easily from person to person."

Apple Said to Be in Talks to Sell IPhone for Verizon - NYTimes.com

Apple Said to Be in Talks to Sell IPhone for Verizon - NYTimes.com:

It's only a matter of time until Verizon has an iPhone or a very close facsimile. It makes more sense to me that Verizon's discussions with Apple are for an iPhone to jump start Verizon's new LTE 4G network which will begin rolling out on the new UHF frequencies acquired in the FCC auction last year.

The LTE technology will also be used by AT&T in its new 4G network. Apple stands to win by allowing both Verizon and AT&T to sell an LTE iPhone.

In either event, iPhone on CDMA or LTE, I'll be a customer.

"...In a recently quarterly conference call with investors, Tim Cook, Apple’s chief operating officer, cast some doubt on the prospect of an imminent deal with Verizon. He said that Apple was wary of building a phone for a network using C.D.M.A. technology — which Verizon’s current network uses — because, Mr. Cook said, the C.D.M.A. infrastructure may have a short life span.

Verizon, however, is moving to a new network in 2010 that would not rely on C.D.M.A technology. Verizon has said previously that even as it deploys its new network, it plans to retain its C.D.M.A. network for a time to transmit voice communications.

The person who had been briefed on discussions between Verizon and Apple said that it was not out of the question that Apple could build an iPhone for the current network..."

Captain Phillips Welcome Picnic

I attended the celebration picnic today at Mills Riverside Park in Jericho, VT for the public welcome-home by the community. It was very well attended on a gorgeous April day.

The politicians, Congressman Welch, Chuck Ross, Senator Leahy's Vermont chief-of-staff, and Gov. Jim Douglas were thankfully brief and gave appropriate gifts including American flags flown over the nation's and state's capitols, resolutions by the U.S. Senate and House of Representatives and other appropriate items, including a six-pack of LaBatt's Blue!

The whole affair was well organized, low key and Vermont-appropriate, showing respect for Richard's and the family's privacy.

I am a friend of his mother-in-law Catherine Coggio, who lives in Richmond.

Here's the notice:

Picnic to Honor Captain Richard Phillips

This Saturday there will be a community picnic at Mills Riverside Park to Honor Captain Richard Phillips. This will be an afternoon to show our appreciation for Captain Phillips' selflessness and bravery and to give the Phillips' family an opportunity to thank all community members for our prayers and positive thoughts during their difficult ordeal.

When: Saturday, April 25th, 12:00 noon to 4:00 PM, Mills Riverside Park. Bring a picnic lunch and enjoy an afternoon of music and fun to honor Captain Phillips. A program will begin at 1:00pm with remarks from Representative Bill Frank, Congressman Peter Welch, Senator Bernie Sanders, Chuck Ross from Senator Leahy's office, Governor Jim Douglas and Richard & Andrea Phillips.

Live music will begin immediately after the remarks from Bobby Hackney's a cappela group, The Audio Journal with Jeff Wynne & Erik Urch and Tammy Fletcher and The Disciples.

This is a day for a community celebration. The Phillips family will not be giving interviews or answering questions from the press after the formal program. Gov. Douglas and Rep. Frank will field their requests.

Come celebrate and show Captain Phillips and his family how proud we are of him.

Op-Ed Contributor - Small-Town Big Spending - NYTimes.com

Tom Brokaw - Small-Town Big Spending - NYTimes.com

Brokaw recommends revamping the structure of legacy institutions such as towns, counties, colleges, etc., as the economy 'resets' (GE CEO Immelt's words) so as to improve efficiency and reduce costs.

I'm inclined to agree that fundamental changes, particularly in government, are needed. But immediately I'm brought up short by the reality that there is no way to absorb all the jobs that would disappear from these tax-supported employers if the change happened quickly.

On further reflection, we have built ourselves into a box with ever higher taxes to support ever more 'needs' and more government employees to manage the programs to meet those needs. Well-meaning politicians want to meet these 'needs' of the people which creates increasing dependency on government by these needy people. This dependency is then fostered and leveraged by 'advocates' to persuade politicians to increase, never to reduce, the programs. This translates into yet more spending and taxes.

