Wait!

Leadership!

Sen. Obama, against Sen. McCain:

Senator McCain offered up the oldest Washington stunt in the book: you pass the buck to a commission to study the problem. But here's the thing: this isn't 9-11. We know how we got into this mess. What we need now is leadership that gets us out.

The majority leader of Obama's Senate party, explaining their absence:

The Democratic-controlled Congress, acknowledging that it isn’t equipped to lead the way to a solution for the financial crisis and can’t agree on a path to follow, is likely to just get out of the way.

Lawmakers say they are unlikely to take action before, or to delay, their planned adjournments — Sept. 26 for the House of Representatives, a week later for the Senate. While they haven’t ruled out returning after the Nov. 4 elections, they would rather wait until next year unless Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke, who are leading efforts to contain the crisis, call for help.

One reason, Senate Majority Leader Harry Reid said yesterday, is that “no one knows what to do” at the moment.

You guys are going to make me cry. With laughter.

Everybody's using this clip. I think I have seen about a half dozen parodies of this thing.



(via Instapundit)

Health Care Crisis

Is the Health Care Crisis a Fiction?

Cassandra has a post up that shows a marked equality of spending on health care across the American spectrum, from poorest to richest. The sources claim that if you look at all spending from all private and government sources, the difference between the poorest fifth (per capita) and the richest is about twenty bucks -- in favor of the poor.

Certainly there are some serious problems with the system from the provider's perspective -- ask Doc Russia sometime! Yet advanced care is more available here, and we don't have to fund a huge government bureaucracy. Neither do we have to give up control of our lives to the government as we would if they were paying the bills ("No drinking! You may not eat meat! No smoking! Keep costs down!").

Drift over and see what she has to say.

Economics

Dear Mr. Obama, II:

I don't know if this guy is a vet like in the original, but the fellow's got the concept down.



H/t: Miss Ladybug.

I made what was essentially this point in my first BlackFive piece, "Red State, Blue Collar." I included a link to that in my recent "Cowboys and Liberals" piece at Winds of Change, and got this insightful comment:

The barter arrangement you described in your Blackfive post also has one issue that nobody discussed, but that any bureaucrat would spot in their sleep: there's a bunch of imputed taxes and regulations being avoided and bypassed by such arrangements.

In a fully taxed and regulated world, the work you did for your landlord as imputed rent payment would have to be declared as self-employment income, subject to 15.7% self-employment tax as well as ordinary income tax. There may also be sales taxes involved, as well as numerous worksite regulations and insurance issues and even possible "without-a-license" violations, depending on the type of work you did.

He goes on from there to indicate how common such 'off books' arrangements are. The point is well taken, though: taxes are already strangling the economy. Regulations are already strangling initiative. Setting out to start up a business is an act of tremendous risk, but now it is also probably a felony -- that is, the regulations with prison time as a remedy have expanded so fast, you are likely committing a serious crime without knowing it.

Indeed, even if you hire a lawyer to advise you and do your best not to commit a crime, you may well be committing one. Even the lawyers can't keep up with all the new regulations and laws. The famous legal saying is, "Ignorance of the law is no excuse," but that depends on the law being something a reasonable person can expect to know. We've passed that point, and entered territory where the law changes so quickly and at such depth that good faith efforts are not enough to ensure that you don't violate some regulation.

That seems to me to be a very serious problem. It is surely one that acts as a brake on economic growth, both by increasing the setup costs for a business (those good-faith legal efforts) and by looping up at least some of these businesses in court. (Criminal court!)

Several of you have pointed to the entitlements collapse as a more serious economic problem than anything else. I agree, but the government doesn't. Last year, we talked about how very serious it might be, and the government's attitude:

The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.

...

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don't show up when the government reports its financial condition.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.

Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities.

So why don't we change to the corporate-style accounting method?

The White House and the Congressional Budget Office oppose the change, arguing that the programs are not true liabilities because government can cancel or cut them.

Right.

They're already telling you that they have no intention of making these payments. They are "not true liabilities." The government can "cancel or cut them."

Economics 101? The whole government needs that lesson.

UPDATE:

Obama has received almost $400,000 from Lehman employees in his three-plus years in the Senate. McCain has gotten less than $150,000 from them since 1989. Certainly both have benefited from Lehman’s largess, and simply taking donations doesn’t prove any kind of corruption. But a hundred k a year certainly cuts into Obama’s message of “change.” “Hope,” too.

