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The art of statesmanship is to foresee the inevitable and to expedite its occurrence.
Charles Maurice de Talleyrand

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It was worse than a crime, it was a mistake.
Charles Maurice de Talleyrand
Unmatched in cynicism, Talleyrand was nevertheless understood the dirty business of politics better than almost anyone in European history. Were I in the business of politics I'd be hesitant to break any of his dictum for any reason. 

Fun Facts To Know And Share

Top 20 2006 World tourism rankings from Wikipedia

Rank	Country	International tourist arrivals
1	France	79.1 million
2	Spain	58.5 million
3	United States	51.1 million
4	China	49.6 million
5	Italy	41.1 million
6	United Kingdom	30.1 million
7	Germany	23.6 million
8	Mexico	21.4 million
9	Austria	20.3 million
10	Russia	20.2 million
11	Turkey	18.9 million
12	Canada	18.2 million
13	Ukraine	17.6 million[a]
14	Malaysia	17.5 million
14	Hong Kong	15.8 million
15	Poland	15.7 million
16	Greece	14.3 million[a]
17	Thailand	13.9 million
18	Portugal	11.3 million
19	Croatia	11.2 million
20	Netherlands	10.7 million

a = 2005
China would be second with 65.4 million if you include Hong Kong.  On the other hand, its amazing that Hong Kong can accommodate 15.8 million extra people each year

Fun Facts To Know And Share

The estimated population of Saudi Arabia was 27.6 million in 2007.  22 million Saudis and 5.6 million resident foreigners. Most of the population is concentrated along the Red Sea and Persian Gulf coasts.

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University politics are vicious precisely because the stakes are so small.
Henry Kissinger
via Gabriel Robins
Kissinger may be evil, but he's not stupid.

Henry Fucking Kissinger

     This must have been photoshopped.  There's no other way to get the blood off Kissinger.

It was no surprise that when US vassals like Karzai and Uribe were commanded to meet with Sarah Palin, Kissinger turned up as well.  Nothing says "foriegn policy wonk" like rubbing up against Henry Kissinger.  He's like a lucky rabbit's foot for Palin.  Henry doesn't get as much press as he would like these days.  So in that sense he needed the work.  As the saying goes, there's no whore like and old whore.  How he must loathe George Bush and his neo-con cronies with their talk of empire and their utter incompetence. There are so many bad things you can say about Kissinger, but incompetence doesn't quite make the top 10.  Call it a strong 11.  Unlike Bush, Cheney and Rumsfeldt who raised great-power incompetence to a level not seen since the Romanovs.

Kissinger won a Nobel Peace Prize for ending the Vietnam War.  A prize he richly deserved.  But only if by peace you mean a futile war of aggression against Cambodia with lots of civilian casualties.  And by deserved you mean that the man had so much blood on his hands, he couldn't hold a pen to endorse the back of his prize money cheque from the Nobel Foundation.  I hope he's still too scared of arrest to visit anywhere in Europe or South America.  England is safe as long as Margaret Thatcher is alive.  But he has to tread carefully elsewhere.  Augusto Pinochet's arrest in Spain scared the bejeezus out of Kissinger and his partners in crime.  There are warrants out for his arrest in multiple countries.  He's guilty of both war crimes and crimes against humanity.  There may have been crimes worse in severity (Bosnia) or in scale (Congo), but none since the second world war equal Kissinger's crimes in terms of cynicism.  Citizens of Chile, Vietnam, Laos, Cambodia, Argentina, Angola and East Timor were denied their freedom or their lives by Kissinger.

Kissinger is the reason why I agree with America's otherwise quaint constitutional provision against foreign-born presidents.  A Bismark wannabe, he ended up more like Metternich.  Any relevance to world affairs is at this point coincidental.  His only use now is as a stick McCain and Obama can use to whack each other.  The great Henry Kissinger is no more useful than an axe handle.  Fitting.  It's how he should be remembered.

