The undivided attention of a leprechuan

51 Jokes In 4 Minutes:
[Via The Moderate Voice]

No, this doesn’t include Senator Lindsey Graham seeming outraged over a President using what he says are fear tactics. This are NON POLITICAL jokes – and this You Tuber does deliver:

This builds on itself so that by the second minute, the jokes seem to take on a weird sort of flow, with them seeming to get funnier. I’m sure heard separately, they are not as funny but put together in such rapid fire they become something more.

Technorati Tags: Entertainment

Innumeracy

Steven Pearlstein Is On Fire:
[Via The Big Picture]
The Big Picture has all the links. I’ll just give one paragraph that made me grin:

And then there is Sen. Tom Coburn (R-Okla.), complaining in Wednesday’s Wall Street Journal that of the 3 million jobs that the stimulus package might create or save, one in five will be government jobs, as if there is something inherently inferior or unsatisfactory about that. (Note to Coburn’s political director: One in five workers in Oklahoma is employed by government.)

I just did a quick perusal of the census databases. About 140,000,000 people were employed in the US in 2007. About 24 million worked for various city, state and federal governments. That is 17% which is pretty close to 1 in 5 (It is really 1 in 5.6). So if the stimulus generally affects the entire economy equally, you would expect about 1 in 5 jobs to be in the government.

Now, it might seem odd that 1 in 5 people are employed in a government job but that is because we often overlook many government employees.  Most of the people who work in the government are incredibly important to the daily functioning of our lives. They are people we do not usually think as being government employees. But they are, as far as the Census Bureau is concerned.

Eight million of the government employees in 2007 were teachers. Almost a million were police officers. Almost another million were corrections officers. Another million were hospital workers. All government employees. Wouldn’t we want more teachers and more police officers? More firefighters and hospital staff?

Over half of all the Federal employees (total = 2.7 million) are either postal workers (770,000) or in National Defense/International Relations (698,000). Another 12% (338,000) are involved in health and hospitals.

Only 25,000 Federal employees are government administrators. That is one percent of all Federal employees. That is what most people think of when they think of government employees, More bureaucrats,

They are not the ones getting the money. Teachers are. Police are. Hospitals are. I’m glad 1 in 5 work for the government since they are the ones who make sure our towns are safe, our houses are protected, our children are educated and our sick are healed.

Technorati Tags: Economy, Politics

Really, Really Different

This Is Different:
[Via Balloon Juice]

Via memeorandum, this:

Sweet jeebus.

As mentioned in the original article, this is ‘realtime’ data, not extrapolated. It is from the current data from the government about job losses. While the previous two recessions were already showing a slowing curve at this point, the current one is still showing an accelerating curve which is not even close to bottoming out.

As a side note, I’m not sure why but the curve looks to me like it was done in Pages (the Apple program) rather than Excel. The colors, fonts and the shadows on the lines just look similar to default values in Pages charting features. Anyway, it was designed by somebody who has an understanding of how to easily display data.

Here is what a typical government representation of similar data from the Bureau of Labor Statistics:

The top graph displays the same data, just as a cumulative change instead of month to month. Look at the plunge in the data.

Job losses in either of the last two months would have been almost twice as great as any other month i the last 20 years. We have had TWO months in a row of this, with little sight of any change.

We will be telling our children about 2008-2009 for a lot more than Obama. This is rapidly turning into a once in a century event.

Technorati Tags: Economy, General, Government, Politics

And is it art?

Is the Obama Poster a Copyright Violation?:
[Via Concurring Opinions]

From the AP:

Designed by Shepard Fairey, a Los-Angeles based street artist, the image has led to sales of hundreds of thousands of posters and stickers, has become so much in demand that copies signed by Fairey have been purchased for thousands of dollars on eBay.

The image, Fairey has acknowledged, is based on an Associated Press photograph, taken in April 2006 by Manny Garcia on assignment for the AP at the National Press Club in Washington.

The AP says it owns the copyright, and wants credit and compensation. Fairey disagrees.

Fairey’s Obama poster strikes me as sufficiently different from the photo. There is certainly a resemblance, but they are far from identical.

