Drain The Swamp

News of regulation rollbacks meant to save the average Americans about 17 billion in unnecessary fees to Wallstreet might make you think that the POTUS has a weird way of following through on his campaign promises to "drain the swamp" when it comes to Wall Street.

But if you think about what a swamp actually is, you'll see his promise makes sense.

A swamp is the very definition of a wetland. And you know what wetlands, do, right?

Wetlands "mitigate the impacts from storm damage and flooding, maintain good water quality in rivers, recharge groundwater, store carbon, help stabilize climatic conditions and control pests."

So yeah, the POTUS is draining the swamp alright, as he promised. Yay?

Internet Promotes Self-Delusion Via Non-Statistical Validation

I have a hypothesis regarding some of the impetus behind Trump and related hate rhetoric of recent years. It's the internet.

Ok, it's more than the mere existence of the internet. It's an originally unforeseen emergent property of the internet: No matter how wrong or bad the behaviors you exhibit or promote are, it's easy to find a population of people who'll support it. That's the "beauty" of an online network that transcends walls, streets, cities, and states. It's a strength of the internet that you can find those like you, with your same interests.

But that isn't where I'm going, because that's obvious. My hypothesis is that the internet is a great tool for self-delusion. Because here's the thing. You'll find tens, hundreds, or in the case of Trump, thousands of people willing to validate every "Sad," "really terrible," and racist implication you utter. But consider.

Human brains aren't great at statistics. Prime example: sharks kill about 10 people a year, if that, worldwide. Accidentally falling on the stairs kills more than x10 that a year in the US alone. Stairs clearly need far more attention than sharks.

Which leads me back to the internet's role of self-delusion via non-statistical validation: It only takes a relatively small number of likes/loves/+1s/upvotes to make you think that the potentially sketchy thing you just said or posted was actually genius. Consider for a moment that internet validation might not be your best measure of what is actually moral, ethical, and reasonable.

Saying Something Doesn't Make It So, Unless You Say It Often Enough

Years of character assassination and relentless allegations don't actually make someone an inveterate liar if most of it leads to nothing significant. Hillary Clinton being a "liar" is mostly a product of years of hard work by GOP strategists and for-profit media who want flashy headlines. (Yes, Clinton has taken some liberties with the truth, but less often than most other politicians.)

As a matter of fact, apparently the "liar" allegation-turned-meme goes all the way back to when Clinton was as a 27-year old lawyer investigating Nixon. To discredit her after the fact, the allegation was made that she was fired from the Watergate investigation. That allegation has never been proven, and in fact, it is provably false. But right-wing TV and radio hosts repeat it over and over again, along with all the other allegations, as if the weight of allegations themselves, despite being created by those with a motive to smear her, could be construed as truth.

It's easy to see how average people, even progressives, would eventually buy into the false narrative at some level, without ever realizing it.

Call it another win for The Big Lie strategy. Add it to all the other wonderful outcomes Big Lies lead to. Or shake it off, and try to find the truth, which I grant you is a nuanced and complicated picture of a human being who is no saint, who's made mistakes, and who's a politician. But someone who is a far cry from Evil Incarnate.

Car Insurance Model for Guns (with tweaks)

From http://laist.com/tags/gunbuyback

No one blinks at the idea of liability insurance for our cars. If fact, most of us have been the beneficiary of mandatory liability insurance, after we’ve been rear-ended at a stoplight or suffered some other traffic mishap.

It’s not much of a stretch to imagine that our guns should also require liability insurance. In fact, we believe mandatory gun insurance is something that both responsible gun owners and non-gun owners alike could get behind. Why? Because of how it would work.

Just as with cars, this plan would require annual registration and liability insurance renewal through private insurance companies. And guess what? There’s already a precedent: the National Rifle Association offers liability insurance to members. (The problem is, the NRA's insurance is not universally mandatory.)

