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Assorted Links 5/16/10 Archives

Assorted Links 5/16/10

Noted Bear Bob Janjuah Sighted on Bloomberg

  • Strategies for Working with Congress: Effective Communication and Advocacy on Capitol Hill, May 21, 2010
  • Congress in a Nutshell: Understanding Congress, June 3, 2010
  • Congressional Dynamics and the Legislative Process, June 4, 2010
  • Mark Twain on Copyright - "Remarks of Samuel Langhorne Clemens Before the Congressional Joint Committee on Patents, December, 1906 (Mark Twain on Copyright)"
  • Capitol Hill Workshop, June 9-11, 2010
  • Wi-Fi Classroom - How to Find, Track, and Monitor Congressional Documents: Going Beyond Thomas, June 24, 2010
  • Wi-Fi Classroom - How to Research and Compile Legislative Histories: Searching for Legislative Intent, June 25, 2010
  • Persuading Congress: Candid Advice for Executives - "Persuading Congress, by Joseph Gibson, is a very practical book, packed with wisdom and experience in a deceptively short and simple package.

    This book will help you understand Congress. Written from the perspective of one who has helped put a lot of bills on the president's desk and helped stop a lot more, this book explains in everyday terms why Congress behaves as it does. Then it shows you how you can best deploy whatever resources you have to move Congress in your direction."
  • The Dark Magic of Structured Finance - "In Too Big To Save Robert Pozen gives a clever example, based on an excellent paper by Coval, Jurek and Stafford, which explains both the lure of structured finance and why the model exploded so quickly.

    Suppose we have 100 mortgages that pay $1 or $0. The probability of default is 0.05. We pool the mortgages and then prioritize them into tranches such that tranche 1 pays out $1 if no mortgage defaults and $0 otherwise, tranche 2 pays out $1 if 1 or fewer mortgages defaults, $0 otherwise. Tranche 10 then pays out $1 if 9 or fewer mortgages default and $0 otherwise. Tranche 10 has a probability of defaulting of 2.82 percent. A fortiori tranches 11 and higher all have lower probabilities of defaulting. Thus, we have transformed 100 securities each with a default of 5% into 9 with probabilities of default greater than 5% and 91 with probabilities of default less than 5%.

    Now let's try this trick again. Suppose we take 100 of these type-10 tranches and suppose we now pool and prioritize these into tranches creating 100 new securities. Now tranche 10 of what is in effect a CDO will have a probability of default of just 0.05 percent, i.e. p=.000543895 to be exact. We have now created some 'super safe,' securities which can be very profitable if there are a lot of investors demanding triple AAA."

    From the comments: So is Congress like the Good Witch of the North?

  • Auditing the Fed: “The Single Greatest Act of Bipartisanship Since Obama Took Office” - "Yesterday, I noted that there weren't many opportunities for conservatives to find themselves in agreement with the Congress' only declared socialist Bernie Sanders. But that's exactly what happened when the audit the fed amendment was attached to the financial reform bill on a 96-0 vote. Are the left and the right finally coming to agree that crony capitalism and rent seeking by big business has had a corrupting influence on our government?"
  • U.S. Chamber of Commerce endorses Trey Grayson over Rand Paul in Kentucky Senate - "If anything could push the GOP towards some free-market populism -- opposing bailouts, standing up to lobbyists, cutting spending -- it would be the election of Rand Paul, son of Rep. Ron Paul, in Kentucky. The younger Paul has railed against bailouts and lobbyists, while the establishment of the GOP has rallied behind Secretary of State Trey Grayson in the primary.

