Friday, October 31, 2008

They had their chance

Damn straight.


Thursday, October 30, 2008

Rice and Baylor College of Medicine to Merge?

They're thinking about it, according to the The Houston Business Journal.
Rice University and Baylor College of Medicine in Houston are in talks aimed at a possible merger of the two institutions.
“Rice and Baylor have a long history of valuable collaborations and are exploring the possibility of a closer affiliation,” the schools said in a joint statement. “Preliminary talks are under way.”
Spokespersons at both institutions said no officials would talk further about the negotiations at this time.
Rice is one of the top-ranked private universities in the country and Baylor is among the country’s top medical schools. It also is one of fewer than a dozen medical schools not affiliated with a university.
Both institutions are located in The Texas Medical Center in Houston.
Such a merger would bring Rice’s strong financial backing to Baylor, which has struggled financially since it separated from its long-time affiliate, The Methodist Hospital, in 2004.
And universities like Rice are increasingly seeking partnerships with medical schools to expand and enhance their biomedical research capabilities.
Wild, huh? A few years back, I heard Rice President Lebron speaking about plans for the University. Lebron is a controversial figure at Rice--many see him as a careerist type who is using Rice to build up his resume. But he has been aggressive about expanding Rice--increasing the undergraduate population (and building three new collages for them), and increasing the size and scope of many departments (for example, the business school will now be offering an undergraduate business minor). So at this meeting, Lebron was asked about the possibility of Rice adding a medical school or a law school. He was frank about the difficulties of both--in the first case, you needed to have a hospital, which was a big obstacle for starting a medical school from scratch. (For a law school the obstacle was that someone would need to give Rice a check "with eight zeros".)
Baylor seems to solve the main problem. This seems like a win-win, especially as Rice has been moving so heavily into bio-medical research (including a new building devoted to it in the Medical Center, the "Collaborative Research Center."). The only bad thing is that Rice would inherit Baylor's financial problems and (current) bad leadership. The latter can be dealt with easily enough, but the former will put a strain on even a rich institution like Rice. I expect to get a few more begging-ass letters from my dear old alma mater.
Update: It looks like this information was not meant to be leaked, because Lebron immediately sent out the following letter to alumni apologizing for not keeping them in the loop.
Dear Robert,

As you may know, today's Houston Chronicle includes an article on a potentially closer affiliation between Rice and Baylor College of Medicine. (You can read the article here: This possibility has been discussed for many years, and the two institutions already have collaborations that we are always seeking to build upon. I am writing to let you know that such a discussion is in fact under way, but is very preliminary, tentative and exploratory. Yesterday afternoon Rice and BCM issued the following joint statement:

"Rice University and Baylor College of Medicine have a long history of valuable collaborations and are exploring the possibility of a closer affiliation. Preliminary talks between the two institutions are under way. No further details are available at this time."

I can assure you that the Rice leadership team and Board of Trustees will not undertake a decision like this without the utmost care and due diligence. I had the opportunity to update the Association of Rice Alumni board of directors at their recent meeting, and will keep you apprised of the situation as conversations between Rice and BCM may continue in the months to come.

Sincerely yours,

David W. Leebron

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Wednesday, October 29, 2008

Chron Endorses Skelly

Given the tenor of the times and the undeniable quality of Michael Skelly, it is not a surprise that the Chronicle has endorsed him.
For a diverse range of communities stretching from the Texas Medical Center and West University Place to the far northwest suburbs of Houston, the representative for District 7 must balance many interests and service priorities. The Chronicle urges voters to support a political newcomer, Michael Skelly, an entrepreneur and family man who built Horizon Wind Energy, one of the largest such companies in the nation.
His life offers an appealing American story — an Irish immigrant who came to the U.S. at the age of 2 with parents who had little money but plenty of determination. Skelly graduated from Notre Dame and Harvard Business School with the assistance of loans and grants.

Skelly supports Metro's plans to build light rail on portions of Richmond and Westpark. He opposes federal restrictions on stem cell research and pledges to push for expansion of the Children's Health Insurance Program.

Skelly believes the best way to achieve independence from foreign oil is to push development of alternative energy sources but opposes windfall profits taxes on industry and supports expanded domestic drilling.

Skelly doesn't inspire rhetorical sublimity from the Chron, evidently. What they don't say directly is that it's time to get rid of the transit-hating John Culberson. But I'll say it for them--John Culberson must go! Vote Skelly!



The original...

The new version...


Tuesday, October 28, 2008

Biking for Obama

Aaargh! I'm trying to spend these last few days convincing you all to vote for Skelly and Noriega (and Obama, natch), mustering whatever arguments I can. But I've had two long days so to tide you over until tomorrow (I hope!), this made me laugh...


Sunday, October 26, 2008

Proud to be an Owl

Over in the development office at Rice University, I imagine that there are annual brain-storming sessions designed to come up with a way to get me to donate money to the General Fund. And damn if they haven't finally thought of a solution!
A team of researchers at Rice University in Houston is working to create a beer that could fight cancer and heart disease. Taylor Stevenson, a member of the six-student research team and a junior at Rice, said the team is using genetic engineering to create a beer that includes resveratrol, the disease-fighting chemical that's been found in red wine.