In fact, of the nearly three million dollars Lehman employees and PAC distributed in the last 19 years, just two senators — Obama and Clinton — received more than a quarter of the total, split nearly evenly. McCain got about five percent.

Grim's Buffalo Chili

[UPDATE from 2023: This is an early chili made in the manner that my father preferred. He was from Tennessee, somewhere between the Texas Red chili tradition and the midwestern 'Cincinatti' chili traditions. Appalachia is also poor country, so this version has a lot of beans which are cheaper protein than meat; Texas chili doesn't use beans because beef was plentiful there. My later chili recipes use fewer or no beans, and not canned ingredients as a rule. -Grim]

Cassidy, often inspitorial in her posts, has a piece on comfort food. This convinces me to share my recipe for chili. You may want to serve this with tamales or Southern style cornbread; or just by itself. It does go well with beer. Start with a double-fistful of fresh-chopped jalapenos (or hotter, if you prefer). Do not core and seed them first: include the whole pepper except the stem. In a hot dutch oven or black-iron pan of at least several quarts' size, sautee these in beer (preferably Murphy's Irish Stout; Guinness will also do; failing that, any beer). Use no more than half a pint of the beer, reserving the rest for the cook. Once it is simmering, add one pound ground buffalo. Lean ground beef can be substituted. Once this is browned, and you have cut it apart into small chunks while stirring it, add enough chili powder* to make the whole thing a threatening color, much darker than the chili you want to eat (as you expect to add more ingredients, which will lighten it). Add three freshly chopped tomatoes (or one can of minced tomatoes, or one can of tomato sauce) once the peppers begin to soften. At the same time, add one chopped medium red onion, as much chopped cilantro as you expect to want, and simmer more. Add as much minced garlic as you expect to want. At last, add two normal-sized cans each light red kidney beans and Bush's best chili beans; or one large can each. Salt to taste, but you may not need much b/c of the canned beans. If you taste it and it doesn't have enough chili powder, add more; you can also add dried, ground ancho or chipotle peper at this stage if you desire. Allow to cook through. It'll be better tomorrow, but good enough tonight. Finish with shredded cheddar, diced onions, and jalapenos. Serve with cornbread, over tamales, or straight up. Serve with habenero pepper sauce, since this is a toned-down version of the chili suitable for the whole family. If your wife whines about her mouth being on fire "after just the first bite!", you've done it correctly. Her response should look something like this: When you get there, you're done. Add the pepper sauce to your own, and eat with good cheer.

* Update from 2024: In later years I learned that chili powder is entirely inferior to using whole dried chiles. I learned chili from Dad, who was from Tennessee although we had family in Texas. I was greatly surprised to learn how much difference it makes to use whole dried chilies that you roast in black iron until shiny, boil until soft, and then puree with the other spices and herbs, tomatoes and a little fresh water (not the water the chiles were boiled in, which can make things bitter). Try it that way instead, and it's at least twice the chili that the chili powder version is.

Op Rabbit

Operation Rabbit:

Sarah Palin v. the Coyote, via Iowahawk.

Good afternoon, madam. Allow me to introduce myself: my name is Wile E. Reporter, investigative correspondent for an international network news gathering organization. No doubt you may have seen my award-winning coverage, assuming your igloo is equipped with a satellite dish. No, I am not selling anything nor am I working my way through college, so let's get down to cases.

You are a Republican candidate, and I am going to eat you alive. Now don't try to get away! I am more educated, more cunning, faster, and larger than you are... and I'm a genius. In fact, I have not one, but two diplomas from the Acme Correspondence School of Journalism. And you? Why, you could hardly pass the entrance examinations to kindergarten, let alone the vice presidency of a major western democracy....

If this leaves you nostalgic, here's what you're looking for:

Fundamentals

Fundamentals:

Are the "fundamentals of our economy sound"? That's the question of the day, and it's a fairly interesting one. It starts with this question: just what are the fundamentals of the economy?

If you come up with the banking system, the housing sector, and the strength or weakness of the dollar, then the fundamentals are not looking very good. I think a lot of people look at those as being what "economics" are all about, and from that perspective, the economy looks shaky.

Yet if you look at the infrastructure of the country, the availability of capital for new ventures (even during a financial crisis!), the education of the population, and the availability of raw materials, the fundamentals are not just sound. They are rock solid.