Now comes the recession and the wailing increases. The wailers include both those that cannot afford to lose the services they have and from taxpayers (40% of people pay no income taxes and many receive tax credits) who are no longer willing to pay (or burden their grandchildren with) increasing taxes when they see their own private sector jobs at risk in a failing economy.

While Brokaw's idea has intellectual merit, the forces arrayed against such fundamental local and regional change are enormous because the people in these public sector jobs much prefer the less risky nature of their livelihood. Such changes can happen, but only incrementally over a generation or two.

So where do we go from here? The answer is clearly a far healthier economy with motivated people doing useful work that will gradually improve our condition. Meanwhile, plans should be afoot to reduce the size of government. If you believe that's on the near term horizon, there's a bridge in NYC you may want to buy.

In NY State Pension Inquiry, a Scandal Snowballs - NYTimes.com

The formula is simple enough and quite predictable:

Big Money + Greedy Public Officials + Ethics-challenged Money Managers = CORRUPTION

Is there no integrity left in the system? Can we trust no one on Wall Street or in Big Government to do the right thing? Is there any wonder that citizens do not trust the power structure?

Despite TeamObama's transparency doctrine, watch down the road 2-3 years for this same sort of corruption as the $ trillions flow out of government into the economy.

We saw it in Connecticut, California, Illinois, now New York. It's likely prevalent elsewhere, too. I trust Vermont's State Treasurer, Auditor of Accounts and Attorney General are watching Vermont's pension funds and their management, and VSAC, too.

In State Pension Inquiry, a Scandal Snowballs - NYTimes.com

Remembering America Online - Osnos

Osnos provides a concise history of the unfolding and folding of online and other technology titans. In the old days a DoJ monopoly lawsuit (ATT, IBM, MICROSOFT) was the leveler. Considering the outcomes and subsequent revamping, various M&A activity, etc., gave us better companies and far more innovation....all driven by technology's unrelenting pressure.

Today's print media and advertising industry is under similar siege, but not by government. "Do no evil" Google is the culprit du jour, painted gray, if not black, by newspapers and the news business for taking away their revenue. The last thing Eric Schmidt wants to wade through is an antitrust morass triggered by his growing dominance in search. No wonder he has played so nicely for a long time with now-President Obama.

Curious by omission, Amazon is a huge content distribution player and will become even more important. I'm surprised the newspapers have not attempted to get in bed with them for distribution (Kindle, billing systems, customer base, etc.) Amazon and the newspapers together could mount a credible challenge to Google for advertising dollars.

Of interest, way back when I was at NYNEX in the InfoLook days, a local newspaper publisher was frightened to death that the telephone company was about to eat his newspapers' lunch. We had many vibrant discussions. He was so worried about this camel's nose in the 'information services' tent that he became active with Vermont regulators to restrict the fledgling experimental pre-internet InfoLook online service.

Now, 15 years later, Google, originating in a Stanford dorm room from bright students then in their early teens in InfoLook days, has become one of the most powerful arbiters of internet content activity nearly 100% funded from the advertising revenue that so worried our local publisher.

It's all about the metadata!

Transformation of Medicine and Biotechnology

We are making that inexorable move toward medicine informed by biotechnology and enabled by a common (hopefully), sharable, individual, digital medical record. This is the so-called third revolution in biotechnology and medicine following the description of DNA by Watson and Crick 50 years ago and the identification of the human genome 10 years ago.

The Economist describes it all in this story ending with:

"The coming convergence of biology and engineering will be led by information technologies, which in medicine means the digitisation of medical records and the establishment of an intelligent network for sharing those records. That essential reform will enable many other big technological changes to be introduced.