Scientists at the University of Wisconsin in June had called resveratrol, which is a natural component of grapes, pomegranates and red wine, a key reason for the so-called French Paradox -- the observation that French people have lower rates of heart disease despite a cuisine known for its cream sauces and decadent cheeses, all loaded with heart-clogging saturated fats.

Stevenson said that the Rice research group, most of the members of which aren't old enough to legally drink alcoholic beverages, came up with the idea of adding resveratrol to beer during a casual conversation about potential projects to undertake. "The idea is that it may have greater effects [in beer than in wine]," he added. "The amount of red wine you'd need to drink to get the same results they get with rats in labs is about half a bottle a day."

He explained that the amount of resveratrol in wine varies from bottle to bottle, since it depends on growing conditions for the grapes and other variables. The researchers felt they could design a beer with higher and more consistent concentrations of the cancer-fighting chemical.
If they succeed, they will surely rank among the Greatest Americans EVER! And certainly the greatest Rice students of all time (including the future). At the very least, they will deserve one of these:

Beer-drinkers around the world pray for your success, lads!


Saturday, October 25, 2008

Exonerated in Texas

Texas Monthly has a very powerful story this month about 37 men who were sentenced to prison, served time, and were exonerated on the basis of DNA evidence. The number of exonerated men is small, but that reflects the fact that most crimes don't leave DNA evidence (all of these men had been convicted of rape), and even in such crimes, not all jurisdictions retain their evidence after the final appeal. The number of innocent men in prison is far greater than we'd like to believe.

Their tales are harrowing, especially of the guys who figured, well, I'm obviously innocent and have just been picked up for a superficial reason (like wearing a plaid shirt, in one case)--only to find themselves doing hard-time for 10 years or more. Worst are the guys who made false confessions--where the cops told them they'd get the needle if they didn't confess. Would you confess to a crime if you were being threatened with death? Some of these guys have been able to do amazing things since leaving prison (Christopher Ochoa, a Pizza Hut employee when he went in, is now a lawyer in Madison, WI, and Anthony Robinson is now a lawyer who runs a consultancy in Beijing), but many have struggled--after all, their young manhood, when they'd be learning job skills and putting down roots, has been wasted in a living hell, where you learn skills opposite of those that would help you thrive in society.

Reading this article, several statutory reforms come to mind.
  • All evidence should be retained for at least as long as the prisoner is incarcerated or paroled, especially DNA evidence.
  • Eyewitness identification protocols (such as the "line-up") which have proven again and again to have high rates of error should be abolished and replaced with procedures proven in laboratory environments to produce better results.
  • Likewise, defense attorneys should have the right (if they don't already) to bring up the statistical evidence regarding the unreliability of police line-ups in trial.
  • There should be serious consequences for police and/or prosecutorial mishandling of evidence, with no statute of limitations (so that if a man is exonerated after 17 years in prison, the people who put him there can still be punished if they did anything wrong).
Now the knee-jerk response to calls for this kind of reform is that it is soft on crime. It makes these reforms hard for Texas politicians to initiate. But remember that these men did not commit the crimes, and the people who did, in many cases, are still free. By putting these men in prison, the justice system guaranteed that a rapist would continue to walk the streets, a free man. Furthermore, DNA evidence, when handled properly (and not by incompetents like the Harris County Crime Lab or frauds like Fred Zain), leads to more and better prosecutions. On balance, we want more rapists in jail and more innocent people out of jail, right?

One great Texas blog that covers these issues often is Grits for Breakfast. It's well worth subscribing to if you are interested in police, prosecutors, judges and jails in Texas.

One last word--the photo above is by Randall Ford. The small jpeg on Texas Monthly's website doesn't do it justice. If you can, get your hands on a copy of the magazine, where it is printed as a two-page spread. It has an almost painterly texture, and the faces of the men are striking--defiant, defeated, proud, beaten down, sad but strong. A powerful photograph.


One More Reason to Vote for Obama, Dudes

An update of a classic '60s anti-war poster.



The poo is being flung fast and furious by the right as the election winds down and it looks increasingly bad for them. You expect it from the usual suspects: hate radio, anonymous e-mailers, some bloggers and many blog commenters, etc. But it is disturbing to hear such reckless hate expressed by elected officials. In the news quite a bit recently is the case of Michelle Bachmann, Congresswoman from the 6th district of Minnesota. This has gotten enough bad publicity that her seat, in a previously reliable Republican district, is in danger. Good. There should be consequences for uttering this kind of vile slander.

Given this, let's look at Texas's own Ted Poe (2nd district). Poe, as you will recall, got this seat by virtue of it being gerrymandered out from under Nick Lampson. And, as reported by CQ Politics, he likes to toss out Michelle Bachmann's favorite slur, "anti-American", from the floor of Congress.
“As a former judge, it appears to me the abuse of power by this anti-American military, peacenik judge is the perfect example of her having a terminal case of black robe disease, a disease some judges get when their personal politics cloud their judgment,” Poe said on March 10, after Mackel reportedly told a 17-year-old she opposed the Iraq war while denying his request for early enlistment into the Marine Corps.

“Columbia University clearly shows a pattern of being anti-American by promoting forums to warmongers and by preventing the U.S. military ROTC program on campus. Maybe the university should just relocate to Tehran. And in the meantime, the U.S. taxpayers have no business sending American money to the University of Hate,” he said on the day in September 2007 that Iranian President Mahmoud Ahmadinejad spoke at Columbia.