Andy Warhol made a living with copies of soup cans. Others have simply taken photographs of photos to create art. this certainly seems to have a lot more creativity and artistic endeavor than those examples. But the AP was trying to sue writers for using ANY of its copy in fair use.

To the extent that some elements of the photo are duplicated in the poster, it isn’t clear that Obama’s facial expression is unique enough to give the photographer the right to copyright all subsequent renderings of it. Can one, by taking a photo of a person, have copyright over all subsequent depictions of that person from that angle or with a particular expression or posture?

Moreover, the poster might constitute fair use. The fair use factors include:
1. the purpose and character of the use
2. the nature of the copyrighted work
3. the amount and substantiality of the portion taken, and
4. the effect of the use upon the potential market

The poster isn’t a direct copy of the image. The background of the photo and other details are different in the poster. The poster is quite different in its use and nature from the photo, and the market for the poster strikes me as significantly distinct from that of the photo. The AP seems to be attempting to be money-grubbing here with this rather petty copyright claim.

But copyright law is suffering from a bit of delirium these days, so it’s hard to know what’s up or down or fair use anymore. Thus, I’ll throw this out to the intellectual property experts. Copyright violation? Fair use?

Image Credit: AP Photo by Manny Garcia and poster by Shepard Fairey. From Brietbart.com

There are some interesting possibilities, such as the fact that the AP might not really own the copyright of the photo in the first place. Andy Warhol settled out of court and tis probably will also. After all, the AP photo is actually worth more now than it ever was before

Technorati Tags: General

But Steve Jobs’ health is really important

Harry Markopolos Speaks:
[Via Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal]

Joanna Chung and Brooke Masters report for the FT:

SEC ‘illiteracy’ to blame for Madoff affair: The losses linked to Bernard Madoff may be closer to $15bn-$25bn rather than the $50bn the New York broker allegedly told US investigators, according to Harry Markopolos, a former money manager turned fraud investigator.

Mr Markopolos, the man who tried for nine years to expose Mr Madoff, told a Congressional hearing on Wednesday that staff incompetence on the part of the US Securities and Exchange Commission was partly to blame for failing to bring a case against Mr Madoff earlier. “I gift-wrapped and delivered the largest Ponzi scheme in history to them,” he said. Most officials “did not understand …the 29 red flags that I handed them. The SEC securities lawyers, if only through their investigative ineptitude and financial illiteracy, colluded to maintain large frauds such as the one to which Madoff later confessed,” Mr Markopolos said.

Mr Madoff was arrested in December after his sons reported him to the authorities. He has not been asked to enter a plea, nor has he been indicted. Since then, the SEC has suffered an avalanche of criticism for not thoroughly investigating Mr Markopolos’s apparently credible allegations for nearly a decade. The difference between Mr Markopolos’s loss estimates and the $50bn could be explained by notional returns that investors thought they had reinvested. It could also sharply limit the amount of money that investors can hope to get back.

Irving Picard, the trustee overseeing the Madoff firm’s liquidation, said in court on Wednesday that he had recovered about $946m so far and hoped to start distributing it “in the near future.” He also confirmed that liquidators were working with investigators in Mr Madoff’s office in Manhattan and at a warehouse in Queens, where 7,000 boxes of documents were stored. Mr Markopolos also accused the SEC of being “over-lawyered,” captive to the industry it regulates, and weighed down by regional turf battles. Top SEC officials, who came under fire during the hearing, said they were reconsidering the way they regulated investment advisers, and may impose more frequent inspections, tougher filing requirements and tighter custody and audit rules. The SEC also wants to improve its risk assessment and to coordinate regulation of brokers and investment advisers to prevent firms from hiding activities from its examiners.

The SEC is investigating whether Jobs ran afoul of something by not notifying everyone of his health daily. And, of course, the SEC gave us Marth Stewart.

But they completely ignored this case for 9 years, even when the whistleblower handed it to them. Just incredible. Like the FDA, this agency needs to be completely gutted and reformed, with competent people actually running it.

