Thursday, April 30, 2009

Challenge Accepted

During "100 Days" PR blitz of his presidency, President Obama issued a challenge to free-marketeers of the world to provide alternatives to big government health care.

I find the challenge a bit disingenuous as I suspect anything said by Libertarians will be summarily dismissed. However, it is an issue of concern to me. Although the classical liberal foundations of the United States have been rejected by our intellectual and political class, I think it is a fun topic to discuss.

So I will take on the challenge.

Mr. Obama specifically asked people to talk about ways that the free market could cut the cost of health care.

I find that question to be loaded. The question approaches the issue of health care in the negative. While there is merit to examining negative space, approaching the issue from the negative will not provide a positive result.

The negative debate starts with the premise that the amount of health care is a fixed quantity. The negative question asks: What is the best way to ration this fixed resource?

A real debate on health care needs to cast aside any artificial frames created by the political class seeking to manipulate the debate. A real debate should begin with questions about the nature of health care and the role that it plays in the lives of individuals and our community.

Realizing that any and all arguments made by Libertarians will be automatically dismissed by the current regime, I will ignore the framed question and simply write about articles on the role of medicine in our lives and society, and put forward the argument that the free market provides the best mechanism for people to pursue the goal of living healthy lives in a vibrant and diverse community.

I hope that others who see value in the classical liberal tradition that formed the United States take up the challenge as well and discuss in an affirmative manner the reasons why The United States has produced so many improvements in health care through the years.

Here is the YouTube in which Obama threw down the gauntlet:

Wednesday, April 29, 2009

Grading the President

The hundred day mark has hit, and I guess that we are all supposed to grade President Obama.

In any system of grading, the first concern is how the grade will affect the self-esteem of the person being graded.

Obamas seems to have an almost unquenchable desire to be liked. So, I am really worried that any negative words could be a self-esteem shattering event.

So, after a great deal of research into grading mechanisms, I've decided that my best option is to give the president a grade of "present."

This grade is not intended in any way to degrade those people who play. My nonjudgmental grading scale only has the option "present."

It is a bit like the nonjudgmental grading scale used for Bush which has only one grade "failed."

I admit, I was put off by Obama's world apology tour. You know … the thing where Barack Obama went to the capitals around the world and apologized for the arrogance of the "failed" Bush Administration.

As you see, it really is not possible to apologize for one's political opponent. Apologizing for the supposed arrogance of one's partisan is itself an act of arrogance.

Anyway, on the scale of "present" to "present," I give Obama the grade of "present." I wish the president the best in self-esteem and hope that he is never given a choice between doing what is right for the world and being liked.

Swine Flu and Swine

Apparently the net is ablaze with reports about Egypt's order to slaughter pigs in the face of swine flu. Many focus on the fact that only minorities such the ancient Coptic Christians own pigs.

Daily News Egypt provides a more sympathetic report claiming the effort is aimed at removing pigs from populated areas.

I find it interesting that the Judeo-Islamic tradition seemed to have figured out the swine are a common breeding ground for disease. On the modern front, I can't help but notice that first world nations have thrown a great deal of effort into separating humans from livestock.

Interestingly, the slow food movement has lead to a drive to bring livestock back into the city. There's a growing number of efforts like Fort Collins Urban Hens seeking to bring chickens into the city (so that people will be closer to their food source).

Hens, of course, are breeding grounds for bird flu.

Swine are wonderful little mulchers. I could imagine our creating a system where restaurants feed waste to swine ... processing the effluence of our modern lifestyle. Other than their being a breeding ground for disease, swine would do well in the city.

Perhaps one of the reasons that Mexico is faring worse in this stage of the swine flu is the proximity of people and livestock.

END NOTE, I put an ad for the Germ Guardian on this post. The germ guardian uses UV-C light to sanitize surfaces. I think this is wonderful tool for people who have young ones or who are caring for the elderly as it allows the user to sanitize surfaces that people contact. I like the ability to clean the cooking area and restroom facilities.

Tuesday, April 28, 2009

War is About Breaking Rules

Leftwing pundits are correct about many things. For example, they are correct to point out that the information about terrorist attacks would become known without use of enhanced interrogation techniques.

For example, if we caught a radioactive terrorist who just smuggled a nuke across the border, we could easily find out both the time and location of the attack without using any sort of interrogation technique.