Unfortunately, he doesn't have Democratic opposition in this race, as far as I can determine. (There is a Libertarian running against him, if you feel like casting a protest vote.)

Of course, the guy whose seat he took in the Delay redistricting became, through some fairly clever manoeuvering and some big mistakes by Tom Delay, Congressman in Delay's old district, the 22nd. This is Nick Lampson, and he's running a tight race against Pete Olson. If you live in district 2 and feel bad that you don't have a Democrat to support against your horrible incumbent, consider tossing a few dollars Nick Lampson's way.

And come 2010, I want to see a Democrat running against Poe. It's not too early to start organizing now to retire this hate-monger.


Thursday, October 23, 2008

Seen in Arkansas
This amazing vehicle was speeding, weaving in and out of traffic, tailgating, cutting people off, and generally driving like a first-class asshole. Doesn't he know Jesus is always watching? He finally turned into the parking lot of Church of the Nazarene. Oh, and where was this? Literally, on the road to Damascus. Damascus, AR*, that is.

*Not AK, as I previously wrote. I don't know if there is a Damascus in Alaska, but that's not where I was going when I snapped this photo.


Culberson Avoids Debating Skelly

ABC Channel 13 interviewed Mike Skelly and John Culberson. The piece was too short for the candidates to spell out their positions in any serious detail, but they did give Culberson enough rope to prove that he's a afraid of Skelly.
Yet the most telling answers came when we asked candidates why they've never debated.
"Can you imagine that? This is a sitting member of Congress and he will not debate the other guy," said Skelly. "Oh, come on."
"This entire month has been filled completely with campaign events scheduled a long time ago," said Culberson.
"You haven't been avoiding him?" we asked.
"No, of course not," he answered.
What a pussy.


Wednesday, October 22, 2008

Chronicle Endorses Noriega
Newspaper endorsements don't change much on the ground, but it was nonetheless heartening to read this endorsement this morning.
Come January, the halls of Congress will likely be populated by strengthened Democratic majorities in both the House of Representatives and the Senate. Texas will need able representation in all arenas in that shifting legislative environment. It will be especially important for Texans to have a strong, respected voice inside the expected Democratic majority in the Senate. Rick Noriega offers such a voice, with a distinctive Lone Star tone and perspective. The Chronicle endorses Noriega for the U.S. Senate seat now held by Republican John Cornyn.Noriega, a Houstonian, describes himself as a Texas Democrat. That term, once common currency in the state's political conversation, seems to have fallen out of favor over the past several Republican-dominated years. But it resonates once more in this season of voter discontent with partisanship uber alles. Some old-fashioned moderate bipartisanship, Texas style, should be much welcomed in the Washington debate, particularly on overheated topics such as energy and immigration. Rick Noriega can provide it.
They go on to make a point that I think cannot be expressed frequently enough.
Noriega well understands that there are subjects on which Texas Democrats must stand apart from the party's national leadership. Energy is one. He is committed to bringing the message that the nation will need new domestic oil and gas supplies as it builds a bridge to greater energy independence and increased reliance on alternative energy sources. He will be able to point out in a forceful and personal way the folly of relying almost exclusively on hurricane-prone areas of the Gulf for supplies when abundant reserves can be tapped on the East and West coasts with little risk to the environment.
Come January, the stronger Democratic majorities in both the House and the Senate (and a probable Democratic president) will mean a lot more legislators with anti-oil and gas feelings. They may be more environmentally sensitive than Congresses past, or they may feel a partisan dislike for the industry based on its long association with the Republican party. This is the reality of the situation.

But this negativity towards oil and gas exploration and production can be mitigated by a strong Texas Democratic presence in the House and Senate. We already have some Democrats in the House, and we're likely to have more (including, hopefully, Michael Skelly, whose energy plan I discussed in an earlier post). But right now we have no Democrats in the Senate--but we have a chance with Noriega. Indeed, a good way to think of the choice is between a useless, isolated John Cornyn and an engaged, welcomed fellow-party-member Rick Noriega. Noriega will be part of majority party, and will thus have a seat at the table. He can help represent the oil and gas industry and all its workers (like me!) in the Senate, in a way that Cornyn obviously cannot.

For this and many other reasons, vote Noriega.


Sunday, October 19, 2008

Chron Assesses Noriega's Chances
Everyone knew Rick Noriega would have an uphill race in Texas, where no Democrat has won a statewide race in many years. The statistical poll-weighing site FiveThirtyEight gives Cornyn a 93% chance of winning by 10 points as of October 14, which is pretty grim. The Houston Chronicle is slightly more sanguine. The Chron, which just endorsed Obama (its first Democratic Presidential endorsement since Johnson in '64!) wrote the following:
The first-term senator [Cornyn] wouldn't have anything to worry about in an ordinary election. A Democrat hasn't won a Senate race in Texas in 20 years or carried the state in a presidential contest in 30 years. Cornyn has led in the polls and enjoyed a fundraising advantage of almost 5-1 over Noriega.

Nevertheless, the polls have never shown Cornyn with a lock on re-election and indicate he has less support than Republican presidential candidate John McCain among Texas voters.