Faves: Sandinista

London Calling is considered by many to be among the best albums ever made.  I've always thought their best material was on Sandinista.  Its The Clash's Exile on Main Street, a band at the height of its powers that couldn't stop cranking out fabulous material fueled by unapologetic political sophistication.  I remember hearing the triple album the day it came out in December 1980.  It was amazing.  I've never stopped listening.  Unfortunately, this was the last gasp artistically for The Clash.  Subsequent material was embarrassing, if popular.  But I don't begrudge them selling out, they earned it.  I'll always have Sandinista.

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When I meet a man I ask myself, 'Is this the man I want my children to spend their weekends with?'
Rita Rudner

Boom!

      Reporters watch John McCain's announcement earlier today.

The other shoe just fell.  The McCain campaign is suggesting they reschedule Friday's debate to replace the VP debate.  I just read an interview Sarah Palin did with Katie Couric.  The woman is as free of intelligence as she is filled with ambition.  You could sense Couric's frustration even in the written transcript.  They need to keep Palin as far away from unscripted public interactions as possible.  Thus today's stunt.

Iran War: Monthly Update

The Roosevelt - still Atlantic bound       Photo: US Navy

Long-time readers will be familiar with my claims that the US Military likes to start offensive operations in the dark, i.e. around a new moon.  As the last quarter of the current moon is waning, its time for an update on a potential attack against Iran.

The key question is: where are the carriers?  They need a minimum of two but three would be better.  Last month, it looked like there would be three in the area, at least for a while.  The tip-off was to be the Lincoln.  Would it go home after being relieved by the Reagan, or would it hang around?  It's headed for San Diego and is currently in the Pacific.  The Roosevelt was also scheduled for deployment, and still is.  But it hasn't left the Atlantic.  Those pesky Russian naval vessels visiting Venezuela may be giving the Navy second thoughts.  In any case, a second carrier in the Arabian Sea would be useful for expanded US operations in Afghanistan.  So the appearance of the Roosevelt, sudden or otherwise, is not necessarily cause for alarm.  In any case, current US Navy deployment suggests no all-out attack on Iran is planned during the approaching lunar darkness window.

As alert readers may have already noted, US policymakers have their hands full with other business.  Similarly, Israeli leaders are pre-occupied with political matters.  The temperature of anti-Iran rhetoric has thus cooled considerably in both Washington and Jerusalem.  In addition, the strategic situation has shifted noticeably with Afghanistan and Pakistan taking center stage.  Nobody in their right mind would attribute problems there to the Iranians.  Lastly, an IAEA investigation into a Syrian "reactor" bombed by Israel last year has turned up no evidence of any nuclear activity.  Russia, China and Germany all publicly noted this development.  One can be sure others noted it too, but were too polite to say anything.  This is a major hit to US credibility.  Coming after the Georgian fiasco and war that isn't with Pakistan, enthusiasm among US allies for more adventures is likely thin.  Even if they were enthusiastic, friendly capitals are busy with keeping the US debt contagion out of their banking systems.

So, no war this month.  Unless something really bad happens in the US next month, it looks like the whole operation is off, at least until after Israeli elections.  After a certain point, it no longer makes sense.

A Red Reality Check

After breathlessly reporting  on the game changing nature of the new Red One 4k digital camera, it only seems fair to report some caveats.  A bunch of rebuttals have been collected on the Red Facts page .
The key points are:

• Red has fudged the resolution numbers.  The tech specs have been polished up by marketing so that an apparent apples to apples comparison with other cameras is misleading.
  
• Extreme compression and interpolation produce noticable blocking and pixillation at full-screen projection.  35mm and high-end HD do not.
  
• There is some resentment in the cinematographer community that Red is using the mainstream tech press to hype the product. 

I've worked in the industry and can attest the cinematographers are a finicky guild.  They don't like being talked down to and they really don't like being told what to use by a director that's fallen for some company's hype.