With just a little patience we will find both the location of the bomb and time of the attack. The location, of course, is somewhere near the center of the crater. The time of the attack is a few seconds before the clocks in the area stopped.

We can easily get all of the information relevant to a terrorist attack simply by waiting.

There is a great deal of merit to the left's belief that the proper way to handle terrorist attacks is to wait until after the attack, then to arrest and prosecute the suicide bomber in a court of law.

Despite all of their grandstanding, the failed Bush administration did not bring a single one of the suicide hijackers to court after the 9/11 attack!

Rather than arresting and trying suicide bombers in a court of law, the failed Bush administration went after terrorist cells and did all they could to uncover attacks.

I believe that the critics of waterboardering are correct to point out that the information gleaned from the technique is not all that reliable.

But, Wait a second!

The same statement is true of any behavior modification technique used during interrogation. If the NSA tossed a handful of Skoobie Snacks to the terrorist each time they produced the desired answer, the NSA would simply get well trained terrorists.

Behavior modification techniques tend to simply get people to behave the way you want them to.

There is no way to extract truth from people trained to make whatever sounds are to their best advantage. There is always a degree of separation between what people say reality. Such is the nature of communication.

The question is really about relative truth value, and, of course, the value of the information. A group dedicated to doing WMD attacks against civilian population is different from one attacking military installations.

Neither the institutionalized use of enhanced interrogation techniques nor the absolute prohibition of techniques leads to utopia. There is not a perfect path to utopia, only a bumbling path to a world with less misery.

The formulas people devise to ensure peace usually fall to ruin.

War, after all, is about breaking rules. War has a strange habit of making whatever techniques were used in the last war fail.

Even things which are dear to people's heart can end up aiding to the failure. For example, the Geneva Convention is very dear to our hearts. You might remember how the lovable Hogan always used the Geneva Convention to gain advantage over the bumbling Colonel Klink.

Yet it is possible for even the Geneva Convention to become a sticking point.

Notice that the convention is named for a western city (Geneva). It was established by the Red Cross. The convention itself was very much a realization of Western Christian struggles to limit war.

Radical Islam is a reaction to Western Imperialism. They see the Koran (not the Christian Cross) as the source of universal law.

Despite the great ideals encapsulated in the Geneva Convention, we need to realize that the convention just might be perceived by others in a different light.

Since Black Hawk Down, potential allies in the Middle East had openly questioned if the west was a reliable ally. After all, the International Community and Red Cross stood back and did absolutely nothing as both Rwanda and Darfur degenerated into genocide.

The United States itself has a regretful history of abandoning allies to doom when pictures in the media became unpleasant.

The Geneva convention may not be seen in the same light that we see it. Our imposing a rigid set of rules derived from the Western Christian tradition just might be seen as Western Imperialism, even despite the fact that it is a very good idea.

I've always held that ideals are great, but absolutes are not. Human life is filled with challenges that create context where pursuing an ideal leads to ruin.

A terrorist cell plotting WMD attacks on civilians is just such a challenge. It creates the situation where one may have to treat the terrorist cell in a way that is less than humane than we desire.

The system that is capable of handling exceptions without collapsing is better able to pursue ideals than a rigid, puffed up system

The United States has a secular government precisely because history has taught us that Christian ideals make a wonderful foundation for the life of an individual or small community, but that history will always toss situations at our country that challenge the ideals.

The structure of a Christian people with a secular government allows us to define and pursue high ideals, with a government that makes necessary compromises with the world.

Our personal ideals often have absolutes. We, as individuals should be absolutely against torture, killing, theft, and other evils. The secular government faced with the prospect of a WMD attack against civilians must weigh the merits of intervention v. letting the attacks happen and trying the suicide bombers after the fact.

But, wait a second, the suicide bombers are dead after the attack.

Which brings up the question of why radical Islam chooses to engage in suicide attacks? Could it be that having the bomber kill himself in the attack destroys the ability to try and convict the attacker?

Suicide attacks are designed to destroy the ability of our court system to function as the primary adjudicator in the crime. It is an act designed to destroy our defense against such attacks.

There is no logic to war. Wars happen because groups feel that the can turn things to their advantage by breaking the current status quo. No matter how much we wish things were to the contrary, war forces societies to re-examine basic humanitarian principles.