    But the U.S. Chamber of Commerce has endorsed Trey Grayson, TPM reveals. I generally like the Chamber, as it tends to oppose regulatory robbery. But when the Chamber shuns a candidate for being too free market, that’s quite an endorsement."
  • Who Is Fighting (Or Helping) Whom In Mexico’s Drug Wars? - "Are Mexican authorities fighting an all out war against drug cartels or simply helping one drug organization win the battle against other criminal gangs for the most lucrative trafficking route to the United States? Street banners alongside Mexico’s highways--put up by rival drug gangs--have long suggested that the administration of Felipe Calderon is in bed with the Sinaloa cartel, that country’s most powerful drug organization. As The Economist reported earlier this year, the Mexican government’s efforts against drug trafficking have been fairly one-sided:
    . . .
    Also, these allegations present a conundrum for president Obama, who happens to host Felipe Calderon on Monday for a state dinner at the White House. The administration has been pressed by the Mexican government to substantially increase the level of assistance in the fight against cartels. However, if it becomes clear that high-ranking Mexican law enforcement officials are in bed with one or more criminal organizations (not the first time that something like this has happened) and that U.S. intelligence has ended up in the hands of drug lords, there will be growing resistance within the U.S. government to further aid Mexico. This in turn, will only exacerbate the tension between both governments.

    'Plata o plomo' (which literally means 'silver or lead' and refers to how officials are either corrupted or killed by drug lords) has long been a common feature of the drug war in Latin America. It is not surprising that multi-billion dollar cartels corrupt the officials who are supposed to fight them. What is surprising is some people in Washington still believe that this is a winnable war."
  • 16 Reasons Why California Is The Next Greece - "THE BIG ONE: California has no central bank and can't print money to stave off debt.

    This is everything.

    The inability of Greece to give itself some monetary flexibility was devastating, and it's the reason the UK is not facing an acute crisis, despite a very high level of debt. Eventually, California will need a bailout from DC, but while European leaders came together for Greece and the PIIGS, could you imagine our fractious Congress saving Europe -- especially if the GOP takes over in November?"
  • Housing never really improved -- 10 charts showing the United States housing market is entering the second wave of problems. 1 out of 4 people with no mortgage payment in the last year are still not in the foreclosure process. - "To put it bluntly, the U.S. housing market today is in deep water. Nothing exemplifies the transfer of risk to the public from the private investment banks more than the deep losses at Fannie Mae and Freddie Mac. Fannie Mae announced a stunning first quarter loss of $13.1 billion while Freddie Mac lost $8 billion. At the same time, toxic mortgage superstar JP Morgan Chase announced a $3.3 billion profit for Q1. This reversal of fortunes has been orchestrated perfectly by Wall Street. Since the toxic assets were never marked to market, the big losses have been funneled to the big GSEs (and as we will show in this article, now makes up 96.5 percent of the entire mortgage market). In other words, banks are making profits gambling on Wall Street while pushing out mortgages that are completely backed by the government. We are letting the folks that clearly had no system of underwriting mortgages correctly or any financial prudence lend out government backed money and the losses are piling up but only in the nationalized Fannie Mae and Freddie Mac. What a sweet deal. Stick the junk in a taxpayer silo.
    . . .
    In total the housing market is in worse shape today than it was a few years ago. If the stock market was tied to housing we probably have a Dow 20,000 with 14 million foreclosures. The bailouts have been one large transfer of wealth to the banking sector. Remember that the bailouts were brought about under the guise of helping the housing market and keeping people in their homes. None of that has happened. Ironically the only thing that seems to keep people in their home is when they stop paying their mortgage! If that is the strategy we have arrived at after $13 trillion in bailouts and backstops to Wall Street we are in for a world of problems."
  • Black, Brown, and Beige: Duke Ellington’s music and race in America. - "Celebrating Ellington’s seventieth birthday, in 1969, Ralph Ellison recalled what it was like when, in his youth, in the thirties, the Ellington band came to Oklahoma City 'with their uniforms, their sophistication, their skills; their golden horns, their flights of controlled and disciplined fantasy,' all of it like 'news from the great wide world.' For black boys like Ellison all over the country, the band had been 'an example and goal,' he wrote. Who else--black or white--had ever been 'so worldly, who so elegant, who so mockingly creative? Who so skilled at their given trade and who treated the social limitations placed in their paths with greater disdain?'