This solution offers many advantages that all well-meaning people on both sides of the debate can appreciate. For example, the insurance market is a proven expert at weighing risk. If they don’t already exist, a gun insurance mandate would quickly generate reams of actuarial tables devoid of anything but solid, dry, actual odds of a particular gun or a gun in a particular situation being used to hurt someone, and find an associated liability price.

Just as car insurance premiums are based on both the driver and the vehicle, so would gun insurance premiums. So someone from South Dakota who’s hunted during deer season for years without an accident would have a much smaller premium than a first-time buyer looking to own an assault rifle.

And just like with insurance, taking comprehensive training, owning biometric gun safes (or owning guns with trigger locks, or even smart guns), and not possessing more than one or two guns would decrease premiums. Other factors would include the magazine size of the weapon, the age of the gun owner, how many children the owner has living in the same home, previous criminal record, and so on.

All of this means that if someone wants an arsenal of semi-automatic rifles, they can still have it. But the civilization they’re part of will disincentivize that kind of bunker mentality through the hand of the market.

And of course, like regular liability insurance, gun liability would provide some restitution for those hurt by guns. (This is liability insurance, so it wouldn’t replace stolen or damaged guns--that's homeowner's insurance.)

We also believe that stiffer penalties for unreported gun theft would be useful. Just like with cars, all guns would have be registered so they can be tracked if they’re used in a crime. We suggest that if your weapon is lost or stolen, you have 24 hours to report it. If you fail to report it and your missing gun is used in a crime, your mandatory gun liability insurance rises steeply. Any shootings involving a weapon registered to you that you have not reported missing/stolen results in a punitive fine (and even higher insurance rates). In addition, a civil suit could be brought against you if firearms registered to you are used in the commission of a crime. But, your gun insurance would help you deal with such a possibility. Specifically, it would pay out to cover damages leveled against you if your gun is used in a crime, by anyone, to pay for your legal defense and for any fines or civil liabilities against you.

As an aside, introducing mandatory gun liability insurance doesn’t mean we can’t continue to enact other sensible measures designed to moderate gun violence. Another front should include closing loopholes in current law that allow private individuals to sell to one another online or at gun shows, at least not without some sort of simultaneous proof-of-insurance requirement. Yet another way to stem gun mayhem would be via a national gun buyback program, similar to the Australian policy, which would prove especially useful for people who come into the possession of guns they didn’t seek, such as when people who discover they’ve inherited several guns after the death of a relative, but don’t have the interest or means to deal with them.

Those hoping for an easy solution should be patient, because as with any realistic answer, gun liability insurance (and other measures noted above) will take time to enact, and more time for their effects to spread to all corners of the nation. But this is a start. And over time, mandatory gun insurance would lessen the likelihood of both parking lot gun aggression by adult against adult, and more importantly, mass killings of kindergarten children in their classrooms.

(The foregoing policy recommendation evolved following the events at Sandy Hook and other recent mass shootings, and incorporates the feedback from my social network and friends. If you think it is viable, do what I've done, and contact the vice president and your representatives with this proposal.)

An Exercise in Sarcasm

Herman Caine's 9/9/9 plan is easy to understand. That's why it's BETTER. Everything easy to understand is ALWAYS better. That's why iphones and electron microscopes are better than yelling and looking, because everyone understands exactly how iphones and electron microscopes operate. Shucks, I could probably whip either up in my barn in just two shakes of a lamb's tail.

Artificial Left-Right Divide

This year GE had a profit of $14.2 billion. Of which exactly nothing is being collected for taxes (reference), even while all us honest workers fork over a significant percentage of our wages to improve the country we're all part of.

Our elected officials could have tackled the deficit by imposing a fair share of the load on these corporations. Instead they cut billions from programs that do "wasteful" things like create new jobs, drive economic growth, and help the needy and our nation's children.

Is there any clearer evidence of the artificial nature of left-right divide that has been foisted on us (or that we've allowed ourselves to fall victim to), blaring from every major news outlet? We squabble over crumbs while corporations secure their hold on power.