Fanboys are livid.  Accusations (probably true) that many of the Red Facts facts come from Panavision and/or Sony.  A classic flamewar is developing.  But who cares?

So Red may not be the revolution.  But if not, then someone else soon.  Canon and Nikon are very busy in this realm.  Red may yet have some tricks up its sleeve.

The only other interesting facet of this issue is the continuing marketization of previously non-tech industries.  Marketization is what happens when tech industry marketing and product standards infect non-tech industries. It is a cancerous sub-set of traditional marketing.  Beta products, fudged specs, bleeding edge features adopted across the board, personalization of competition, no guarantees, six month product cycles, complete disregard for customers of previous product cycles, engineered lack of interoperability, expectation of continuing customer upgrades at a pace dictated by the vendor, DRM, Windows Vista.  Its the selling of broken or crippled products as a matter of course.  Everything becomes disposable.  Anything you can't fix with a patch, you throw away.  Microsoft is the best example of this disease, but they didn't invent it and are no more responsible for it perpetuation that HP, IBM or Apple among many others.  Add Red to the list.

Fun Facts To Know And Share

Herbert Hoover, who was the 31st president of the United Stated, turned over all the Federal salary checks he received to charity during the 47 years he was in government

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All successful revolutions are the kicking in of a rotten door.
John Kenneth Galbraith

Epic Fail

      Photo: Getty | Chip Somodevilla via Denver Post 

The picture says it all. Two men who let the US Financial system slide into its worst crisis since 1932 have a plan to fix it. Consistent with their scandalous lack of oversight in letting this happen, the plan contains specific measures to ensure there is no oversight of their actions.  How big is the problem?  They don't know.  What will it cost the US taxpayer?  They don't know.  Will their actions inject sufficient liquidity to solve the problem?  They don't know.   What will be the impact on the $?  They don't know.  Is a reverse auction the best way to determine the value of an unmarketable security?  They hope so.  What happens if the package isn't passed?  They don't know, but it will be really, really bad.  Will the same Wall Street types that made billions creating the problem also make billions from cleaning it up?  Now is not the time for recrimination. Apart from their culpability in the crisis, their performance yesterday before the Senate was an epic failure on its own.

In all my years watching US politics, I've never seen an issue that so shattered party lines. There is everything from outright condemnation to strong support, from every corner of the fairly narrow US ideological universe. At the moment, opposition seems to have the upper hand. Opponents are tending to agglomerate around two issues. First are the "its an emergency, trust me" skeptics who remember the disastrous consequences of accepting the same arguments over Iraq. These are mostly Democrats, but include a significant minority of Republicans sick of being told what to do by a now-lame-duck Bush administration. Second are the free-marketers and practical skeptics . They either disagree on principal, or do not agree that the crisis is so dire, or doubt the proposed solution will solve the problem. In all cases, the fundamental problem is that Bush and his appointees have next to zero credibility among lawmakers looking at an election in six weeks.

The odds play is a Democratic compromise version of the legislation will passing next week. But there is so much political maneuvering going on behind the scenes that anything is possible. For example, the Presidential debate Friday evening may have a big impact on Democratic calculations, depending on the outcome.

For political theater junkies, this is the best show since Watergate. But I'm glad I live in Canada and have no $US assets. No matter how this turns out, somebody is going to pay. The weak link is the $US. I can't see any scenario where the $ doesn't get clobbered. The rosiest scenarios (like Bush's) just leave that part out.   Fail.  Epic Fail.  Cosmic Fail.
-----------
Update 3:58PM - Merill Lynch Canada just released an economic report that says Canadian households are just as overextended as US households at their 2005 peak and UK households are today.  They warn that a similar melt-down is possible.  True, but there was never a sub-prime mortgage industry in Canada and the real estate bubble was considerably smaller.  But its worth noting the report after my smug words above.