Technorati Tags: Economy

It will be a long time gone

by bobster1985
Reinhart & Rogoff: Expect a prolonged slump:
[Via The Big Picture]

Terrific piece in the WSJ by Carmen Reinhart and Kenneth Rogoff on the economic situation.

We’ve previously discussed their seminal work, 5 Historical Economic Crises and the U.S., and it has been very instructive as to how we got into – and how we get out of – financial crises

Here is a quick excerpt:

“Financial crises, even very deep ones, do not last forever. Really. In fact, negative growth episodes typically subside in just under two years. If one accepts the NBER’s judgment that the recession began in December 2007, then the U.S. economy should stop contracting toward the end of 2009. Of course, if one dates the start of the real recession from September 2008, as many on Wall Street do, the case for an end in 2009 is less compelling.”

Given the depth of crisis, and the severity of the economic downturn, I care less about starting dates to calculate an end date, than actual measurable economic improvement. The recession will show signs of ending when Housing stabilizes, employment layoffs peak (it will lag the recovery), industrial production improves, and spending begins to normalize. Watch those data points.

Back to R&R:

“On other fronts the news is similarly grim, although perhaps not out of bounds of market expectations. In the typical severe financial crisis, the real (inflation-adjusted) price of housing tends to decline 36%, with the duration of peak to trough lasting five to six years. Given that U.S. housing prices peaked at the end of 2005, this means that the bottom won’t come before the end of 2010, with real housing prices falling perhaps another 8%-10% from current levels.

Equity prices tend to bottom out somewhat more quickly, taking only three and a half years from peak to trough — dropping an average of 55% in real terms, a mark the S&P has already touched. However, given that most stock indices peaked only around mid-2007, equity prices could still take a couple more years for a sustained rebound, at least by historical benchmarks.

Turning to unemployment, where the new administration is concentrating its focus, pain seems likely to worsen for a minimum of two more years. Over past crises, the duration of the period of rising unemployment averaged nearly five years, with a mean increase in the unemployment rate of seven percentage points, which would bring the U.S. to double digits.

Interestingly, unemployment is a category where rich countries, with their high levels of wage insurance and stronger worker protections, tend to experience larger problems after financial crises than do emerging markets. Emerging market economies do have deeper output falls after their banking crises, but the parallels in other areas such as housing prices are quite strong.

Perhaps the most stunning message from crisis history is the simply staggering rise in government debt most countries experience. Central government debt tends to rise over 85% in real terms during the first three years after a banking crisis. This would mean another $8 trillion or $9 trillion in the case of the U.S.

Interestingly, the main reason why debt explodes is not the much ballyhooed cost of bailing out the financial system, painful as that may be. Instead, the real culprit is the inevitable collapse of tax revenues that comes as countries sink into deep and prolonged recession. Aggressive countercyclical fiscal policies also play a role, as we are about to witness in spades here in the U.S. with the passage of a more than $800 billion stimulus bill.”

Good stuff from the guys who correctly identified how other crises end . . .

Previously:
5 Historical Economic Crises and the U.S. (February 9th, 2008)

http://www.ritholtz.com/blog/2008/02/5-historical-economic-crises-and-the-us/

The Aftermath of Financial Crises (January 24th, 2009)

http://www.ritholtz.com/blog/2009/01/the-aftermath-of-financial-crises/

Sources:
What Other Financial Crises Tell Us
CARMEN M. REINHART and KENNETH S. ROGOFF
WSJ, FEBRUARY 3, 2009

http://online.wsj.com/article/SB123362438683541945.html

I included the whole post because this is something that needs to get through to people. Things will very likely NOT be back to normal anytime soon. There is a very good chance that things will never be back to normal, at least normal as we knew it over the last 100 years.

They will get better and some of the large imbalances will disappear but it will take some time to accomplish this.