Combine that with Democratic excitement for presidential nominee Barack Obama and voter anger over the economy, gasoline prices and the Iraq war, and Noriega believes he has a shot at an upset.

One other factor is that among most voters, Cornyn has no particular active following. He's the Republican who happens to be the senator. Otherwise, he is seen as a piece of furniture, a fairly reliable yes-man for whatever the party favors at the moment. He's a non-entity. It seems to me that this kind of candidate is especially vulnerable when his opponent does have a vocal and active following. Unfortuntely, Noreiga hasn't been able to generate that. But Obama has. So Obama's coattails will be a big factor.

The funny thing is that Cornyn has apparently given up on his own party this time around. He told the Longview News-Journal that

he will be able to serve Texas well in the U.S. Senate, even if Sen. Barack Obama wins the presidency and Democrats win a filibuster-proof majority in the Senate.

If that scenario happens, his role in the Senate's minority still will be important, Cornyn said in an editorial board meeting Friday with the Longview News-Journal.

Cornyn touted his working relationships with other legislators in Washington, and he said he has worked on many bipartisan bills.

This is hilarious, the notion that a Democratic Senate and President will want to have anything to do with Cornyn, a hard-core Republican apparatchik. This is, in fact, a very good reason to vote for Noriega. Noriega in the Senate will be able to make sure Texas's interests are looked after. Cornyn will be less than useless in this regard after the election, if it turns out that Obama wins and the Senate gets a deeper Democratic majority, as seems likely.

So, for this and many other reasons, vote for Rick Noriega for U.S. Senate.

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Morally Unfit for Office
Here's what our beloved Representative John Culberson said in 2006.
"I think the military ought to just take the gloves off and do what they do best," he says. "Just give them the complete freedom to use their best judgment. They're Americans, they've got good judgment, they're going to do all they can to protect women and children and innocent life...If there's an area where the terrorists have been active in and we're having trouble getting them out, the military should be able to go in, and if they've tried everything else and there's no other recourse, to notify everybody in the area and tell them they've got 72 hours, women and children, to get out and we're gonna send the bombers in."
Because like, how dare the Iraqis fight back against the people who invaded them. We should teach their country a lesson by leveling it. (This quote comes from The Houston Press.)

It's old news, but the fact that Culberson has been a shamefully bad Representative for the 7th District of Texas is also old news. Let's make some new news--vote for Michael Skelly.


Colin Powell endorses Obama

This will be old news by the time anyone here reads it (the readership of this blog, tiny to begin with, dwindles to almost nothing on the weekends), but I thought Powell was good at laying down the case here:


Saturday, October 18, 2008

Greed versus Prudence, Continued previous post reminded of a specific example of management choosing to go against its financial risk analysts to its misfortune. The company was Enron, and the analyst was Vincent Kaminski. As the Washington Post put it,
For Vince Kaminski, the in-house risk-management genius, the fall of Enron Corp. began one day in June 1999. His boss told him that Enron President Jeffrey K. Skilling had an urgent task for Kaminski's team of financial analysts.

A few minutes later, Skilling surprised Kaminski by marching into his office to explain. Enron's investment in a risky Internet start-up called Rhythms NetConnections had jumped $300 million in value. Because of a securities restriction, Enron could not sell the stock immediately. But the company could and did count the paper gain as profit. Now Skilling had a way to hold on to that windfall if the tech boom collapsed and the stock dropped.

Much later, Kaminski would come to see Skilling's command as a turning point, a moment in which the course of modern American business was fundamentally altered. At the time Kaminski found Skilling's idea merely incoherent, the task patently absurd.

The deal was "so stupid that only Andrew Fastow could have come up with it," Kaminski would later say.

Kaminski was the naysayer who finally was left outside the loop. Skilling didn't want him saying no anymore. Enron was one of the leading companies pushing for financial deregulation. Their point-man in Washington was Phil Gramm, whom they rewarded by putting his wife on the board of directors. Now Enron is dust, Skilling and Fastow in jail, and Gramm is, absurdly, advising John McCain.

As for Kaminski, he is an MD at Citigroup and teaches energy derivatives at the Jesse H. Jones Graduate School of Management (where I had him as a professor). He, like Michael Skelly, is a big supporter of tradeable carbon credits. If Obama becomes president, he could do a lot worse than have Skelly and Kaminski on the team that designs a national cap-and-trade plan.

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Greed, Not Bad Models, Doomed Wall Street
Megan McArdle, The Atlantic's libertarian economics blogger, had a post in which she wrote the following:
The people who, it seems to me, have been truly vindicated by this are Nassim Taleb and Benoit Mandelbrot. They nailed what to me is the core issue: bankers pricing security risk as if it were distributed along a normal curve with thin tails.
This assertion was made at the end of a long blog post decrying the precognitive failings of Paul Krugman. The thing is that Krugman correctly identified housing as a bubble that would burst, even if he didn't know precisely when. McArdle seems really reluctant to give him credit for it, and indeed writes off all prognosticators by saying only Taleb and Mandelbrot deserve praise, and that if anyone got anyone else got any prediction right, it was just chance. Only hindsight bias makes them seem wise now. Now aside from the ungenerousness of this (after all, quite a few people warned that housing was overpriced and could suffer a correction, and I doubt they were right purely by accident), the praise for Taleb is fantastically undeserved! (Mandelbrot I can see maybe, since he appears to be one of the earliest to see that financial returns were not normally distributed.)