Just as important, it can make that information available to the patients too, empowering them to play a bigger part in managing their own health affairs. This is controversial, and with good reason. Many doctors, and some patients, reckon they lack the knowledge to make informed decisions. But patients actually know a great deal about many diseases, especially chronic ones like diabetes and heart problems with which they often live for many years. The best way to deal with those is for individuals to take more responsibility for their own health and prevent problems before they require costly hospital visits. That means putting electronic health records directly into patients’ hands"

Op-Ed Columnist - In the Age of Pirates - NYTimes.com

Op-Ed Columnist - In the Age of Pirates - NYTimes.com

Thomas Friedman is quick to deliver opinions, but comes up short on solutions. In fact, the problems in Pakistan, Afghanistan, Iran and North Korea seem intractable. While not saying it outright, he is critical of TeamObama's foreign policy, which at this point is only a continuation of Bush foreign policy with a few overtures to problematic regimes like Iran and Cuba.

To be fair, there are no easy answers and the same GS career diplomats are working on these intractable problems. Thomas seems to be saying that military pressure may be a better solution...without quite recommending it.

Meanwhile Defense Secretary Gates says that the Somali piracy problem can only be solved 'on the ground.' He even hints, as others have at nation-building.

[WSJ 4/14/09: "Defense Secretary Robert Gates said Monday that despite the successful rescue of an American merchant captain Sunday, piracy off the coast of Somalia will flourish until a stable government is established in Mogadishu.

Mr. Gates said poverty and rampant criminality in Somalia make piracy an attractive option for local youths, and problems there are "probably going to get worse."

Robert Gates

"There is no purely military solution to it," Mr. Gates said in an address to the Marine Corps War College in Quantico, Va. "There's really no way in my view to control it unless you get something on land that begins to change the equation for these kids.""]

What? rebuild another nation? Not likely! It's obvious we (the world) have no viable answer.

The world is full of rogues and bastards in addition to the RITS (Radical Islamic Terrorists) and RATS (Radical Arab Terrorists). BTW, I note with great humor the foolish new terms of art adopted by TeamObama for the war on terror/terrorism [this from WAPO 4/4/09: "SECRETARY OF STATE Hillary Rodham Clinton recently confirmed that the Obama administration has dropped the phrase "global war on terror." She didn't say why. "I think that speaks for itself. Obviously," was her elaboration...].

TeamObama seems to think they can soften the hearts of the Muslim world by describing reality in different words. Nonsense!

Op-Ed Columnist - Dinosaur at the Gate - NYTimes.com

Op-Ed Columnist - Dinosaur at the Gate - NYTimes.com:

Maureen Dowd is an entertaining but seldom benevolent journalist, not one my favorites because her skewer is always sharp...not enough humility.

In this interview with Eric Schmidt, CEO of Google, about the future of print journalism, she opines:

"When I ask him if human editorial judgment still matters, he tries to reassure me: “We learned in working with newspapers that this balance between the newspaper writers and their editors is more subtle than we thought. It’s not reproducible by computers very easily.”

I feel better for a minute, until I realize that the only reason he knew that I wasn’t so easily replaceable is that Google had been looking into how to replace me."

The Media Equation - Newspapers Begin to Push Back on the Web - NYTimes.com

The Media Equation - Newspapers Begin to Push Back on the Web - NYTimes.com:

Translation of this final graph from a NY Times story yesterday: Under developing business models from news media, consumers will wind up paying for professional news content...at least until the pirates have their way or journalists themselves find a a way to make money as independent operators.

The BIG questions remaining: Is Google part of the problem and the solution? [Google CEO Eric Schmidt's edited speech is here] And what is Microsoft's contribution to a solution? How does a newspaper like the Times or the Journal gracefully cease printing?

"“For more than a century, advertisers have subsidized readers and viewers, and that is changing,” said Mr. Curley (the chief executive of The A.P.). “We are in the beginning of that change. To say that the Internet is fixed and we missed that opportunity is nonsense. We are in the beginning of a transition of what will be a proliferation of models, many of which will include getting more compensation from readers and users.”

Digital evangelists rightfully heap scorn on newspapers that leveraged monopolies into huge profits without investing for a day they knew would come, but newspapers have walked back the cat on the cost side as far as they can. Their gaze will inevitably turn toward consumers and the portals that serve them. The reckoning is at hand."