Technorati Tags: Economy

Love iTunes

Did I ever say I love the new Genius feature in iTunes. A single click can create a playlist with 100 songs from my collection that ‘fit’. I played a bluegrass tune and made a playlist that is just wonderful. Here are the last 5 I have listened to:

• Someone Play Dixie for Me Dry Branch Fire Squad Live! at Last
• Alabama High-Test Old Crow Medicine Show Tennessee Pusher
• Lost Highway The Nitty Gritty Dirt Band Will The Circle Be Unbroken: 30th Anniversary Edition (Disc 2)
• Blue Grass Breakdown Bill Monroe Bill Monroe: 16 Gems
• Ballad of Jed Clampett (Theme from the Beverly Hillbillies) Earl Scruggs Classic Bluegrass Live

I have ones for bluegrass, progressive, rock, folk, etc. Just a click and I have hours of music for whatever mood I’m in. It helps that I have over 10,000 entries. Part of having eclectic tastes.

Technorati Tags: Entertainment

An antidote for barbarians?

ANTIDOTE: Great Powers:
[Via Global Guerrillas]

I love reading Global Guerrillas because it provides me with a nice variety of POV without getting too didactic.

If you are interested (and you likely should be), in an antidote or intellectual time-out to the chaos and change detailed on this blog and in BNW, I recommend that you read my friend Thomas Barnett’s new book, “Great Powers.” It is a relentlessly optimistic book. Optimistic about America, the World, and your future.

Whereas my view of the world is of an ungoverned and increasingly chaotic supersystem (composed of markets, networks, and more) that has diminished the role of nation-states and opened the door to small groups to displace them, Tom’s view is that the global system as we see it today is merely a transitional frontier en route to a world that is as economically (and to a lesser extent socially/politically) integrated as America’s states. The 21st Century, according to Tom’s thesis, IS America’s Century: the time when the American model maps to the world.

The current economic crisis, when viewed through this lens, is merely a speed bump on the way to this final integration (rather than being a sign of an increasingly non-linear global system that will hollow out states and recast how we live and work). I suspect that given the approach of the book, it would be Tom’s belief that this crisis will be seen (in hindsight) as a golden opportunity for improvement. As the time when we finally got our regulatory arms around the global economic and financial system and brought it back into service of collective economic progress.

In short, it is a great read. While I didn’t agree with much in the book, it made me think — which is the only true test of a book on strategy.

This post then followed it.

BARBARIANS:
[Via Global Guerrillas]

Here’s some fun thinking (at least I enjoyed it):

The most elegant approach to social collapse and renewal is Joseph Tainter’s excellent, “The Collapse of Complex Societies“. He makes the case that complex societies are at root problem solving systems (a very Boydian or Robbian approach). As new problems erupt (enemies, environmental problems, etc.), society’s evolve solutions that add to their cumulative complexity (the society’s toolset). Eventually, complex societies reach a point of maximal complexity (due to the constraints of its underlying organizational platforms/design) as its “solutions” suffer diminishing returns — as in, the benefits derived from new evolutionary solution’s approach the costs of implementing them.

When benefits equal costs, it is ripe for collapse and replacement.

One method of collapse detailed by Tainter is the increasing costs of fundamental inputs. Essentially, the “free” energy input that drove the growth of the social system to to the heights of potential. If that “free” energy becomes erratically available or expensive, the cost/benefit equations of many (if not most) of that social system’s solutions turn decidedly negative. Collapse, at that point, is inevitable. In our case, this “free” energy input would be fossil fuels (the negligible cost of which underlies all social solutions).

I’d like to offer another cause of collapse using this model: the threat of barbarians (relatively small groups that prey on a rich society). In a society that has reached the limits of its organizational complexity, every attempt to counter barbarians generates negative returns. Every barbarian engineered looting event, every war to counter barbarian incursions, and every barbarian engineered crisis brings a complex society closer to bankruptcy and collapse. In our current case, it would be the combined effects of successful societal looting by aggressive tribes of banksters (several hundred thousand technologically superior financial warriors) and disruption from violent groups emerging within the growing number of weak spots of the global social fabric. Both are what I term global guerrillas.

Will we be able to meet the challenges posed by these barbarians?

Think about the efficiency of the solutions to Iraq and Afghanistan and the cost/benefit equation they represent — or worse, the mindset that keeps us paying for a defensive system that guards against a great power war that won’t ever come and the efficiency of the proverbial GWOT.