The thing that McArdle doesn't seem to realize is that everyone on Wall Street worth his or her salt knows that returns are not normally distributed and therefore, models that are based on such a distribution of returns must be adjusted. She seems to think that Taleb was some kind of Cassandra, when the notion of fat tails is widely known, a major aspect of financial academic research, and something that traders and financial engineers constantly deal with.

A normal distribution can be described with two numbers, a mean and a standard deviation. If you are looking at a time series of returns, you can easily find a mean and standard deviation. The standard deviation here is what we call volatility--how much can a security go up or down? Risky assets have high volatility, safe assets low volatility. The problem is that if you make a histogram of those returns, the result rarely looks quite like a normal curve. You see fat tails. The reason for this is that volatility isn't really a constant. Just because you get a single unique number when you used the STDEV function in Excel doesn't mean it really exists.

This is a bit scary. You can look at a data series and feel like the volatility is about X, but what you can't see is that there could be some event you haven't seen yet and can't predict that would push that volatility way above X. This kind of event is what Taleb calls a "black swan"--something you don't think exists until you actually encounter it. But the thing is, if the volatility isn't constant but is ever-changing (as is actually the case in most financial returns), you can never be sure whether a "black swan" is lurking out in the future. You get a distribution of returns with leptokurtosis (aka, fat tails, which indicates that extreme outcomes are more likely to happen than in a normal distribution).

Like I said, none of this is secret. It's why the VIX exists. It shows the implied volatility of S&P 500 options. If Wall Street was full of people who didn't know about fat tails, they would not bother creating a VIX--because this volatility would just be assumed to be a flat line.

What is "implied volatility" and why do traders care? Back in the early 70s (or late 60s?), an options pricing tool called the Black-Scholes model was created. B-S assumed that the underlying asset had normally distributed returns. But since every options trader knows this not to be true, they often take the actual current option price and treat the volatility as the unknown. That's the implied volatility--implied by the current option price. (Figuring out current volatility turns out to be pretty hard.) Why do they do this? It turns out that having a better idea of the real volatility is useful for many financial activities. For example, they can use it to better delta hedge and gamma hedge their positions.

They could also try to get volatility using GARCH. This is a model for volatility that uses previous data to find volatility (as you normally would in getting a standard deviation), but weighs the data heavily to the most recent data-points, so that you can see volatility changing over time. It won't help you see the future, but it will help you see the present, which is hard enough. Well, this all sounds pretty obscure, huh? Except that its discoverers won the Noble prize in economics for it in 2003. So maybe it is obscure to Megan McArdle and other readers of pop-finance books, but not to actual practitioners.

The reason I'm going on and on about this is to demonstrate that despite what McArdle claims, people who built pricing models on Wall Street were well aware of fat tails on the probability curves of returns. And knowing these things did nothing to prevent this financial meltdown.

Why? Reading The Plight of the Fortune Tellers (excellent book on financial risk, far better than Taleb) suggests an answer. It wasn't stupidity but greed overcoming prudence.

Imagine a bank as having two groups--the risk-management group and the traders. They both use complex models to help them make their decisions. The risk group are always saying, "No." Don't leverage so high, don't have inadequate cash on hand to handle possible forecasted losses, don't engage in that risky strategy, etc. They are naysayers and scolds, and are pretty much unloved but necessary. The traders, on the other hand, are always saying yes. Yes, let's take this huge risk because the returns will be freaking orgasmic. Let's leverage to the hilt to multiply our returns. Let's not have a bunch of cash sitting around because that ain't making me a fat bonus, baby!

Now the top management is supposed to weigh these two necessarily competing urges. But because all the big banks are public and in competition with one another, they lean to what their traders are telling them. Hell, they got to be CEOs by being risk-taking traders themselves--no pussy risk-manager ever gets to be CEO. So they lean towards the risky trades and (as Michael Lewis observed) don't really understand these complex financial products and strategies that their big swinging dick rocket scientist traders have invented. (Do you think the top brass of AIG knew how to value a credit default swap? No, but they knew the CDS desk was making them a shitload of money.) They are just dazzled by the complexity and promise of returns. And if any of the risk-managers understand the shit themselves, they just come across as party pooper Deputy Dawgs. So blow them off! Go with the traders and make the big bucks!

This will always happen. That's why you need regulation. You need a brake from outside the company to prevent it from commiting suicide in its quest for ever higher returns. That regulatory brake gives the CEO cover if shareholders ask him why their stock is not higher. He can say that regulations prevent him from taking the kinds of risks necessary to produce higher returns. Without regulation, the trader mentality of high return/high risk will always prevail. That's fine if the industry we're talking about is not intimately tied to the functioning of the entire economy, but when you talk about big banks, it's unacceptable. Their greed must be tempered with sensible risk-avoidance regulation from the government.

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Friday, October 17, 2008

Obama by Jaime Hernandez

Well, not quite. But almost as cool--it's Maggie wearing an Obama T-shirt. This is from an online fundraiser for Obama. The auction ends Sunday, so get your bids in!