    Two years before Ellington died, in 1972, Yale University held a gathering of leading black jazz musicians in order to raise money for a department of African-American music. Aside from Ellington, the musicians who came for three days of concerts, jam sessions, and workshops included Eubie Blake, Noble Sissle, Dizzy Gillespie, Charles Mingus, Max Roach, Mary Lou Williams, and Willie (the Lion) Smith. During a performance by a Gillespie-led sextet, someone evidently unhappy with this presence on campus called in a bomb threat. The police attempted to clear the building, but Mingus refused to leave, urging the officers to get all the others out but adamantly remaining onstage with his bass. 'Racism planted that bomb, but racism ain’t strong enough to kill this music,' he was heard telling the police captain. (And very few people successfully argued with Mingus.) 'If I’m going to die, I’m ready. But I’m going out playing ‘Sophisticated Lady.’' Once outside, Gillespie and his group set up again. But coming from inside was the sound of Mingus intently playing Ellington’s dreamy thirties hit, which, that day, became a protest song, as the performance just kept going on and on and getting hotter. In the street, Ellington stood in the waiting crowd just beyond the theatre’s open doors, smiling."
  • California Wants to Attract Jobs -- But What About Retention? - "The debt and taxes in California are a deterrent to job creation. Can Schwarzenegger's new coordinating agency fix that? In his YouTube address announcing his new Office of Economic Development, Gov. Schwarzenegger said the office would make starting or growing a business 'as painless as possible, because we'll be cutting through all the red tape and streamlining state bureaucracy. And believe me, there's a lot of state bureaucracy.' While it's nice to streamline, maybe part of the problem is that the state is running 100 programs in 28 state agencies in the first place. All that job-creating bureaucracy costs money, and that means job-killing taxes.

    If your state isn't business friendly, billboards and 'one stop' permitting won't matter. Marketers know that it is many times more expensive to attract a new customer than it is to retain existing ones. The same is true with jobs. Instead of working so hard to spur job growth, lowering taxes and easing regulatory burdens can enable existing businesses to thrive."
  • A 'High Risk' State: California Makes Top Ten List For Potential Government Default - "California bonds are now viewed as one of the riskiest places in the world for investors to put their money. At least that is according to the latest 'CMA Sovereign Risk Monitor,' which ranks the world’s most volatile sovereign debt issuers. The analysts, in a May 11 list, said California has the seventh highest risk of default.

    The six with rankings more worrisome than California are Venezuela (the worst), followed by Argentina, Pakistan, Greece, Ukraine and the Emirate of Dubai. California ranks ahead of the Republic of Latvia, the Region of Sicily and Iraq. See the list under 'Highest Default Probabilities.' (The report is issued by CMA Market, a 'credit information specialist' with offices in London, New York and Singapore.)"

Duke Ellington: Take The "A" Train

  • Tyler Cowen, a blogger, professor and organizer of rules on how the world works - "Cowen is 48. He grew up in Hillsdale, N.J., an hour's drive from New York. His mother stayed home and his father was president of the chamber of commerce. He has a younger brother (a cook) and an older sister (a grocery store manager). Holly Cowen recalls her brother acquiring vast quantities of information before he was 4. He read constantly, even at dinner, though not to the exclusion of playing sports. 'He wasn't a total nerd,' she says. 'He was balanced.'"
  • Vanity sizing: the consumer spending edition - "Yes, it’s another installment in my pet theory series, the myth of vanity sizing (links to previous entries appear at close); this one being a discussion of the influence of the evolution of consumer spending. Described most succinctly:

    Manufacturers don’t know who their customers are anymore.

    I concede this broad generalization is at least the size of the side of a barn. Humor me, let’s just say most large apparel firms have less an idea of who the end consumer is than at any other point in history. The reasons they don’t know anymore are influences that can be attributed to:

    1. The average clothes buying consumer is changing where and how they buy.

    2. How the windfall of low cost off-shore manufactured apparel has contributed to evolving expectations and subsequent disappointments.