This is not a bad thing. It is the re-examining of humanitarian principles that leads societies back on to the road toward peace.

War is about breaking rules. Peace is about re-establishing rules.

The fantasy that there is an international law that prevents war usually ends up creating conditions for war. Likewise, shrill partisan attempts to seek retribution after wars often ends up destroying the peace.

Friday, April 24, 2009

The Pendulum Swing

American politics has devolved into a two party system. Some people like such a system. The basic idea of a two party system is that policies would swing like a pendulum between major issues. Periodic changes of administration should theoretically lead to a fairly balanced government.

Unfortunately, experience does not hold to theory. The reason for this is that the parties are continuously realigning and changing the weight of the pendulum.

For example, let us examine the important issue of the overall size of government. There are some people who think bigger government is the answer to our problems, and those who opt for greater personal liberty. For want of better terms, I will call the group wanting more government "progressive" and those wanting more freedom "liberal."

As it happens, neither of the parties have a purely progressive or liberal agenda. There are progressives in the Republican Party (including Theodore Roosevelt, Hoover, GW Bush) as well as those championing liberty such as Reagan or Ron Paul. Likewise, the Democratic Party encompasses a broad spectrum of beliefs.

Politics is not a simple matter of parties holding to set beliefs. It is a complex system in which both parties have internal pendulums.

What seems to happen is that when a party is out of power, the liberal elements of the party come to the fore. These liberal voices are quick to point out the abuse of power of the opposition. They fill the airwaves with a lot of freedom centric rhetoric.

The progressive side of each party take a different tact. Progressives often lie low when their party is out of favor. In some cases, when progressives sense a change in the balance of power, they simply switch party and attach their fortune to the winds of change.

The Bush Administration was punctuated with a large number of neo-cons. Many of these were progressives who simply realized that moving from the Democratic to Republican party was a better path for pursuing their political objectives.

The inner party pendulum swings create a perverse system where the small government forces within each party hold sway when the party is in the minority, while the big government forces within the party come to the fore as the party moves into the majority.

This synchronized swing of policy positions within the two party system creates a system that works more like a screw than a pendulum.

Rather than having a pendulum that swings from more government to less government, we end up with cycles where the big-government elements come to the fore when parties are in the majority.

Rather than a pendulum swinging between more and less liberty, we have a system that ratchets down on liberties with each election cycle while notching up the size of government.

Only on the rarest of occasions does one find situations (such as the Clinton administration) where both parties were on a swing toward greater liberty. Even then, the nation did not see a decrease in the size of the government. We simply saw a temporary decrease in the rate of increase.

More common are situations like the Bush administration where the public rhetoric becomes detached from actions. During the Bush years, the small government advocates of the Repbulican party were yelling slow down, but the administration increased the size of government. This gave the illusion that it was the small government advocates who created the big government mess.

During the Bush years, the Republicans took a jump to the left. The Democrats took a bounding leap to the left. Meanwhile, the groups advocating greater liberty are simply left out in the snow.

I penned this piece on the pendulum as I think the Tax Day Tea Parties were not simply a rightwing effort, but an effort to kick both parties off the track of seeing bigger government as the answer, and on to the track where one values the freedom of the people.

Regardless, the two party system creates a political structure where partisans rule and the average person is cut out of the process.

Wednesday, April 22, 2009

Happy Earth Day

Happy Earth Day!

I used to look forward Earth Day. Unfortunately, since the primary goal of Earth Day is to raise political awareness, the community events surrounding Earth Day come off a bit too partisan for my taste.

The partisan line, of course, is that one protects the environment by expanding government and limiting personal freedom. Looking at the scars on the mountainside funded by the construction of public roads, listening to the clanking of Trax and inhaling the exhaust of empty city buses, it seems to me that government ends up doing more destruction for less gain than the free individual.

I believe that conservation is neither the exclusive domain of the peoples government nor the free individual. I believe that free people do a better job maximizing the return from the resources than big bureaucracies. Yet my opinion is obviously a minority.

So, I thought I would spend the day trying to figure out how to save energy.

My big innovation this year came with the realization that pulling the red cord on the garage door opener lets me open the garage door by hand. This saves precious electicity.