The T Word

   Seen and unseen - image source unknown
A million seconds is 11 1/2 days.  A billion seconds is around 31 years.  A trillion seconds is 31,000 years.  I'm used to billions, at least I can get my head around the numbers thrown around in business and governance.  Trillions don't come up often.  There are only 11 countries in the world with annual GDP greater than $1 trillion.  The entire world economy is about US$54 trillion.  The US is variously estimated to have spent about $5 trillion in current dollars to fight WW 2.

All of a sudden, the US financial crisis, is throwing out numbers in the trillions.  This frightens me.  I hope it frightens the powers that be.  Its an enormous red flag. The kind of debt levels facing US taxpayers are unprecedented in the modern world.  A lot of people are working very hard to ensure worst case scenarios are avoided.  But even so, there's a frightening amount of debt on the table.

Both the SEC and British regulators are banning short selling of stocks.  This is an extraordinary intervention in the markets.  It scares me as much as the bad debt.  Short sellers are like pathogens that help to regulate the overall health of the markets. A need to stop short sellers, even temporarily, suggests the markets may be broken in fundamental ways.  If so, we are in scary new waters.

If you'll permit a catastrophic analogy, its a bit like the Titanic, another T word.  Having spotted the iceberg, the rudder isn't turning the ship fast enough, and we've just been informed the steel may be sub-standard, brittle and prone to crack.

Brooks Nails Bush

David Brooks is the New York Times' tame right wing columnist.  As such he is annoying rather than outrageous, like say Rush Limbaugh.  Brooks is good enough that I still read him from time to time.  He also appears on PBS and is a good political analyst, especially when he forgets that he's supposed to be a balance for the leftish commentators he appears with.   Given that role, his latest column, a scathing attack on Sarah Palin was surprising.  Not only that, but he made some astute criticisms of George Bush.

In the current Weekly Standard, Steven Hayward argues that the nation’s founders wanted uncertified citizens to hold the highest offices in the land. They did not believe in a separate class of professional executives. They wanted rough and rooted people like Palin.
I would have more sympathy for this view if I hadn’t just lived through the last eight years. For if the Bush administration was anything, it was the anti-establishment attitude put into executive practice.
And the problem with this attitude is that, especially in his first term, it made Bush inept at governance. It turns out that governance, the creation and execution of policy, is hard. It requires acquired skills.
[Snip]
Sarah Palin has many virtues. If you wanted someone to destroy a corrupt establishment, she’d be your woman. But the constructive act of governance is another matter. She has not been engaged in national issues, does not have a repertoire of historic patterns and, like President Bush, she seems to compensate for her lack of experience with brashness and excessive decisiveness.

Too fucking right.  You can read the whole thing here.

I sense that the blue-blood Republicans have had it.  They are looking at a wipe-out in November and are very, very unhappy.  They're unhappy with Bush, with McCain, but especially with Sarah Palin.  She's going to be blamed for their humiliation.  Not because she's a woman, or from Alaska, but because she is a lens that focuses nearly everything that has gone wrong in the last 8 years.

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I heard Tonya Harding is calling herself the Charles Barkley of figure skating. I was going to sue her for defamation of character, but then I realized I have no character.
Charles Barkley

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This changes everything... except human nature
Albert Einstein
on hearing of the successful atomic bomb test, July 1945

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Beware of all enterprises that require a new set of clothes.
Henry David Thoreau

Pix

       Image: Luc Viatour via Wikicommons
Armed with my new set of glasses, I've been looking at the moon the last few nights. My old glasses are in the cornfield, so I've been without them for almost a year.  I'd forgotten what an amazing sight the full moon is. If you actually go out and look at it, its magnificent.

Faves: Greek Sculpture

Besides their other contributions to Western Civilization, it is worth noting that Classical Greek sculptors were the best anywhere anytime.  Other civilizations have produced great sculputre, like the Assyrians, India, various Chinese eras.  But nobody ever came close to the ancient Greeks.  Even during the height of the Roman era, when portrait busts became supernatuarally realistic, the actual artists were all imported from Greece.