    3. Why the unintended consequences of consumer credit to finance apparel purchases has created an apparel sizing problem for all concerned.
    . . .
    Do you recall the very first time you were in a store and noticed a great top name brand that was being sold for an uncustomary low price? Perhaps you noticed because it was a brand you coveted (confirmation bias). This would have been about 15 to 20 years ago, give or take five years. In the beginning, people were very excited about it. They were happy to buy big names they previously could only have aspired to own. These products were the first of the big push coming in from off shore. Product landed at the loading dock with the 40% hang tags already attached. People were so excited, they didn’t care that the fit was a little off. Between price and the anticipation of acquisition, they were willing to overlook a small defect (like fit or diminished product complexity) because they wanted The Brand so badly. I remember that. It was exciting. Nobody cared that the back neck was cut too deeply so the front rode up into the neckline, it had a horsie dammit! And everybody wanted one. Me too."
  • Pattern of Death - "The future of terrorism, according to John Robb, will be the story of individuals acting on their own initiative according to broadly shared narrative. That might include attacking artists in university lecture halls who’ve had the temerity to draw ‘Mohammed’ cartoons, encouraging piracy, sowing mines and IEDs at random, or using cell phone technology to stage flash events. Open Source Warfare is open season on everybody. According to this view the challenge comes from the grassroots. To some extent the challenge of distributed warfare has been accepted, and war in the grassroots it is. One example of a America’s counter is the so-called 'pattern of life' of life targeting, which tracks individuals, such that if a person looks persistently guilty, then he is ‘engaged’.
    . . .
    The program has been criticized as a violation of human rights. But one criticism which is rarely heard is whether the program is moving the target list in the wrong direction. It is moving it down the chain. Suppose instead of moving down from the Taliban and al-Qaeda top leadership, it moved up? Suppose Mullah Omar and Osama bin Laden were not at the top of the terrorist food chain? Why not hit the guys above them? Hillary Clinton recently hinted that Pakistani officials were more deeply connected to terrorism than they were letting on, and that they may have been sheltering Osama Bin Laden and the Taliban leadership. On a CBS interview the Secretary of State said, 'We’ve made it very clear that if -- heaven-forbid -- an attack like this that we can trace back to Pakistan were to have been successful, there would be very severe consequences.' This suggests that the Taliban and al-Qaeda, rather than being the Alpha and Omega of terrorism, are just proxies in a war with bigger fish.

    But what would Washington do with a bigger fish if it found it with stratospheric UAVs and super databases? Would the President impose 'very severe consequences'? Or on the contrary, would it find a reason to let the monster fish go in the name of maintaining 'world peace'. Suppose Hillary actually found a smoking gun linking the leadership of Pakistan to al-Qaeda? Which incentive would prevail? Is saving 500 or 1,000 American lives worth war with Pakistan? There would arguably be a huge incentive to do nothing because of the risks of taking action against Islamabad would be so great. One example of how catching a big fish can cause problems was recently illustrated by a New York Times report that the South Korea found torpedo explosive residue on the sunken hull of its corvette, the Cheonan. It is almost impossible to avoid concluding that North Korea torpedoed a South Korean Naval vessel. Does this mean 'very severe consequences'? God a-mighty, no.
    . . .
    The War on Terror isn’t being fought to win, it’s being fought to keep the lid on. The conflict will be managed, not resolved. The War will be kept within bounds, at all costs. An explosion in New York will be met by a flurry of missiles fired from robotic aircraft circling over certain countries. Tit for Tat. Corpse for corpse. Missile for car bomb."
  • Wheat Ridge High School Class of 1970 - "The reonion committee is working away planning the 40th reunion the weekend of August 13-15, 2010. Wheat Ridge, Colorado"
  • Common Market Food Co-op - "Common Market Food Co-op was a 'new wave food co-op' located at 1329 California Street in Denver, Colorado, from 1975 - 1980. It started as a buying club at the University of Denver in the early 1970s, and for a few years prior to moving to the old Safeway at 13th and California Streets, Common Market operated out of a small storefront on Champa Street."
  • Solitude and Leadership - "We have a crisis of leadership in America because our overwhelming power and wealth, earned under earlier generations of leaders, made us complacent, and for too long we have been training leaders who only know how to keep the routine going. Who can answer questions, but don’t know how to ask them. Who can fulfill goals, but don’t know how to set them. Who think about how to get things done, but not whether they’re worth doing in the first place. What we have now are the greatest technocrats the world has ever seen, people who have been trained to be incredibly good at one specific thing, but who have no interest in anything beyond their area of exper­tise. What we don’t have are leaders.
    . . .
    How do you learn to think? Let’s start with how you don’t learn to think. A study by a team of researchers at Stanford came out a couple of months ago. The investigators wanted to figure out how today’s college students were able to multitask so much more effectively than adults. How do they manage to do it, the researchers asked? The answer, they discovered--and this is by no means what they expected--is that they don’t. The enhanced cognitive abilities the investigators expected to find, the mental faculties that enable people to multitask effectively, were simply not there. In other words, people do not multitask effectively. And here’s the really surprising finding: the more people multitask, the worse they are, not just at other mental abilities, but at multitasking itself.