Think about how efficiently the global system responded and put down growing insurgencies in Mexico, Nigeria, and Pakistan (hint: they didn’t).

Think about the benefits/costs derived from the shadow banking system (CDSs, CDOs, etc.) and the ability of the current social system to control it.

Think about how the financial barbarians have convinced governments that private gains and socialized losses are acceptable and that continued looting through tens of billions in bonuses while on the government dole is entirely OK. This is a remarkably similar process to how al Anbar’s (Iraq) guerrillas, fresh from slaughtering thousands of American soldiers, were able to secure autonomy, weapons, and a paycheck from the US gov’t.

Think about climate change and the inability of the social system to even generate an inkling of a response that wouldn’t entail social bankruptcy.

Talk about whiplash. It’ll be great. It’s the end. Pause for thought but I figure we will muddle through, as we always have.

Technorati Tags: Environment, General, Politics, Sustainability

New approaches to journalism

by mikebaird
Churnalism:
[Via Bench Marks]

As a quick follow-up to this posting, a colleague sent along a review of a new book called Flat Earth News by Nick Davies, which rightly points out that the “death of journalism” isn’t a murder, it’s a murder-suicide. Yes, readers are abandoning print newspapers and magazines, preferring to get their information online (with an assumption that such things are free). At the same time, this abandonment is being driven by a decline in quality of the old media, as the owners seek to cut costs and increase profits. From the review:

“The most basic function of journalism, in Davies’s view, is to check facts. Journalists don’t just pass on what they’re told without making an effort to check it first. At least, in theory they don’t. In practice, contemporary journalism has been corrupted by an endemic failure to verify facts and stories in a manner so fundamental that it almost defies belief. The consequences of that are pervasive and systemic…Journalists report much less than they used to, and much less than they should, as the papers have switched over to a reliance on columnists and opinion…Stories need to be cheap, meaning ‘quick to cover’, ‘safe to publish’; they need to ‘select safe facts’ preferably from official sources; they need to ‘avoid the electric fence’, sources of guaranteed trouble such as the libel laws and the Israel lobby; to be based on ‘safe ideas’ and contradict no loved prevailing wisdoms; to avoid complicated or context-rich problems; and always to ‘give both sides of the story’ (‘balance means never having to say you’re sorry – because you haven’t said anything’). And conversely, there are active pressures to pursue stories that tell people what they want to hear, to give them lots of celebrity and TV-based coverage, and to subscribe to every moral panic.”

I do strongly believe that people are still willing to pay for quality, but as this review points out, that’s not what’s being offered by most of our media outlets. The book looks interesting, definitely worth a read.

Few current newspapers are owned by families anymore. They are owned by large corporations where the search for greater profits often runs up against the cost of doing good reporting. Just as TV news has gone south after they were forced to become profit centers, so too with print media.

I would present the hypothesis that the problem with most companies today, in any industry, is that the people who actually control the company have very little experience in what the company does. The head of GM used to run Home Depot. There are countless examples.

People are turning away from most print media, even when it appears online, because it has become harder and harder to be informed. Most people read the paper for sports, comics and maybe a little business. I red the news online to really find out, usually relying on interested bloggers who I have come to trust to provide some perspective and to inform me on the subject.

The one thing a paper could do well, local news, is often given short-shrift because it costs money to have real people report.

The latest meme is the idea of non-profit newspapers as discussed in the New Yorker. The St. Petersburg Times is anexample, perhaps. Some small, young but strongly focussed newspapers that are not-for-profit are also starting to make some noise. They certainly check facts.

Could these be the beginnings of a new rise in objective, information-driven news reporting? They will if the big guys continue to lose focus on what their mission truly is. I think it is very likely that in 10 years a lot of companies that are currently for-profit will be in the non-profit sector.