War is Peace

Same as it ever was? Bald-faced lying has become (or, remains) an accepted tactic of corporate interests, and those who take their coin.

As Lawrence M. Krauss said:

When I saw the statement repeated online that theoretical physicist Stephen Hawking of the University of Cambridge would be dead by now if he lived in the U.K. and had to depend on the National Health Service (he, of course, is alive and working in the U.K., where he always has), I reflected on something I had written a dozen years ago, in one of my first published commentaries:

“The increasingly blatant nature of the nonsense uttered with impunity in public discourse is chilling. Our democratic society is imperiled as much by this as any other single threat, regardless of whether the origins of the nonsense are religious fanaticism, simple ignorance or personal gain.”

More Here: http://www.scientificamerican.com/article.cfm?id=war-is-peace

USA Honored by Nobel Peace Prize

President Obama was awarded the Nobel Peace Prize. Amazing. Yet a lot people in the USA apparently have an issue with that. Also sort of amazing. I think my friend Marc Carlson best points out how some of us could stand to show a little grace:

Many [peace prizes have been awarded for solid achievements], but many have been more symbolic. Peace prizes are not like the other ones which are often given decades after the accomplishment just to verify the significance of the work. Peace prizes have often been assigned for much more obviously political intentions. Does Arafat really deserve his peace prize? And that makes some sense because how do you actually measure a persons contribution to Peace??? This has never been a rocket science. This has always been politics. The Nobel committee is trying to encourage political developments that they see as ones that contribute to peace.

So this is Europe's way of trying to say they appreciate our recent efforts. And all the griping people are doing is embarrassing. I can understand that some people just don't like Obama and are somehow deeply offended that he would be given a prize. Fine. But can you sit down and shut the hell up while your country is honored for one minute? Is it really so terrible that the USA is being shown some appreciation today? When I was a child, I was taught that if someone gave you a big compliment you should always say "thank you". Even if the compliment was premature. Today the Nobel committee has given our nation a huge compliment. We should show at least a little bit of grace.

Shall We Stop Dithering and Act on Climate?

Actual scientific consensus has it that human activity (which includes C02 release, methane release, positive feedback from increased humidity in the air due to warming over the poles, and so on) is the cause of the current climate shift, a shift which seems to be happening more quickly than any in the geologic record. Solar activity and natural variations have been ruled out by experiments. Truly, they have.

If someone decides that the bulk of the scientists who study climate are not reliable sources of evidence because the evidence is inconvenient, then evidence-based argument becomes useless with that person—they’ve gone to a place where reason can no longer touch them.

I try not to be that kind of person on a wide variety of topics, including this one. But since the scientific method is the best tool we have available to approach truth, it is the tool I apply.

And the truth that seems to be emerging is that Earthly species are dying off as quickly or more quickly than anything we’ve seen in the geologic record—we’re living in the midst of the fifth great extinction.

Unfortunately, trying to develop robust forms of alternative energy only begins to address the problems we face.

Be that as it may, I’m not willing to throw up my hands and say the problem is too big to be solved. I would prefer the human race reach cultural adult hood and move forward; and I don’t even have children.

But alternative energy is a good place to start, because C02 is the biggest contributor to climate change (according to the scientists that study climate, noted above). And there is something we can do: support alternative energy programs,and politicians who support alternative energy programs, even those that from a strictly narrow financial viewpoint will lose money. We need to widen our viewpoint beyond next quarter’s profits and recognize longer term trends. If we can’t use evidence and reason to see wider time horizons and act on our conclusions, the best climate models we have predict we’re going to crash headlong into a breakdown far worse than the current economic recession.

Don't forget to mail in your Ballot (for Huff!)

Please mail in your ballot today, and vote for Sherril Huff, the current King County Director of Elections. To learn more about Sherril go to http://www.electsherrilhuff.com.