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Wednesday, October 15, 2008

Tadanori Yokoo

Ok, enough with the politics. Time for a pure visual coolness break.
The Wonders of Life on Earth
Yakuza Movies (1968)
Sleep, Crime and Falling (1965)

See lots more by this Japanese poster artist at Journey Around My Skull, a great blog about avant garde books and graphic art.

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If you can't say yup, just say nope!

Love it. From the cover of this week's Willamette Week. Image by Barry Stock.


Michael Skelly on the TV

This commercial is concise and positive and also visually clever.

(Vote Skelly!)

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Tuesday, October 14, 2008

Skelly Outspends Culberson
The Houston Politics blog at the Chronicle has the details:
Democratic challenger Michael Skelly's campaign spent $1.5 million through September, more than twice as much as Republican U.S. Rep. John Culberson's re-election effort, according to Federal Election Commission records.

Also, Skelly recently pumped $750,000 in personal funds into his campaign in the form of a loan, in addition to the $200,000 he injected earlier this year. Skelly is an exective in a wind power company that the Republican Party of Texas, in support of Culberson, alleges "took taxpayer subsidies to enrich himself and his business."

It's true that the federal government requires power companies to get a fraction of their electricity from alternative sources such as wind. It's also true that the government has subsidized the oil and nuclear energy industries through the years and that Culberson has voted for tax subsidies for conventional and alternative energy.

Skelly's personal loans aside, his campaign has still raised more money from donors than Culberson's, a very rare situation in congressional races across the country. Much of Skelly's campaign spending has been for those incessant TV ads and mailings.

I'm one of those donors (a small but proud one). You can be too--go here to help out.

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Monday, October 13, 2008

Hey, There's Something Kind of Different About That Obama Fellow

Heh. Courtesy of Ill Doctrine.


Sunday, October 12, 2008

Why Equity in Banks Came So Late

Why did the notion of taking equity in failing banks come so late to the administration in this crisis? Even now, Paulson is speaking of taking non-voting stock in failing financial institutions. Why? Felix Salmon has an answer:
But go back to Paulson's famous statement to the Senate Banking Committee on September 23:

Some said we should just stick capital in the banks, take preferred stock in the banks. That's what you do when you have failure. This is about success.

Whose failure is he talking about here? Narrowly, bank failures, of course. But also more broadly, he was talking about the failure of the laissez-faire regulatory system which he helped to create while CEO of Goldman Sachs -- a system which was governed by an ideology which said that markets not only could self-regulate, but would self-regulate.
This is why we don't have a full RFC-style solution yet. That will probably have to come with the next administration.
I suspect that one of the reasons the G7 failed to come up with anything substantive in Washington this weekend was that the US remains atavistically opposed to anything which smells of World Government: it's simply not in the nature of any Republican administration to go along with an international plan to bring a large proportion of the world's biggest banks under some sort of state control.
I only hope they don't let ideological blinders prevent them from taking the bold action that may be necessary. This was the main problem with Hoover.

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Protesting the Protesters

You have to read this. Down in deep red Fort Bend County, some zealots lead by a local priest decide to picket the local Democratic headquarters. They didn't count on Susan Bankston, local blogger and hell-raiser. Read it and laugh. And remember, the sweet baby Jesus is listening.

(Hat tip to Kuff.)


Saturday, October 11, 2008

WIth Supporters Like These...


McCain apparently has become a bit unnerved by the blood-thirsty depravity of his supporters lately. Perhaps the Secret Service asked him to tone it down. Or maybe he had an attack of conscience. In any case, his campaign and his surrogates and supporters in the media have been ratcheting up the hate for a while now, so it seems a bit too-little-too-late for McCain to try to put this fire out now. (One is reminded of those firefighters who have Munchausen Syndrome, who set fires so that they can heroically put them out.) The biggest pusher of the "Obama=Terrorist" meme has been his own running mate, Sarah Palin. We don't need someone like that in the White House. Vote Obama.


Skelly on Energy

One of the biggest issues facing the next Congress and the new Administration will be what to do about energy. Fortunately for us in Texas district 7, the candidates offer clear choices.

Michael Skelly, running as a Democrat, has outlined his approach here. He has three goals: 1) to reduce energy costs, 2) reduce dependence on foreign oil, and 3) reduce carbon emissions. None is trivial, and the first and third will fight each other all the way. But nor is any a fantasy, like some of the other plans being tossed out.

Achieving these goals has four basic approaches.