    One thing that made the study different from others is that the researchers didn’t test people’s cognitive functions while they were multitasking. They separated the subject group into high multitaskers and low multitaskers and used a different set of tests to measure the kinds of cognitive abilities involved in multitasking. They found that in every case the high multitaskers scored worse. They were worse at distinguishing between relevant and irrelevant information and ignoring the latter. In other words, they were more distractible. They were worse at what you might call 'mental filing': keeping information in the right conceptual boxes and being able to retrieve it quickly. In other words, their minds were more disorganized. And they were even worse at the very thing that defines multitasking itself: switching between tasks."
  • A Hidden History of Evil: Why doesn’t anyone care about the unread Soviet archives? - "In the world’s collective consciousness, the word 'Nazi' is synonymous with evil. It is widely understood that the Nazis’ ideology--nationalism, anti-Semitism, the autarkic ethnic state, the Führer principle--led directly to the furnaces of Auschwitz. It is not nearly as well understood that Communism led just as inexorably, everywhere on the globe where it was applied, to starvation, torture, and slave-labor camps. Nor is it widely acknowledged that Communism was responsible for the deaths of some 150 million human beings during the twentieth century. The world remains inexplicably indifferent and uncurious about the deadliest ideology in history.

    For evidence of this indifference, consider the unread Soviet archives. Pavel Stroilov, a Russian exile in London, has on his computer 50,000 unpublished, untranslated, top-secret Kremlin documents, mostly dating from the close of the Cold War. He stole them in 2003 and fled Russia. Within living memory, they would have been worth millions to the CIA; they surely tell a story about Communism and its collapse that the world needs to know. Yet he can’t get anyone to house them in a reputable library, publish them, or fund their translation. In fact, he can’t get anyone to take much interest in them at all."
  • My Thoughts on Gold - "Here’s a good rule of thumb. Gold goes up anytime real rates on short-term U.S. debt are below 2% (or are perceived to stay below 2%). It will fall if real rates rise above 2%. When rates are at 2%, then gold holds steady. That’s not a perfect relationship but I want to put it in an easy why for new investors to grap. This also helps explain why we’re in the odd situation today of seeing gold rise even though inflation is low. It’s not the inflation, it’s the low real rates that gold likes.
    . . .
    My view is that the Federal Reserve will raise interest rates earlier than expected. I don't know exactly when that will be but it will put gold on a dangerous path. For now, my advice is to stay away from gold, either long or short."
  • Black & Decker’s Alligator Lopper Is The Awesomest Pair Of Scissors I’ve Ever Seen - "Maybe it’s the fact that Black & Decker has gone to the trouble of printing a mean-looking alligator graphic on this lopper that has drawn me to it, but the super villain-esque combination of pruning shears and a miniature chainsaw doesn’t hurt either. A 4.5 amp electric motor and a wide set of jaws allows the Alligator Lopper to chew through a branch up to 4 inches thick like it was a wounded gazelle’s hind leg, and the clamping action ensures it won’t let go until it’s all the way through."