In Rescue of Captain, Navy Kills 3 Pirates - NYTimes.com

In Rescue of Captain, Navy Kills 3 Pirates - NYTimes.com

We in Vermont are very thankful for the safe rescue of Captain Phillips on Easter Sunday by America's finest.

This was made for TV reality ad exhibits the best of what we have learned in dealing with renegade terrorists, kidnappers and pirates. We'll never know all the details of the tightly coordinated efforts of the Navy, the work of the Navy Seals in particular, the FBI and other government agencies who pulled this off. But what we do know is that we can win tactically when the conditions are 'right.'

Strategically, dealing with the pirates presents a much bigger problem because they hold so many hostages and shippers are willing to pay to retrieve their crews, cargoes and ships. If the United Nations was worth its salt, it would mount a targeted strategic effort to focus the world's naval resources on the pirate entrepreneurs. Little hope for that from the feckless U.N. that consumed nearly as much time fussing over the language of a worthless 'condemnation of North Korea's missile launch.

Some of the TV talking heads mumbled yesterday about rebuilding the nation of Somalia in order to control the piracy. At best, wishful thinking, but in my view, utter nonsense!

I think convoys of ships escorted by armed naval forces offer the best near-term hope to thwart this scourge, at least for the few hundred miles of heavily traveled routes. Sinking a few of the pirate vessels on their way to a target would be a strong signal that their successful business model has some downside risk. If we can identify them as pirates, we can certainly track their ships via satellite and blowing a few out of the water may be a deterrent.

A WSJ editorial includes this thought:

"While praising the rescue, Mr. Obama added yesterday that "we must continue to work with our partners to prevent future attacks, be prepared to interdict acts of piracy and ensure that those who commit acts of piracy are held accountable for their crimes." But since the Navy can't stop every hijacking, some kind of military action against pirates on land may be needed. The Somali gangs operate openly in the port city of Eyl and claim "shares" in ships held for ransom. The willingness of the Saudis and Europeans to pay ransom is one reason the pirates have become so brazen.

Somali pirates are turning the high seas into a state of anarchy not seen in a century or more. They'll continue to terrorize innocents until what we call the "civilized world" demonstrates that they will suffer the same fate as the pirates who made the mistake of kidnapping Captain Phillips."

Meanwhile, creative minds, I'm certain, are working on a plan to target the shore-based pirate operations.

What Will Fill Our Economic Desert? -- (Seeking Alpha link below)

A great deal of common sense gloom is prevalent. Steve Hansen strikes me as a shrewd observer of fiscal and economic reality. He has little faith that we are seeing glimmers of a recovery. Of course we all want to see a build back of vibrancy, but, as Hansen points out, our crushing debt and continuing rise in unemployment are heavy anchors to a turnaround.

"Year to date US Government income (mostly from taxes) is off 14% year-over-year, while expenditures have increased 33%. Revenues are half of expenditures. They have spent about 1/3 of the bailout money, and essentially none of the stimulus (pork) yet. The budget busting shortfall is a hair short of a trillion dollars – or 7% percent of GDP in just the last six months alone.

All is not well. There are no fundamentals which support a strong economic recovery.

The servicing of debt and employment are the primary impediment to a normal recovery. There is only so much investor money lying around. It is not unlimited, and the government only can fill this gap in certain specific circumstances. I see no mechanism to build new jobs yet.

This is not a post WWII young vibrant nation which was one-half of the world’s economy. This is a more mature nation - now only 20% of the world’s economy and continuing to slide.

Instead of trying to redirect our PRODUCTIVE economic base, our leaders want to help the bankers and tell us stories of rainbows and wildflowers. Americans have been lied to so long by their government that any negative news from the government causes an over-reaction because things must be really bad.

Banks are not the economy. And neither is terraforming unless it creates jobs."

What Will Fill Our Economic Desert? -- Seeking Alpha

PR 2.0: Can the Statusphere Save Journalism?

A worthwhile read from Brian Solis, a fellow soaked in social networking who comments on the future of journalism. Without a doubt he is right about how a consumer connects to relevant journalists and the coterie they build via various social networks. He accurately describes the Darwinian demise of traditional journalism as well along its devolutionary timeline.