To be honest, I've relied on Jeff Grubb to do the heavy lifting on researching who to vote for in this special election, and Mr. Grubb says Huff is the one. Trusting his instincts and following his reasoning, I agree.

Spin War for Minnesota Senate Seat Ensues

Challenging ballots as they come in puts them out of circulation for a recount, at least temporarily. This may give the impression that one of the candidates is winning a recount when it is simply too early to say.

Both candidates in Minnesota are challenging ballots as their recount moves forward, but it looks like the Republican candidate, Norm Coleman, is going slightly more crazy at this time.

From fivethirtyeight.com (Nate Silver):

Now, the Coleman campaign isn't being devious or anything like that; they're simply exploiting a flawed system and trying to win a spin war. But news organizations should recognize that -- as of about Friday afternoon when the number of challenges skyrocketed -- the entire first phase of the recount process essentially became a spin war. The running totals being reported by the Star Tribune and the Secretary of State are at this point fairly meaningless, and should be denoted as such; we aren't likely to learn very much more about the ultimate winner of the recount until the state canvassing board convenes in December.

Supreme Court Sides With Navy Over Whales

So much for Pacific whales. I guess the Supreme Court doesn't hold much with the ecosystem's value. I guess they don't think it's important the ecosystem maintains life on earth (life such as, say, Supreme Court justices) through a complex network of species interaction.

This decision was 5-4. Thanks George W. Bush, for stacking the court with science ignoramuses. That'll continue to serve us well long after you're run out town.

http://blog.wired.com/wiredscience/2008/11/supreme-court-n.html

VOTE

Things have been hectic for me lately on any front you care to name, but thankfully, I managed to vote. Actually, my legislative district (#33) has no polling places--it's all vote by mail. So my ballot went into the mail last week.

I pointed to Jeff Grubb's recommendations awhile back. Of course, he's not in my district. So I'd like to add one additional recommendation for a few folks whose campaign office I've visited:

State House of Representatives District 33, Pos 1: Tina Orwall
State House of Representatives District 33, Pos 2: Dave Upthegrove

Go vote!

Grubb Guide to Responsbile Voting Is In

Want to research every candidate and issue before you on the ballot, but just don't have the luxury of time? Well, if you live in King County in Washington State, one of your first stops should be the blog of someone who always does his own research, and better yet, posts his conclusions on his blog.

Yes, I'm talking about Jeff Grubb, my friend and fellow Alliterate.

His latest take on the issues facing us on Nov 4 are up and posted here.

Take a look!

http://grubbstreet.blogspot.com/2008/10/jeff-recommends-annotated-version.html

Viral It: The Truth About ACORN

I think we saw the first salvo last night that will become an attempt to delegitimize Obama's upcoming presidency, at least among McCain's unswerving base. So let's get the truth out there and spread it around.

Here's the deal: ACORN is not trying to steal the vote for Obama.

* The only fraud committed was against ACORN itself. ACORN hired 13,000 workers to register a remarkable 1.3 million new voters. And a few of them turned in registration forms with inaccurate and even made-up names to get credit for work they didn't do. ACORN fired them and turned them over to the authorities.
"The Truth About ACORN's Voter Registration Drives,"
http://acorn.org/quickfacts

"Group Answers Charges of Voter Registration Fraud," New York Times, October 14, 2008
http://thecaucus.blogs.nytimes.com/2008/10/14/acorn/

* ACORN reported the fraudulent registration forms. In most states, ACORN is required by law to submit all forms collected whether they appear to be bogus or not—that way election officials, not partisan groups, can make the call. ACORN flags cards that may not be legitimate. And in many places, the charges of fraud only came up because ACORN was the one who flagged the cards!
"Voter Group Admits Mistakes, Defends Work," ABC News, October 14, 2008
http://www.moveon.org/r?r=31241&id=14429-6672261-LU6AT3x&t=5

"Is there ACORN fraud in Florida?," Orlando Sentinel, October 15, 2008
http://www.moveon.org/r?r=31239&id=14429-6672261-LU6AT3x&t=6

* This won't have any impact on the election. No one is allowed to vote unless they are properly registered. And there is no evidence of false registrations actually leading to organized voting fraud.
"'Fraud' vs. 'Suppression'," Politico, October 14, 2008
http://www.moveon.org/r?r=31240&id=14429-6672261-LU6AT3x&t=7

maps.google.com/vote

This is amusing, but has some NSFW language in it. So, put on your headphones.