The 4 chord song....s

  • Honda To Exhibit Walking Legs at the Smithsonian in New York - "Rather goofy-looking at first glance, Honda's new legs (aka Bodyweight Support Assist Device) makes walking and stair-climbing easier for the elderly and folks on rehab. Leveraging walking technology from full-body ASIMO robot, the leggy device provides natural walking and crouching support with its combined saddle, motorized leg frame and force-sensing shoes. With a control computer and battery pack neatly tucked away under the femur of the frame, the legs sense and guide motion while walking, going up and down stairs and in a semi-crouching position. An assisting force is directed towards the user's center of gravity and in sync with movement to support one's bodyweight and reduce the load on the user's leg muscles and joints."
  • Household Debt Around the World - "From a new report, a look at household debt levels around the world. Interestingly, Canada leads the way -- in a bad sense -- in one measure."
  • Phished Brands Seize on Teachable Moments - "Not long ago, most companies whose brands were being abused in phishing scams focused their efforts mainly on shuttering the counterfeit sites as quickly as possible. These days, an increasing number of phished brands are not only disabling the sites, but also seizing on the opportunity to teach would-be victims how to spot future scams.

    Instead of simply dismantling a phishing site and leaving the potential phishing victims with a 'Site not found' error, some frequent targets of phishing sites are setting up redirects to phishing education pages.

    For the past 20 months, Jason Hong, assistant professor of computer science at Carnegie Mellon University’s Human Computer Interaction Institute, has been measuring referrals from phishing sites to an education page set up by the Anti-Phishing Working Group (APWG), an industry consortium. Hong said the site now receives close to 25,000 referrals per month from phishing sites that brand owners have modified."
  • Errol Morris on the postmodernity of the electric chair - "There is nothing post-modern about the electric chair. It takes a living human being and turns him into a piece of meat. Imagine you -- you the young journalists of tomorrow -- being strapped into an electric chair for a crime you didn't commit. Would you take comfort from a witness telling you that it really doesn't make any difference whether you are guilty or innocent? That there is no truth? 'I think you're guilty; you think you're innocent. Can't we work it all out?'"
  • People Start Noticing That The Web Competes With iPad Apps - "Back in February, when many in the media were insisting that iPad apps were going to save the media business, we wondered why all the stuff they were talking about sticking in their apps couldn't work on the web as well. It appears that others are noticing that as well. Jason Fry at the Nieman Journalism Lab is noting that publications' own websites may be the biggest competition to their iPad apps -- and he was apparently a big believer in the concept of iPad apps originally. But after using the iPad for a while, he's realizing that the web is pretty good again:"
  • Caribbean Corner, 4008A University Drive, Fairfax, VA, 703-246-9040 - "Mostly Jamaican, this is a real mom and pop restaurant in the middle of downtown Fairfax. It’s strangely silent. They only have two tables and a few chairs. The dining room is not really separated from the kitchen, or for that matter the cashier station, by any clear line. I’ve tried the jerk chicken and that was genuinely good. I’ll go back, at the very least this place is worth a try."
  • Facebook faces a consumer backlash over security concerns as bloggers urge users to 'kill' their accounts - "The backlash comes as Facebook yesterday announced the launch of new security features to combat malicious attacks, scams and spam.

    It remains to be seen whether this is a case of too little, too late.

    Peter Rojas, the co-founder of respected gadget site, announced this week that he had shut his Facebook account down.
    . . .
    Tech blogger Jason Calacanis blamed Facebook boss Mark Zuckerberg's woes on overplaying its hand.

    He wrote: 'Over the past month, Mark Zuckerberg, the hottest new card player in town, has overplayed his hand.

    'Facebook is officially “out”, as in uncool, amongst partners, parents and pundits all coming to the realisation that Zuckerberg and his company are - simply put - not trustworthy.'"

. . . . . . . . .

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May 16, 2010 11:57 AM    Caught Our Eye

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