As a relative old-timer, I am not ignorant of the online world, I believe his thesis has some merit. What's missing from his treatise is the notion of high standards. His argument is that quality journalism will be recognized by the number of followers the individual cultivates and accumulates in the social graph. I don't wholly buy that because self-promotion, which he recommends and is quite good at himself, is wholly different than solid journalism, e.g., investigative reporting over a long period of time.

He skips over the discussion of monetizing this upheaval, leaving it to the media moguls and publishers to figure out how to tap the 'groundswell. But he basically says that publishers need to embrace their best journalists rather than the other way around.

What eludes publishers is the very thing that can save them, the new model for not only surviving the evolution, but also thriving in the future ecosystem of publishing and connecting content with audiences—where they congregate online. The new media economy will embrace a shift in content creation and revenue generation from a top-down model to a bottom-up groundswell.
The socialization of the web is powered by not only the ability for citizens to publish and share content, but also the wherewithal and associated rewards for connecting with the real people and the personalities with whom we follow. This is paramount as publishers and journalists can learn from the ongoing documentation in the art and science of online community building.

Many more thoughts, but little time.

PR 2.0: Can the Statusphere Save Journalism?

TheBurningPlatform.com » Economy » WASTING A GOOD CRISIS: RESULT - $200 OIL

This is a long story by James Quinn, a prolific blogger and writer. But READ IT! If you do and you believe the facts and scenarios that Quinn portrays, then we're headed to $200/bbl oil in very short order, within five years at most. That means $5.00-$6.00/gal. gasoline and heating oil very soon, even without any additional tax levies. The scenarios he lays out are the most plausible I've read.

I don't think Quinn claims any particular energy expertise, but has researched the available facts and drawn his own conclusions. We can all do the same.

Alternative energy wishful thinking will not stop this. In fact, alternative energy proponents are hoping for this as the impetus for a massive change in our energy mix. Fear not, it will happen because of rapid growth and modernization in developing countries with expanding populations.

But a shift to alternatives will require YEARS, perhaps a decade or two. Smart policies would include nuclear production of electricity, but 'TeamObama' seldom utters the word, except in a pejorative sense.

As oil supply is unable to meet worldwide demand, Quinn raises the specter of broad world war for oil and gas as a possible result. A friend, without tongue in cheek, has advised me to check my supply of guns and ammo.

 

TheBurningPlatform.com » Economy » WASTING A GOOD CRISIS: RESULT - $200 OIL

Standoff With Pirates Shows U.S. Power Has Limits - NYTimes.com

Captain Phillips' wife is the daughter of a friend who's a long-time member of the Vermont Italian Cultural Association.

Standoff With Pirates Shows U.S. Power Has Limits - NYTimes.com

A Placid Man on Land, Caught in a Drama at Sea - NY Times

Jumping overboard was a 'not-so-placid' act!

New Journalism's Content Cascade

Interesting ruminations about a journalism model focused around the notion of a 'content cascade.' At its heart are wiki-like active repositories which is the vibrant heart of content.

I have long believed that wikis are an extraordinarily powerful tool very much underutilized. But I have been disillusioned and frustrated by the reality that so many people still believe the Internet is email and therefore fail to embrace many of the advantages of the other powerful tools. The 'social networking' phenomena may change that. Perhaps it's mostly a generational thing and the twenty and thirty-somethings will easily embrace the content cascade.

In a journalism/news organization, this makes a great deal of sense. Out of frustration a couple of months ago I recommended the idea (online, of course) to the executive editor of our local daily newspaper. Background information on a topic could be continually built into a wiki and the online consumer of 'a story' or opinion piece could follow links to relevant supporting facts and background. Local examples: wind power in Vermont; Vermont Yankee nuclear plant license renewal; Vermont agriculture, et al. The story of the day could then focus on today's news and the background stuff could be linked.

This is no panacea for the troubled newspaper business, but seems worthy of serious consideration.

Monetization of the online distribution of content, certainly is THE issue and this fellow at Harvard skips gingerly over that.