I am not sure if the extra effort to avoid using an electric garage door opener will amount to a saved planet. It may be nothing more than an empty symbolic gesture.

I've decided that the compact florescent bulbs I installed were nothing but an empty gesture.

You see, a few Earth Days ago, I realized that there was no need to turn lights on at night in the first place. Simply remembering where things are lets me walk through the house in the dark. If I don't turn on the lights, than my little mercury laden light bulbs do nothing but create waste.

I now feel guilty every time I turn on a light, and guilty for not turning on lights.

Speaking of creative ways to save energy: A wind up flashlight gives enough light to put a dollop of toothpaste on a brush. Since we brush and floss by feel, I realized that there is no moral justification for having the bathroom light on when preparing for sleep. Imagine the energy savings if everyone made the committment to brush their teeth in the dark!

Unless I have a book that I am reading, there really is no need to have a light on when I visit the john late at night. Toilets work by gravity after all.

I am not sure if any of my symbolic gestures amount to anything. The sad truth is that the symbolic gestures simply have gotten me to a point where I lament everything I consume.

For example, in a state of irrational green exhuberance, I bought two extra green bags.

Since I only have two hands, I only need two bags for the walk back from the store. Anything green bags are simply a greedy waste.

Innocent blades of jute gave their all so that I can overendulge in green bags. I've sinned against Gaia and am racked by guilt.

I've tallied up all of the symbolic gestures I've made to save the earth throughout the years. None of them seem to have justified my existence.

Anyway, I am having a hard time thinking of new ways to cut my energy consumption.

I have all sorts of ideas about how other people can save energy.

I've never really liked trying to tell other people how to live.

Perhaps that is why I don't enjoy green events any more. They seem to be full of busy bodies who condemn others.

I don't think we should engage in such nonsense, unless there is an issue of sufficient substance.

For example, right now, I believe that Salt Lake City is facing an issue of substance. The Wasatch Front is suffering a major problem with an invasive weed called Donkey Spurge. This toxic weed from the Middle East is starting to cover mountainsides. It kills the native wildlife and is a true problem that Utahn's should unite against.

Cycling down Wasatch Drive from Pete's Rock to the Mouth of Big Cottonwood Canyon, one finds the weed is completely out of control.

Utahns should never have let this invasive weed in the state. Irradication will take a major effort.

Anyway, I wish one and all a happy earth day. I believe that, if we all sat really still, we might be able to stop global warming.

But, I don't know that for sure. It is possible that the temperature of the earth is not contolled by our conciousness, in which case all of the symbolic gestures I've done through the years were just silly little acts of superstition.

Wednesday, April 15, 2009

An Iced Tea Party

Iced BikerI woke up with the start of a cold this morning.

To help the cold get off to a good start, I decided to go to the Tax Day Tea Party at the Federal Building in downtown Salt Lake.

Salt Lake was suffering a wet and heavy mid April snow (global warming, you know). The inclimate weather and the fact that the rally took place in the middle of a work day kept the crowds down.

Due to the snow and a lack of a good place to take picture, I only have a score of photos from the event. I have a errand to run, but will hopefully have the full set labeled before the night is through.

Salt Lake had a second rally at the post office. I was worried about my cold and water logged camera; so I skipped the second rally.

Tuesday, April 14, 2009

Exception Handling

I believe that President Obama was correct in authorizing the use of force against the Somali pirates. Authorizing force means, of course, that people died and that Obama could be labeled a murderer where the press so inclined.

I dislike that we shot a bunch of ignorant kids who were sent on the high seas to capture ships by warlords in the Somali ports.

It would be wonderful to live in a world where people didn't kill each other. Yet I do not think it likely that the world will arrive at the place where we can make the prohibition on killing an absolute.

It is strange. Having rejected modern progressivism, I am often accused of being an absolutist. Accusing one's opponents of absolutism is usually just a tactic.

The reason I willing to accept things I do not like (such as taking ships back from pirates, aggressive interrogation of terrorists, and even the death penalty) is because I reject absolutism.

My opinion is that our society will never be able to eliminate bad things. The best we can hope for is to create structures that curtail the bad while promoting the good.

One of the best ways to curtail things is to create an exception handling system in the chain of command so that if people feel an exception is needed, they can appeal to a higher authority.