To some degree this is the difference between a short and long term approach. Are you asking, "Is it possible that we will have a quarter or three of negative growth?" Or are you asking, "Is the economy going to survive and grow in the long term?"

What we have going on right now is the destruction of a massive amount of fairy gold. This happens from time to time: the banking sector builds up a vast store of imaginary wealth, and then it goes away. This has repercussions throughout the real economy, and people's real lives, but those arise mostly within the human mind: we believe that some massive amount of wealth has been created and destroyed, and so we act as if it has, and so the economy contracts.

In fact, the money never really existed at all. This is like housing bubble: is your house worth a million dollars? It is if someone will pay you that for it: that is, it is because they believe it is. But is it really? How much labor went into it? What did the materials cost? What is the land worth, in terms of expected revenue from where you are located v. the place where you want to do business?

There is a thinker in statistics for whom I have a great deal of sympathy, because he and I both tilt at windmills. His is financial markets, and mine is psychology, and the two sectors make up the great bedrock of modern American and European life. Both sectors are all about speculation, and he and I keep trying to make the same point: the methodology that underlies the whole field is worthless.

His name is Nassim Nicholas Taleb, and I've mentioned him several times before. This is a good occasion, though, to focus on what he's trying to tell you about the limits of human knowledge and understanding.

I start with my old crusade against "quants" (people like me who do mathematical work in finance), economists, and bank risk managers, my prime perpetrators of iatrogenic risks (the healer killing the patient). Why iatrogenic risks? Because, not only have economists been unable to prove that their models work, but no one managed to prove that the use of a model that does not work is neutral, that it does not increase blind risk taking, hence the accumulation of hidden risks.

Figure 1 My classical metaphor: A Turkey is fed for a 1000 days—every days confirms to its statistical department that the human race cares about its welfare "with increased statistical significance". On the 1001st day, the turkey has a surprise.

Figure 2 The graph above shows the fate of close to 1000 financial institutions (includes busts such as FNMA, Bear Stearns, Northern Rock, Lehman Brothers, etc.). The banking system (betting AGAINST rare events) just lost > 1 Trillion dollars (so far) on a single error, more than was ever earned in the history of banking. Yet bankers kept their previous bonuses and it looks like citizens have to foot the bills. And one Professor Ben Bernanke pronounced right before the blowup that we live in an era of stability and "great moderation" (he is now piloting a plane and we all are passengers on it).

Readers will recognize this form of argument, because it's just the one I field against psychology: the models cannot be proven and they cannot be disproven. They are not therefore neutral, though, because they leave people with the belief that they may be able to know (and control!) things that they really can have no certain knowledge of, and no control over. You can't even know if the model is correct.

Now you would think that people would buy my arguments about lack of knowledge and accept unpredictability. But many kept asking me "now that you say that our measures are wrong, do you have anything better?"

I used to give the same mathematical finance lectures for both graduate students and practitioners before giving up on academic students and grade-seekers. Students cannot understand the value of "this is what we don't know"—they think it is not information, that they are learning nothing. Practitioners on the other hand value it immensely. Likewise with statisticians: I never had a disagreement with statisticians (who build the field)—only with users of statistical methods.

Spyros Makridakis and I are editors of a special issue of a decision science journal, The International Journal of Forecasting. The issue is about "What to do in an environment of low predictability". We received tons of papers, but guess what? Very few addressed the point: they mostly focused on showing us that they predict better (on paper). This convinced me to engage in my new project: "how to live in a world we don't understand".

That is a noble project, and he has much to say about it. I suppose, in a very real sense, it is also the subject of much of my own work in philosophy rather than statistics.

Are the fundamentals of the economy sound? How would you know? What are they, really? And who are the experts you can trust to help you learn, the ones who really know? The same ones who just ran it up on the rocks?

Toast to Petraeus

Ladies and Gentlemen, Generals David Petraeus and Ray Odierno:

The TOA of MNF-I has occurred, with General Odierno taking command. As a Lieutenant General, GEN Odierno commanded III Corps. III Corps served as MNC-I until last winter, when they returned home and XVIII Airborne Corps took over MNC-I's responsibilities. Now GEN Odierno is back to command MNF-I as a whole, and GEN Petraeus is going to become the combatant commander of US Central Command.

The headline of this article tells an important story, though: GEN Petraeus' tour as head of MNF-I was twenty months. The Surge units of the Army did fifteen months each, a grueling stint away from home and family. GEN Petraeus did what an officer is supposed to do: he asked nothing of them he did not do himself, and in fact did more.