  • Increase efficiency. There are lots of efficiency measures that can be adapted, both long term (like improved CAFE and Energy Star requirements) and short term (see this paper by the EIA). This affects all three of his goals--by controlling demand on oil, it brings oil prices down. It also reduces our gross imports and reduces our CO2 footprint.
  • Renewable Energy. Not a surprising focus from a man who built Horizon Energy, the third largest wind energy company in the U.S. As long as cars are primarily run on gasoline, renewable energy won't have a huge effect on oil imports. But as electric cars like the Volt become common (or CNG cars, as suggested by the Pickens Plan), new sources of electricity will be needed, and many of them will need to be renewable.
  • Access to Hydrocarbons. Skelly recognizes that we will be needing oil and gas for a long long time. He isn't a hippy idealist who imagines solar power will replace oil and gas (and coal, for the matter) in 20 years. But the importation of oil hurts us economically as we continually run up huge trade deficits, and destabilizes the world by pumping U.S. dollars into the hands of various dictators, kleptocrats, thugs, and fanatics. Skelly therefore supports opening previously off-limits areas of the U.S. to oil and gas exploration. It won't end imports, but it will reduce them--as well as providing good jobs to American workers.
  • Carbon Policy. Skelly supports a cap-and-trade system rather than a tax or simple regulatory limits. With a cap-and-trade system, the market decides what is the best allocation of resources. This permits (and even encourages) innovation in energy production while limiting CO2 output.
It all seems pretty sound. Gimmicks he opposes are the gas tax holiday (no reputable economist favored that pander), a windfall profits tax (beloved of many Democrats, unfortunately, and also implemented in Alaska by Sarah Palin, as hard as that is to believe), suing OPEC (good luck with collecting), and releasing oil from the strategic petroleum reserve. He also opposes the disingenuous claims of the "drill here, drill now" crowd, recognizing that expanding drilling will neither cause prices to immediately drop nor replace all imported oil.

This shows, I think, what an independent thinker Skelly is on energy--not beholden to the party line at all. That is a great contrast to John Culberson, the incumbent.

Back in 2001, he said, "President Bush’s energy policy focuses on increasing our energy supplies, and promoting conservation which will strengthen our economy, lower consumer prices, and protect our environment. I believe President Bush’s energy policy will ultimately solve our nation’s energy shortages and bring down the spiraling costs of gasoline, electricity, and natural gas." Ho ho, good one, John. Oh, and he thinks that giving tax cuts to oil companies is a good idea. Because I guess they are hurting for cash for capital investments right now. I work for an energy company, and this is nutty. If oil and gas companies needed a tax cut to "rebuild the oil infrastructure ASAP," as Culberson suggests, they wouldn't have spent the last few years repurchasing stock from investors. Look, I understand why Culberson is doing this--many oil companies are located in this Congressional district. All companies like tax breaks. He's servicing his constituents.

But we need someone who does more than constituent service. We need someone with vision, something Culberson, a consumate footsoldier (not too bright but follows orders well), will never have. We need Skelly.

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Friday, October 10, 2008

We Need a New Jesse H. Jones

After capitalism failed to right itself after the 1929 Crash, Herbert Hoover created the Reconstruction Finance Corporation in 1932. Jesse H. Jones, a self-made millionaire banker and developer from Houston, was named to the board. The RFC was charged with giving loans to banks, railroads, and other corporations to try to get credit flowing again in the U.S. Bureaucratic and narrow in scope, the RFC was not initially successful. Jones chafed at its limitations.

When Roosevelt came in, he put Jones in charge, who greatly expanded the RFC's mandate while streamlining its operation. Now it could take equity stakes in banks. And its equity and loans could come with major strings--including cutting executive salaries and replacing incompetent executives. Jones forced banks to look past their fear and start lending.

Jones was no socialist--far from it. He was an ardent capitalist, and what he did with the RFC was done to save capitalism and to save American democracy. But he recognized that government had a role--especially in a crisis--in governing capitalism. The equity the government bought was eventually sold (with positive returns for the taxpayer), and America survived the Depression with capitalism intact and strong, but chastened after decades of hubris.

Now facing a similar crisis, we can be happy that our leaders are responding faster than Hoover did. They should have started sooner, but the political environment which elevated the notions of government deregulation and the genius of Wall Street made an RFC impossible until now. That old hubris had returned, unfortunately. We let the big swinging dicks of Wall Street remove regulatory protection. We are reaping what they sowed, and we must respond. Even so, the first TARP bill proposed by Treasury Secretary Paulson was an abomination--too narrow in its remedies and too weak in oversight. The revised TARP bill that the House voted down was better, but still just as weak, in its way, as the Hoover RFC. The final version, which added the ability for the government to take equity stakes in troubled financial companies, comes closer to being new RFC. Now if the next president can find a man with the vigor, vision, background and ability of Jesse H. Jones to run the thing, we might pull through this thing.

What we don't need are people like Representative John Culberson (Republican, 7th District of Texas). This know-nothing boob has been an embarrassment to my Congressional district for years now, and the potential meltdown of the world financial market has not injected him with new brains. Here's why he opposed the bailout and voted "No" twice:

My preferred solution to the credit crisis was to repeal the mark-to- market accounting rule and raise the $100,000 FDIC insured limit on bank deposits to $250,000. Unfortunately, this bailout bill also included $42 billion in tax increases and pork barrel spending, and I could not support it. I am committed to finding a solution that restores liquidity to the banking system, and these two steps will help immensely, giving Congress and the Administration time to think the problem through carefully. While I am glad the SEC Chairman Chris Cox repealed the mark to market rule, and that the bailout bill raised the FDIC insured limit to $250,000, I co-sponsored the conservative alternative, H.R. 7223. To read about the Free Market Protection Act, click here.

(This feeble, hopeless act included the Republican's favorite response to any problem up to and including tooth decay, tax cuts. Specifically a cut of the capital gains tax, which would be great news for all six people who will have capital gains this year.)

The White House and the Treasury both tell us that nothing in this bill will prevent this crisis from happening again, or bring those responsible to justice and that $700 billion may not even be enough.