"Obviously, the thorny and perennial question of “monetization” is absent from this discussion. But the advantage of the content cascade is its efficiency and its multiplying effect on page views: reporters don’t labor over 20-inch yarns when a 10-word blog update will do; content from all over the web can create page views on a local site; readers contribute content; each drop in the stream (OK, there’s a basic unit for you) can be repurposed almost indefinitely into new content niches. The resulting vibrancy of the news site draws maximum traffic; let the marketers monetize the value of that."

Information may 'want to be free,' but the people creating it for a living must somehow be paid.

GM, Segway to Make Vehicle - WSJ.com

GM, Segway to Make Vehicle - WSJ.com

Have a look at the photo in this story. Raise your hand if you live where it snows and tell me if you'd buy one, even if it came with studded tires?

PUMA obviously is a sunny weather city vehicle. They'd be great in Italy's narrow city streets, but will they make a two-seater? A model for use by people with disabilities might make sense.

It's All About Power....and Money

A friend called me earlier in the week to go to the newsstand to buy a copy of Rolling Stone with this story by Matt Taibbi (Posted Mar 19, 2009 12:49 PM). In it he focuses on AIG, the bad boy of the hour, but takes the whole system to task. Read the sidebar to the story about "The Dirty Dozen."

It's a long and strong mix of investigative reporting and rant. He's a writer that will certainly boil your juices. Taibbi powerfully makes the case... so emotionally easy to accept... that modern Wall Street 'robber barons' have manipulated the political and regulatory system to their own advantage and in their lust for power and riches have brought down the world's economy. He suggests that some are now the foxes in the hen house of government and the Fed secretly shuffling trillions of dollars back to the banks controlled by their former cohorts and proteges.He believes they are doing this as part of a massive political power grab.

Taibbi [in this 8 minute video clip] even makes Collateralized Debt Obligations and Credit Default Swaps (and the regulatory system that bankers manipulated to enable them) understandable to mere mortals!

He gives some credit to Ted Stevens, now disgraced former Alaska Senator, for attempting to expose some of the troubles while he was in Congress. Conspiracy theorists will wonder if the dismissal of the Government's charges against him a few days ago is somehow connected to this mess?

Read the piece for yourself. Taibbi make it emotionally easy to buy into his rant. But is he right?

The saga begins in 1998 and plays out in 10 years when the house of cards comes tumbling down paralyzing the financial system.

Here are the closing paragraphs:

"As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"

But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

Good luck with that, America. And enjoy tax season."

Montpelier's High Drama

My "Voices of Vermont" column was published in The Colchester Sun on Thursday, April 2, 2009

Following the town meeting break, we have been watching Montpelier's high political drama surrounding the gay marriage debate and the tussle over cutting spending and/or raising taxes to cope with the recession.

Numerous proclamations by the Legislature and the Governor demonstrate that the break served to rejuvenate the actors on Vermont's political stage. If you like political theater, these are the weeks to have a front row seat.

Here's a quick list of the big issues that are stirring Vermont's political juices and my views about them.

• “An Act to Protect Religious Freedom and Promote Equality in Civil Marriage.” aka, the gay marriage bill.

The Senate passed the bill after hundreds turned out to attend committee hearings. The Governor announced his intention to veto the bill, for which he was simultaneously roundly applauded and criticized. Will the General Assembly sustain his veto? Withdraw the bill? I hope so.

Before the town meeting recess, Legislative leaders announced their intent to increase taxes by $24 Million in addition to significant budget cuts and use of federal stimulus money to create a balanced FY2010 budget.

Several business people, including me, testified at the House Ways and Means Committee opposing new taxes. We believe the state has a structural over-spending problem and cuts must be made. The 'revenue problem' is only the result of the recession exposing that past excessive spending. State government must become smaller and more efficient with fewer people. That action is long overdue and we are seeing slight movement in that direction.

• Senate Appropriations Committee Chair Susan Bartlett, posturing for the Legislative leaders' $24 Million tax increase, testified before the House Appropriations Committee with a list of possible budget cuts obviously crafted to induce fear and trembling among the affected constituencies.