The framers of the Constitution gave the president the ability to approve exceptions. This is especially true in matters of foreign affairs.

The media is currently engaged in a witch hunt where they are trying to frame the use of agressive interrogation techniques after 9/11 as a policy making process gone horribly wrong.

I see an exception handling system that worked well.

Right after 9/11, the intelligence community was faced with the possibility that the attack might trigger other terrorist attacks such as the anthrax mailings. Existing intelligence efforts had clearly failed (a very serious attack just happened).

I am quite certain that the Founders of the United States would have been pleased with the actions taken by the intelligence community and President Bush. In response to an exceptional event: The president approved exceptions to standard policy. Having approved the policy, the administration continued to support the people who carried out the policy.

I suspect they would be less pleased with the partisan media in its untiring effort to associate the label "torture" to its opponent. The founders themselves avoided the charged word. They founders used the words "cruel and unusual punishment."

In the long run, I think it wise to have a set of most aggreessive interrogation techniques that are only used in the most extraordinary circumstances. Such a system allows the intelligence community to pursue the ideal of humane interrogations, with the knowledge that they would receive full administrative support on the very rare occasions when one is suddenly facing a truly monumental crisis.

Life has a strange way of configuring itself so that one must make exceptions to ideals. Even worthy ideals like that of creating a murder-free and torture-free society manage to get challenged. Murdering pirates to save the hostage or using agressive interrogation techniques to break up a terrorist plot may or may not be in order.

The ability to define exceptions allows a society to pursue its ideals. While efforts to make ideals absolutes seem to lead to situations that undermine the society.

A few posts back I started talking about secularism. The ideal of secularism evolved in Christian societies through the realization that the government is ever going to be the perfect representation of the ideals of the people. As governments learn to respond to exceptions, they will always end up doing things counter to the ideals of the people.

It appears to me that killing the Somali pirates was against the ideals of Obama and I would take offense at anyone who tried to label Obama as a murderer for the action. Life is such that governments are often faced with decisions counter to our society's ideals.

Thursday, April 09, 2009

Uptick Rule

Coffee - image creditsThe SEC is considering re-instating the uptick rule.

The assumption behind the uptick rule is that the primary problem with short selling is that short selling accelerates market declines.

If this assumption is wrong; then the uptick rule is likely the wrong fix.

Even worse, the uptick rule might even make things worse.

Looking at the massive sales volume of the day, one realizes that it is very easy for market makers and brokers with access to multiple accounts to generate an uptick for a client. It is also possible to programmatically manipulate trades to prevent prevent small investors from short sales.

The uptick rule is likely to devolve into a regulation that gives further advantage to insiders.

The uptick rules being considered by the SEC are all programmatic rules. That is, they are rules that will automatically kick in according to market conditions. As a general principle, programmatic rules simply give an advantage to those engaged in programmatic trading.

To manipulate the programmatic rules, one need simply enter the new rules into a computer model. Run simulations on different trading strategies. Then create a programmatic trading system that manipulates the programmatic system.

An immutable law of the financial universe is that programmatic rules lead directly to programmatic manipulation.

Need I mention that giving an advantage to programmatic traders gives a disadvantage to value trader.

My Solution

Before implementing the uptick rule, I would want the SEC to do serious thinking about short trading itself.

Historically, short trading came into existence as a way to overcome market inefficiencies. In ancient days, a person might have to send a rider from Liverpool to London to make a trade. The short sale allowed for efficient trades.

Modern communication technology has eliminated the inefficiency that led to the need for short selling. It is absurd, but regulatory regime on Wall Street has implemented an artificial three day clearing period for transactions for the sole purpose of continuing the short selling practice.
I contend that short selling is inherently anti-market in that it allows people to sell things that they do not own. Naked short selling is plain evil in that it allows traders to sell things that do not exist.

A large number of our currently economic woes are directly related a regulatory regime that allows widespread short selling.

In recent history, we have found large number of traders engaged in a practice of hedging investments with leveraged positions. In 2008, we learned the hard way that this paradoxical act of hedging with leverage creates systemic risk.

I contend that the best method for market reform would be to remove the artificial inefficiencies created by DTCC and to move to a system of real time trading.

A system of real time trading transfers ownership of the stock at the moment the transaction takes place. Questions of market efficiency are moot because one can't get more efficient than instantaneous. Real time trading is the ultimate in market efficiency.