His command of MNF-I will be remembered in history books as the time when we got the focus right, and began to reverse the chaos that had been rising in Iraq until his tenure. He leaves Iraq in a far better state than he found it.

At the appropriate hour, whenever that is for you, I suggest a toast to the gentlemen. In fact, I suggest three: one to their health, one in honor of their last assignment, and a last to hope for success in their next.

Fine

Historical Accuracy, Eh?

Since we're getting complaints about the historical accuracy of the Old Guard's band, try the 7th Cavalry Drum and Bugle Corps on for size (sample viewer comment: 'Is the drum major sober?').



The 'Indian maidens' remind me of something...

Tax Cuts

Tax Cuts:

Looks like FOX News called out a McCain supporter for claiming Obama would raise taxes on the middle class. In fact, he has campaigned for cutting taxes on the middle class. He said:

I want to make it very clear that this middle-class tax cut, in my view, is central to any attempt we're going to make to have a short-term economic strategy and a long-term fairness strategy, which is part of getting this country going again.

Oh, wait, no. That was Bill Clinton who said that, before he was elected and enacted massive tax increases on the middle class (and everyone else).

Look, we go through this every time. Kerry said he was going to cut taxes on the middle class. Gore said he was going to cut taxes on the middle class. Bill Clinton said he was going to cut taxes on the middle class in 1992, and this year Hillary Clinton and Obama have said it too.

The other thing all of these candidates have done is propose massive new spending, as for example on universal health insurance plans. When that gets crossways with the 'middle-class tax cut', which one do you think is going to give?

Me, too.

This puts us in a difficult position. On the one hand, you want to be fair to people -- even politicians -- and take them at their word when you can. On the other hand, I believe that there is close to 100% certainty that, if elected, President Obama would push through tax increases on the middle class and the rich, just as Clinton did.

Of course, Obama could be the one guy who means it, and he could be the one guy who -- when his pet programs turn out to cost too much -- chooses to cut taxes and forgo his desired reforms instead. My belief on the point aside, there's really no way to know for sure until and unless he does one or the other.

Still, surely it's fair to point out that the track record is not so good, the expected new spending is going to require more taxes, and I think they care much more about the new programs than they care about tax cuts.

When the McCain campaign says, "Barack Obama will raise middle class taxes," I think they're speaking the truth as a matter of fact -- I absolutely believe that he will, if elected. Yet it is necessary to make some nod to his claim to the contrary, since (unlike President Clinton) he hasn't proven himself false on the point. Not doing so is not playing fair, even if they believe -- as I do -- that they're right.

Justifying the Sacrifice

Justifying the Sacrifice:

In the film Little Big Man, there is a scene where the Seventh Cavalry destroys a peaceful indian village to the sound of the Garryowen. The music is beautiful, and the carnage horrible. The movie uses the disparity to lay a charge of hypocrisy at the feet of the US military, both historic and -- as this was a Vietnam-era movie -- contemporary.

The charge is that the beauty is a false overlay on something wicked. The truth, I think, is precisely the opposite: that the beauty is real, and the thing that has to be defended. It is not to make you feel better about the cruel reality of war; it is to remind you of why you thought to fight at all.



The Old Guard here captures the objective beauty missing in so much of our modern culture. It reminds us of the achievement of the West, and why we might fight for her.

The world is as we inherited it, both the good parts and the bad. We can neither claim credit for the good that came before us, nor can we suffer blame for the awful truths about the basic nature of our world. It is not our fault that life must feed on other life: we did not make the rules.

What we can do is recognize the beautiful, and defend it.

Et qui non habet, vendat tunicam suam et emat gladium:

Luke 22:36, as lived today.

A man who threatened to behead two women because they were Christians was attacked in self-defense early Saturday and injured so severely, police say, that his eye was to be removed.

Russell Bowman, who called himself an atheist, showed up with a large knife at the women's apartment in the 700 block of Tia Juana Street about 3:15 a.m., police said.

Another resident grabbed a shotgun and ordered him to put the knife down. When Bowman refused and began approaching, the person hit him with the butt end of the weapon, police said.

Indonesia? Colorado.

offsite

Cowboys & Liberals:

I wrote a post at Winds of Change on the subject.

What could it be?

Oh, Worry, What Could It Be?

Like all right-thinking people, I love the Fail Blog.



These folks would be proud.