This is political posturing of the worst sort. Pandering to people's fears is wrong. The Legislature must be willing to make the tough spending reductions necessary to position Vermont for a least the hope of an economic recovery and more private sector jobs. Some legislators simply choose to ignore the reality that State spending has outstripped its tax base.

Meanwhile, the State employee unions rejected the Governor's proposal that five percent salary and wage cuts could substitute for layoffs.

That showdown will play out and one wonders if the Legislature will side with the unions perhaps inappropriately interfering in the collective bargaining process. No one wants to see jobs lost in a recession, but the Legislature cannot in good conscience continue to spend for a bloated State government.

• Immediately following his decision to veto the gay marriage bill, the Governor with great fanfare proclaimed his focus on the economy and that he proposed using $17 Million in federal stimulus money "to leverage nearly $160 million in direct support to new and existing employers..."

We encourage any realistic proposal to help Vermont exit this economy with some hope of stimulating private sector job growth without adding to the ongoing costs of the public sector.

• Not to be outdone, the Appropriations Committee proposed its own economic help package that would apply $38 Million of federal Fiscal Stabilization stimulus money in both FY2010 and FY2011.

There's plenty of room for a meeting of the Legislative and Administrative minds if they are committed to the common objective of far less public sector spending and a far more robust private sector economy.

Frankly, the rancorous partisanship is frustrating and unwarranted in this recession. The economic issues are too important for political gamesmanship.

Enough drama! The Legislature and the Governor need to get down to business and stop posturing for the 2010 elections.

David Brooks on Greed and Stupidity - NYTimes.com

David Brooks summarizes the two dominant views of what caused the financial meltdown. Read his full analysis to understand these two schools of thought.

I don't think its as simple as Brooks describes. There are many sub-themes playing in this tragic opera. Greed may not only be about money. Power and the desire of bankers, lawyers, and Congressional and Executive branch people to 'hold sway' and be 'in charge' is also at work. Remember, these are people with massive egos that need stroking.

The greed and stupidity jingles also played at the bottom of the scale with stupid home buyers unable to afford the ridiculous mortgage terms offered by unscrupulous brokers that played on this stupidity.

For years our culture has been infused with the background hum that borrowing is better than saving and many have bought into the credit culture. Now they struggle with crushing debt. Some argue that the savings mentality that has come into vogue in this recession will lengthen it. Consumer spending is what's needed. Humbug! What's needed is personal responsibility and accountability for one's actions. Savings is one action that instills that trait. We need it for the long-haul health of our society and culture

This debacle is much more than a two-note song. I am convinced that Government has a very important role to play to prevent the country and the world from collapsing into a Depression. Nevertheless, we need to exert great caution to avoid undermining the market system on which representative democracy rests. We must be extra careful that we do not manipulate our flawed system of commerce into one that is worse.

"The greed narrative leads to the conclusion that government should aggressively restructure the financial sector. The stupidity narrative is suspicious of that sort of radicalism. We’d just be trading the hubris of Wall Street for the hubris of Washington. The stupidity narrative suggests we should preserve the essential market structures, but make them more transparent, straightforward and comprehensible. Instead of rushing off to nationalize the banks, we should nurture and recapitalize what’s left of functioning markets.

Both schools agree on one thing, however. Both believe that banks are too big. Both narratives suggest we should return to the day when banks were focused institutions — when savings banks, insurance companies, brokerages and investment banks lived separate lives."

Op-Ed Columnist - Greed and Stupidity - NYTimes.com

Verizon promises 4G wireless for rural America | CTIA show - CNET Reviews

This is the only strategy - wireless - that makes economic sense to provide broadband to sparsely populated rural areas. Vermont has the goal to have broadband coverage to "100%" of the state by the end of 2010, but it will be 3G, most likely, not 4G.

The lower (700 MHz) frequencies made available by TV moving from analog to digital are the only sensible way to reach the "last mile." Fiber to the home is far too expensive in rural areas for the reasosn stated in this story.

Verizon promises 4G wireless for rural America | CTIA show - CNET Reviews