We would not need a new large regulatory regime with complex programmatic rules. A Real time trading system would use the inherent physical constraints of reality to prevent people from selling shares that do not exist.

A real time system does not completely eliminate the ability of people to engage in short selling. Investors would still be able to enter contracts that allow other investors to borrow and sell their stock. A system of real time trading, however, would force discipline on the practice. When an investor lends to a short seller, then they would have their stock replaced with an IOU slip.

The goal of a real time system is not to eliminate short selling. The goal is provide a system that lets people know exactly what they own at all points during a stock transaction. People should know that the second they lend stock to a short seller that they are no longer invested in a stock. Instead, they have a loan to a short seller.

I am happy that the SEC is addressing the systemic problems created by the currently regulatory regime. I ask that, before slapping regulations on the market, they think deeply about the nature of the market, and about the effects of programmatic regulations.

Programmatic regulations like the uptick rule would give advantage to programmatic traders. Transition to a real time exchange would give the advantage to value investors. I opt for the latter for the value investor is the true source of our prosperity.

Wednesday, April 08, 2009

Thoughts for Holy Week

A primary theme of modern progressive ideology is that the world is in a death struggle between the enlightened forces of secularism and the evil reactionary forces of Christianity.

The great irony of this position is that the American form of secularism that we admired is very much a product of Christianity.

Jesus Christ was neither a fan of big government nor was he that enthralled with the big state sponsored religion of his day. The Christian story was that the Son of God preached personal morality and good works. He was tried by a corrupt priesthood and crucified by a corrupt state.

The early Christian Church was a populist movement that stood in contrast to a brutally authoritarian Roman rule. Despite the brutality of Rome, Christ's message was to render unto Caesar what belonged to Caesar. A secular message is intrinsic to the religion.

Yes there have been movements to create a state religion from Christianity. Notably Emperor Constantine legalized Christianity and made monotheism central to the political vision of the Eastern Roman Empire (Constantinople). Emperor Constantine was not baptized until he was on his death bed.

Rulers are always eager to declare a divine authority for despotism; however, I was surprised to learn that much maligned Byzantium Empire was had varying degrees of secularism throughout its history.

The various reformations in Christianity were often driven by discontent with the power structure of the church and state.

The American experiment with a constitutionally limited secular government was very much in keeping with the Christian tradition. Christ's message, after all, is not about how government is supposed to work. It is about how people should live.

The US Founders sought to create a government limited to those areas needed to maintain a civil society. The people in the society would be free to pursue their Christian beliefs.

The idea of a limited government is the central key to understanding the secularism of the American founders. Their ideal government was relatively small and concentrated on functioning in areas critical to sustaining a civil society. The government was not put on earth to define that society.

I think the founders stumbled onto the ideal structure for a society. The government proper should be small and concentrate on defining the limits. The individuals would have the freedom to define and pursue their ideals within the accepted social limits.

The modern progressive version of secularism is much more in line with the Material Dialectics of the Hegelian/Marxian tradition. The Material Dialectic is a belief system popular among the professoriate with a bizarre claim that an intellectual elite, in tune with the driving conflicts in society, can scientifically control the evolution of culture.

I find this secular-progressive view problematic as it effectively raises the state and science to a religion. I find this problematic as efforts to position science as a belief system undermine the integrity of science. Likewise, efforts to make the state into a religion reintroduce the corruption of a combined church and state.

In my opinion the truth or falsehood of the Christian belief system is secondary. For I believe that the Christian founders found the right balance in their creation of a limited secular government that allows the people in the society the ability to pursue their beliefs.

Such a secular system presupposes that people recognize that they have beliefs. The system of separating church and state falls apart when a group tries elevating secularism to their belief system.

Holy Week and Easter recount the death of Jesus Christ at the hands of an elite church and state that were oppressing the people. I believe that this Jesus Christ would not see the limited secular government of the US Founders as conflicting with his message. Such secularism is perhaps one of the most sublime and important developments in the Christian tradition.

Tuesday, April 07, 2009

Social Media and Mob Reactions

I don't know what happened here. NewspaperGrl just twitted the following:
Twitter teaching me not to respond to people. Lost 30+ followers last time. Maybe I should turn off Quitter - this is supposed to be fun.