The magic web page? maps.google.com/vote

Top 1% Should Aid Bailout

Senator Bernie Sanders voted against the bill that would put Wall Street's burden on the backs of the American middle class. "The bailout package is far better than the absurd proposal originally presented to us by the Bush administration, but is still short of where we should be," Sanders said.

Bernie Sanders, and Independent from Vermont, describes how the top 1% of the wealthy in this country who profited handsomely during the lead-up to this popped bubble, should be on the hook for fixing the situation.

A very interesting read:

http://www.truthout.org/100208J

Crisis Explained

I've heard a lot of explanations about what's caused the current financial crisis, and now I've heard several reviews on why the bail-out plan failed, and what that means.

This blog article does the best job I've seen describing the situation:

http://silentclarity.livejournal.com/376012.html

Summary: We'd better pass some bail-out legislation sooner than later.

How About This Plan, Mr. McCain?

I wonder of John McCain will deign to debate if the following is the plan passed to save the economy? (Or, is it just that the elderly senator from Arizona is too old to call up enough gumption to multitask during times of crisis?)

10 Ways to Bail Out Wall Street (and Main Street) Without Soaking Taxpayers in Debt, By Chuck Collins and Dedrick Muhammad

Who says we need to borrow a trillion dollars to save Wall Street from its own excesses?

As Congress debates the particulars of the Bush-Paulson bailout, one key question has gone largely unexplored: Who will pay for this mess?

Lawmakers in Congress appear to have assumed that the federal government will simply borrow more money to foot the bill for the bailout. The national debt ceiling will rise to a whopping $11.3 trillion, up from $8 trillion a year ago.

But this rush to borrowing merely shifts the bailout burden onto the backs of future taxpayers. Congress needs to change course -- and develop a "pay as we go" plan that makes Wall Street pay.

The lion's share of bailout funding should come from the high-finance gamblers and the wealthy CEOs who have so profited from our casino economy.

Read the full article here:
http://www.alternet.org/workplace/100223/?page=entire

Say No to $700 Billion Bailout?

There may be other ways to save the world from economic collapse (especially the current plan, which has all the makings of a grand screw up). I'd like to see more of these alternates discussed before we move forward. Alternate plans such as those suggested by economists Brian S. Wesbury and Robert Stein (hat tip to Sharon Cordell)

I have a feeling I know why the following won't fly. It is because it doesn't assuage our genetic urge to see those who've transgressed the boundaries of fairness immediately reap the consequences of their decisions, even if this ends up hurting everyone else in the process.

But here's the idea:

The Treasury Department has told members of Congress that the US faces a financial tsunami if a bill to allow the government to purchase up to $700 billion of toxic financial securities from financial firms is not passed – this week.

Unfortunately, this solution of giving the US Treasury almost unlimited power to buy distressed securities could be avoided if the government made some simple (and temporary) changes to mark-to-market accounting rules. So far, and for many unknown reasons, these changes have been considered off limits.

Why drawing such a hard line in the sand is so important, is a real mystery. Certainly, firms that took excessive risk should be punished. And the US should avoid creating moral hazard whenever it can. But saying; “I told you that you would stay in your room for a whole week if you disobeyed, and I don’t care if the house is burning down…you are going to spend an entire week in your room,” is absurd. If we are really talking about the end of the world as we know it; who should really care about relaxing the rules for a short time to get us through.