      You could recognize Augustus on the street from his busts.
Scientists have established that these sculptures were painted in gaudy colors.  However, their reconstructions seem unconvincing.  Possibly because they are scientists, not artists.  In any case, the modern eye is used to the bleached look in classical sculptures.  It gives them a pure, abstract look reinforced by missing pieces.  But the real magic is in the detail.  Has cloth or muscle ever looked so real in stone?  Has any other statue such casual naturalness as the goddess above?  Most of all, there is nothing forced, no irony whatsoever.

Fun Facts To Know And Share

There are six million parts in the Boeing 747-400.

Fear And Greed: Securitization

US$, worth less, soon worthless?

There's been some positive feedback on the Fear And Greed post below.  However, some people are getting stuck on the explanation of securitzation.  Getting stuck on this point means the reader is paying attention and indicates the presence rather than the absence of intelligence.  Securitzation is a fuzzy game of mirrors and make believe.  Really. That's not a disparagement, but a true description.

Think about money.  Is there any inherent difference between a $5 bill and a $20 bill?  No, they are both paper with stuff printed on them.  The only difference is that we agree to pretend there is a difference.  For that matter, the only difference between paper money and any other bit of paper with printing is that we agree paper money is worth something and all other paper is not.  Paper money is completely make-believe, but as long as we all participate in the make-believe, it works.  At its heart, currency is a contract between the governments that issue the currency and the individuals that hold it.  The government guarantees that a $20 is worth $20.  Because currency is an abstract value made material, it is negotiable.  You can use a $20 bill anywhere in the country and it will be valued at $20 by everyone.  A $20 bill is a negotiable security.  A contract that you can transfer.

In practice, currency is non-negotiable.  $20 is $20.  But you and any 3rd party can trade a $20 bill for more or less than the face value.  The only time this really happens is when you convert one currency to another.  $20 might buy £10 today, but only £9.50 tomorrow.

Alexander Hamilton, the first US Treasury Secretary, inherited an enormous problem.  His solution created modern capitalism, literally.  The USA could not raise money because loans to a new, war ravaged, debt ridden republic were too risky for any bank in Europe or the  USA.  What Hamilton did was securitize the debt.  He sold bonds that were like a currency for lending money.  One could buy a 5-year, $1,000 bond that paid 5%.  It was a contract that paid the holder $1,250 in five years.  The math is way simplified, but true to the idea.  The key point is that the government paid the money not to the person who bought the bond, but to whoever held the bond at the end of five years.  If you bought some bonds, but needed the money before five years were up, you could sell the bond and thus the contract.  The security was negotiable.  A market could arise for the buying and selling of bonds by 3rd parties.  The risk of holding US government debt was dramatically reduced.  This idea was a great success, especially popular with those who ran the new markets or exchanges as they became known.

Needless to say, by now, everything that can be securitized has been securitized.  Every government and corporation big enough issues bonds.  Anyone can issue a bond on anything as long as someone in the market is willing to buy it.  Financial firms like investment banks are constantly looking for new things to securitize.  Unfortunately, due to tradition, practical considerations and law, not all kinds of debt can be securitized.  Mortgages have not been securitized in any major world market except the USA after 1999.  De-regulation swept away the legal roadblocks, and clever investment bankers figured out how to deal with the practical problems.  It worked like this:

• Consumer A borrows money for a house from Bank Z
  
• Consumer A has a contract (mortgage) to back the loan on a monthly basis for X years
  
• Bank Z takes Consumer A's contract and a million like it and goes to Investment Bank Y
  
• Bank Y takes Bank Z's contracts and bundles them up into a bond offering
  
• The bond obligates Bank Z to pay the bond holder N% of the bonds value for X years
  