NewspaperGrl is totally dedicated to the social media scene. Her twitter account has some 4600 followers (I started twittering about the same time and racked up some 57 followers. I suspect many are doing an obligatory reciprocal link.)

Even with my tiny tweetership, I've discovered the same problem with the instant feedback of social media. The mob likes to show displeasure by banishment.

Whenever a person says something that falls outside the realm of the mob's desire, the person gets slammed.

In the social media paradigm, the people who concentrate exclusively on their image and avoid substantive investigation of issues, rise to the top.

The game where people follow thousands of people on twitter in hopes of building a thousand followers seems a bit absurd to me. When you follow a thousand people, you really aren't following anyone. You just have random, meaningless messages.

I hope that NPG goes back to having fun and is less caught up in twitter stats.

Sunday, April 05, 2009

World Brinkmanship

I was sad to see Obama making domestic partisan jabs during his world rock tour.

The jabs didn't surprise me. He is simply communicating the way that we were taught to communicate in school. The modern professoriat is built around arcane ideas about paradigm shifting.

The process of paradigm shifter involves teaching people to repeat themes with the notion that the theme will become the accepted reality. Both Obama's international Bush bashing and Hillary Clintons reset button gafaw were efforts to use the international stage as a platform for repeating partisan themes.

This is what we are taught to do in school. Apparently, it is effective.

The speech of note during Obama's trip came in the form of a prepared reaction to North Korea's flaunting UN Resolutions to launch an intercontinental rocket. (an interesting next step in its nuclear weapons program).

The speech echoes Bush's complaints of Iraq's repeated flaunting of UN's resolutions about its WMD program.

Of course, the NK issue is not quite as substantial a threat as Hussein's WMD program. Hussein had used WMDs against his people and the Middle East was gripped with the mistaken belief that a big war would lead to a new glory age for Islam.

NK is simply practicing brinkmanship. The NK game is that the missile spectacle attacks attention and attention helps consolidate power while bringing in money.

Regardless of the context, Obama's speech on the crisis was well played. For society to work, the words we say have to mean something. In a technically advanced world, we have to have more than empty rhetoric; otherwise, we will fall into a negative pattern where dictators use brinkmanship for political and monetary gains.

Thursday, April 02, 2009

Leveraging Fraud

I've been reading a few sites about white collar fraud.

In the YouTube Clip below, the former CPA and convicted fraudster Barry Minkow talks about the ways that white collar criminals use complex financial schemes with multiple entities leveraging against each other to commit fraud.

An interesting theme is that the most common fraud of small private firms is tax evasion. Companies would make profits look lower than they were to evade taxes.

When they are trying to take a leveraged position, fraudulent firms inflate profits to inflate their leveraging power. Both the tax evasion fraud and leveraged fraud are evil and wrong. The problem with leverage is that a highly leveraged fraud does much more damage than a small private non-leveraged fraud.

It appears that Minkow is wanting an improved auditing system.

My thoughts go in a different direction. My beef is with the financial tools that allow companies to take hugely leveraged positions. These tools effectively magnify the impact of a fraud.

Auditing plays an important role in leveraging. Financial institutions give leverage to a firm based on the audited numbers.

The audited numbers, of course, come from the CPAs and auditing firms. A CPA willing to commit fraud need simply become adept at showing auditors want they want to see. They then leverage off the goodwill given by the auditors.

Truly honest firms are unable to show auditors what that auditors what the auditors want to see.

The system of hyper-leveraging that exists in the market allows dishonest firms to leverage ficticious audited numbers and bowl over the honest competition.

Dishonesty is a big problem. The financial system designed to give investors massive massive leveraging poweer in the market has created a world where the bad guys are able to massively leverage their dishonesty and magnify the hurt created by their efforts.

As the dishonest player will always be adept at lying to auditors, the solution to the problem is to deleverage and to break the tools that allow hugely leveraged positions.

Wednesday, April 01, 2009

Photo Approved

Wow, the tea party photo was approved at BigStockPhoto. They are the first with an editorial license. So, i think they are the best choice of microstock for bloggers. The picture was designed for web sites commenting on tax-themed tea parties: Here is a sample of the picture in action. A small version enhances a blog post about a tea party.