Let’s not take this the wrong way. Mark-to-market accounting is a good thing. It makes sense most of the time, and for most financial instruments that are traded frequently, and in the open. But there are special circumstances. And today’s financial market problems would meet any definition of the word special.

It is true that home foreclosures have risen, but a vast majority of mortgages are still paying on time. As a result, the market prices of subprime loan pools today have absolutely no relationship to the actual performance of the bonds. If every subprime loan went bad, and banks recovered just 40 cents on the dollar, the bonds would still be worth 40 cents. But the market has pushed bonds well below that level, taking down venerable firms and causing the government to consider draconian solutions.

In other words, mark-to-market accounting, not the reality of the economy or the actual credits, has created much of the financial turmoil that has shaken the world. Imagine if you had a $200,000 mortgage on a $300,000 house that you planned on living in for 20 years. But a neighbor, because of very special circumstances had to sell his house for $150,000. Then, imagine if your banker said you had to mark to this “new market” and give the bank $80,000 in cash immediately (so that you would have 20% down), or lose your home. Would this reflect reality? Not at all. Would this create chaos? Absolutely.

And it is happening all over Wall Street. Merrill Lynch was forced to sell $30.6 billion of illiquid mortgage securities to Lone Star Funds for just $6.7 billion, or 22 cents on the dollar. If it did not sell, these bonds might have fallen to 18 cents and further eroded its capital on a mark-to-market basis. It couldn’t take the chance.

But what if Merrill was allowed to hold those securities on its books, without marking them to an illiquid market? The company would not have had to take a $24 billion loss. And maybe investors in Merrill Lynch would not have had to settle for a $29/share buyout from Bank of America, a 60% mark-down from the share price less than a year ago. After all, everyone knows those loans were worth more than 22 cents. The actual performance of the bonds was much better than the price, and Lone Star was able to take advantage of the fact that Merrill was over the proverbial knee of accounting rules.

All of this can be avoided if a system were put into place that allowed private companies to hold these distressed assets. Rather than a centralized holding place, why not use a decentralized one? Why not allow financial firms with structured (Tier 3) assets issued between December 2003 and August 2007 to suspend mark-to market accounting for those assets, and receive government insurance as a backstop? This would be a temporary solution, not requiring any ultimate change in Sarbanes Oxley or mark-to-market accounting rules, and the government could even make money by selling insurance with less risk to the taxpayer than buying them outright.

In essence a firm could sequester, or firewall off these specific assets from the rest of its balance sheet, and either finance this itself, or bring in outside financing. The firm would promise to hold the securities to maturity, or until government insurance was no longer needed when it liquidated the assets. All of these deals could be settled in the private sector, in multiple locations with the government looking over the shoulder of each deal.

If the rules had been relaxed a little bit for these specific assets, Merrill Lynch could have created its own private equity investment fund inside its corporate structure instead of selling at a huge loss to Lone Star, which created its own holding vehicle.

This plan would leave mark-to-market accounting regulations intact. It would be a temporary change in the rules. Its most important attribute is that it leaves taxpayer powder dry for another day. It also allows the private sector to price assets in an environment that is not contrived and will help avoid the loss of, or government takeover of, more private firms.

Even if the Treasury initiates an RTC-type vehicle, the slight changes in the accounting rules for these specific assets should still be made. If a firm does not want to accept the government bid for its distressed assets it would have an alternative. It would also create a level playing field because the Treasury does not have to mark-to-market. A competitive marketplace for these securities would insure the current holders that they would get a price that is not based on a fire sale.

This plan stops the mark-to-market meltdown without undoing the good that mark-to-market accounting has done, protects the taxpayer, stops the losses at financial firms at a crucial time, and therefore helps end the shorting of stock and bonds that has kept the financial system on the rocks without making it illegal. Best of all it keeps the government from a massive and draconian step toward financial socialism.

Brian S. Wesbury - Chief Economist

Robert Stein, CFA - Senior Economist

Approved for Public Use