• Pension Fund E buys the bonds from Investment Bank Y
  
• Investment Bank Y passes the proceeds of the sale back to Bank Z (minus transaction fees)
  
• Bank Z takes Consumer A's payments and passes part of the interest on to Pension Fund E
  
• Consumer A pays back his loan, Bank Z pays off the bond held by Pension Fund E and everyone is happy

The big winner is Bank Z, because rather than waiting 25 years to get all their money back via payments from Consumer A, they get it all at once by selling bonds to Pension Fund E.  They can re-lend or invest that money at a higher interest rate than they are paying Pension Fund E on the bonds.  Not only that, but they get to take Consumer A's mortgage off their books.  It no longer counts towards their reserve requirements.  As long as Consumer A and his million friends pay back their loans in a normal fashion, nothing can go wrong.  But, as we have seen, the money to be made by Bank Z and Investment Bank Y from issuing bonds came to be worth more than the underlying loans.  Regulations prevent this type of top-heavy imbalance in most countries because the market will eventually self-correct in a catastrophic fashion.  Think of the no-longer watertight Titanic's self-correction of the relative buoyancy of iron vs. water.   It takes time to devolve all the deals and swaps and exotic derivatives that grew up around the mortgage market.  But the market, now ruled by fear, won't give the players time, so they've started failing catastrophically.

Not many tears are being shed for the firms now getting walloped.  They had it coming.  Lots of people predicted this would happen.  Lots of firms stayed clear of this market.  But there are two potential problems for everyone.

First is a general drying up of credit.  If the banks are scrambling to restore their reserves, they may stop lending and even pull in good loans.  That could send viable companies into bankruptcy.  If the cancer of bad loans has spread beyond the housing market in the US, then its possible its spread into other countries as well.  More severe credit shocks may be coming.

Second is a run on the US$.  All of the bad loans were turned into real money and spent by US Consumers.  Where did all that real money come from?  China, Japan and other US trading partners who hold vast sums of US Treasury Bills.  They are hostages in a giant game of chicken.  If China sells lots of stuff to the US for US$, then turns the $ back into Yuan, the value of the Yuan goes up relative to the $.  The Chinese have to either live with lower profits, or raise $ prices, becoming less competitive.  So instead of turning the $ into Yuan, they park the money in US$ bonds.  This keeps the US$ artificially high vs. the Yuan.  If the US goes to crazy economically, the Chinese will sell the bonds, causing a crash in the US$.  But if they do that, then the Yuan vs. the $ goes up so much that Chinese firms can't sell profitably into the US market.  China's economy takes a huge hit.  When Japan was in this position 15 years ago, they let the currency imbalance fuel a real-estate bubble that has crippled their economy since.  China won't make the same mistake, but they are also playing a game of musical chairs that requires continuous growth.  Nobody knows what will happen when the economy slows, as it must inevitably do.  A US credit crisis, as described above, could dampen US consumer demand so much that it impacts the Chinese economy.  At a certain point, US trading partners may decide to cut their losses, sell US Treasuries, and get used to a world where they don't have to depend on the US for all their economic growth.  This could lead to a collapse of the US dollar and potential depression among the US and its closest allies.

But then, on the other hand, lots of people who make lots of money, and who want to continue doing so, are working hard on avoiding the bad case scenarios.  What goes around comes around, and nobody wants what the US financial markets have got.  The US government over the weekend demonstrated that it would be ruthless if necessary.  If the US financial market players demonstrate the same in a convincing manner, then the crisis can be dealt with in a slow and steady rather than a catastrophic manner.

Note:  The examples here are gross oversimplifications.  The details are important, but the purpose here is to strip away every detail that stands in the way of the key ideas.

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Men are not disturbed by things, but the view they take of things.
Epictetus
What about things like bullets?
Herb Kimmel, Behavioralist, Professor of Psychology, upon hearing the above quote 
via Gabriel Robins