(True--this is a rescue package, triage to fix a crisis. Preventing the crisis from happening again is not its function, and would be inappropriate for this administration to create anyway. That belongs to the next administration. Hopefully one that won't have to worry about Mr. Culberson's votes.)

Since we will have to borrow the $700 billion by selling TBills on the international bond market, and the largest percentage of TBills are bought by the Chinese or other hostile powers through Middle Eastern sovereign wealth funds, under this bill, American taxpayers will borrow billions of dollars from Chinese and Middle Eastern banks to bail out Chinese and Middle Eastern banks.

(Huh? In case he hasn't noticed, several U.S. banks just failed. And thousands of U.S. corporations just lost their access to credit and huge chunks of market capitalization.)

This bill also raised the national debt to $11.3 trillion, doubled the deficit overnight, and saddled our children with at least $1 trillion in new unfunded obligations. All for a bill the Treasury Secretary admits won't prevent the problem in the future and may not solve the urgent problem in front of us.
(Since when has he seriously given a flying fuck about the deficit?! Hasn't he voted with Bush for the past eight years, while we turned a surplus into the biggest deficit in history?)

Federal property managers will be able to rewrite mortgages to reduce principal and lower interest rates to zero if they wish, and they can give away foreclosed or distressed-loan homes in your neighborhood to anyone they wish. Liberals who manage these programs will give away millions of free or reduced homes in neighborhoods all over America to families who could not otherwise afford them. The federal government now has the power to create federal housing projects, house by house, in neighborhoods all over America. Just imagine what that means for property values and the safety and security of your neighborhood.

(Oh noes! You may be forced to live next door to a negro or a Mexican! This is the biggest piece of quasi-racist balderdash in his entire screed.)

Culberson is a witless fool. He's a career politician whose lone virtue up to now has been loyalty--to the Delay wing of the Republican Party. We need someone with brains in the 7th district. Michael Skelly built a multi-million dollar business from scratch. He supports the energy industry, both conventional and alternative. He's fucking smart. Let's have smart people representing us for a change. Vote Skelly.

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Thursday, October 09, 2008

Thought for the Day

If you liked FEMA's response to Katrina, you'll love a McCain/Palin administration's response to the credit crisis.

If the past eight years have taught us anything, it's that if you put people in power who hate the government, they will misuse it and fuck it up and fail, even when the situation is direst and the necessity for bold and competent action strongest. They cannot be allowed to continue.

Vote Obama. Vote Noriega. Vote Skelly.


Saturday, October 04, 2008

Three Excellent Blogs

This image is from the aptly-named Cute Overload.


Apparently, you neither have to be very smart nor have much artistic ability to be a professional cake decorator. The hilarious results can be found at Cake Wrecks.
And finally, Strange Maps for all you map-lovers. Odd maps, imaginary countries, humorous cartography--it's all here.

These are unclassifiable blogs that entertain me greatly. Check them out.

Conspiracy Theories, Superstition, and Loss of Control

OK, so our financial system is in deep shit, and it's really hard to understand and really impersonal. You watch it and think, "What the fuck?" You feel helpless, buffeted by something out of your control. You just know there are shenanigans happening here. Seriously, some guys are making out like bandits--that much is clear. But could it even be bigger? Could this be a conspiracy between various government insiders and financial bigwigs to deliberately push the economy into a crisis, and then take greater authoritarian control as a "response" to the crisis. That's the basic theory of Naomi Klein's The Shock Doctrine, right?

Anyone who knows me knows I am a big disbeliever in conspiracy theories. I feel there is randomness all around us, but there is something inate in humans that seeks to find patterns in the randomness. Apparently Jennifer Whitson, a professor at the McComb's School, has experimentally determined this to be so. Her experiments were about how much we found patterns in randomness based on how "helpless" or "out of control" we felt. She had her tests subjects and her control subjects put in situations where they either were not in control (in an unpleasant way) of a situation or masters of it. Then she had the groups look at TV static. And the ones who were feeling a lack of control were more likely to see patterns in the static.

This strongly suggests that this tendency to see patterns (whether or not they actually exist) when stressed had some evolutionary benefit back in the days of our primitive ancestors. One can imagine our ape-like forebears in a jungle, stressed by the constant danger of predators, disease, inclement weather--things primitive men had no control over. Then there is a rustle in the leaves, then a strange noise. Is it just random noise--wind blowing, a chipmunk or a bird? Or is it a pack of predators? Our ancesters assumed the latter, ran like hell, and lived to gather bananas another day. In other words, this stress-induced pattern recognition helped them survive.

But this survival instinct causes all kinds of irrational behavior in civilized men. We can see it in history. Think of medievel man, trapped in his "demon haunted world." He couldn't understand anything about his world, and any deviation from the patterns he expected must have caused him great distress. It's easy to see how such a man would imagine a virtual parallel unseen world, overlaid with ours, full of malign Walpurgis Nacht-like creatures. Reading Patrick O'Brian's brilliant series of books set on British warships in the Napoleonic War, one is struck by the variety of weird superstitions that sailors (and even the officers) had. But if you think that at that time, there were few people less in control of their enviroment than sailors, it makes perfect sense. Those superstitions are their attempt to achieve a kind of spurious control.

I expect we'll see a variety of conspiracy theories arise out of this crisis, as people feel helpless and sense ominous rustling in the jungle.

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