Technorati Tags: Knowledge Creation, Non-Profit

Economics of low probability events

Harvard economist: Climate cost-benefit analyses are “unusually misleading,” warns colleagues “we may be deluding ourselves and others”:
[Via Climate Progress]

Harvard economist Martin Weitzman published an important analysis last year in which he explained why conventional economic analyses of climate change are “arbitrarily inaccurate.”
The first draft of the paper had said the vast majority of such analyses should carry the following label:

“WARNING: to be used ONLY for cost-benefit analysis of non-extreme climate change possibilities. NOT INTENDED to cover welfare evaluation of extreme tail possibilities, for which a complete accounting might produce ARBITRARILY DIFFERENT welfare outcomes.”

The final version, “On Modeling and Interpreting the Economics of Catastrophic Climate Change,” eliminated that disclaimer, but replaced it with a longer statement that is equally devastating (see below).

I discuss this a little more at Path to Sustainable but I wanted to also put in a little about How It All Ends. Not only is it an illuminating approach but it is a great example of how ‘ordinary’ people can wield much greater power using Web 2.0 approaches. A single science teacher from Corvallis produced the series.

It has been seen by more people than watch many programs on TV. It did not require a focus group to put this together not did the idea have to be pitched to the money guys at a studio.

These sorts of approaches to disseminating information will be critical as we move forward.

Technorati Tags: Environment, Science, Web 2.0

It is gone

by Nagy David
How much wealth has vaporized?:
[Via HorsesAss.Org]

On Thursday The Big Picture had some excerpts from the January newsletter of GMO, a global investment firm. The comments were written by Jeremy Grantham, the chairman of GMO’s board, and are absolutely fascinating, if not easily quoted on a blog like this.

The excerpts at The Big Picture were run under the title Grantham assigned the first section of his newsletter, Greed + Incompetence + A Belief in Market Efficiency = Disaster, and they are worth a moment of your time. If you want to worry about the people Obama has picked to pilot the boat during this storm, check it out.

The Big Picture is a great blog to find out about financial matters. But the report discussed here had some very sobering numbers.

From GMO Quarterly Letter (PDF.)

But let us look for a minute at the extent of the loss in perceived wealth that is the main shock to our economic system. If in real terms we assume write-downs of 50% in U.S. equities, 35% in U.S. housing, and 35% to 40% in commercial real estate, we will have had a total loss of about $20 trillion of perceived wealth from a peak total of about $50 trillion. This relates to a GDP of about $13 trillion, the annual value of all U.S. produced goods and services. These write-downs not only mean that we perceive ourselves as shockingly poorer, they also dramatically increase our real debt ratios. Prudent debt issuance is based on two factors: income and collateral. Like a good old-fashioned mortgage issuer, we want the debt we issue to be no more than 80% of the conservative asset value, and lower would be better. We also want the income of the borrower to be sufficient to pay the interest with a safety margin and, ideally, to be enough to amortize the principal slowly. On this basis, the National Private Asset Base (to coin a phrase) of $50 trillion supported about $25 trillion of private debt, corporate and individual. Given that almost half of us have small or no mortgages, this 50% ratio seems dangerously high. But now the asset values have fallen back to $30 trillion, whereas the debt remains at $25 trillion, give or take the miserly $1 trillion we have written down so far. If we would like the same asset coverage of 50% that we had a year ago, we could support only $15 trillion or so of total debt. The remaining $10 trillion of debt would have been stranded as the tide went out!

Grantham goes on to argue that “somewhere between $10 and $15 trillion of debt will have to disappear.”
[More]

Those numbers are mind-numbing. No matter what some people are saying, it is going to take a long time to unwind all of this. Japan tried to do it slow and did not succeed. I may just be best to write it off, take a hard hit and start over.

Technorati Tags: Economy

LOL

Back When Journalists Were Journalists!:
[Via Grasping Reality with Both Hands: Economist Brad DeLong's Fair, Balanced, and Reality-Based Semi-Daily Journal]

From The Times of London:

Saturday, October 29, 1825–OLD BAILEY: Mr. Segeant ARABIN sat till 10 o’clock, and tried some cases (with a Middlesex jury), but none of them were of any interest.

Reading old newspapers can be a lot of fun.

Technorati Tags: General