The Zeitgeist of the BearDogs

Sometimes Simple IS the best way to communicate. Here's to the simpletons.

An F for Editing

From yesterday's NY Times front page, top right column. Right where you couldnt miss it.

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The Word about The Fed and The Plan for the Change

The Fed is powerful. I'm a fan of a good Fed. We currently do not have a good Fed. I'm horrified.

Be horrified.

Taking Care of the Heroes

Football is valuable entertainment. Add up the value of the NFL teams: $30 billion according to Forbes to get one measure of just how valuable it is. A hundred bucks for every man, woman, and child in the US.

We love to play and watch it more when we can build (indirect) relationships with it by following our favorite teams, coaches, and players.

We love it more when we can build community with other fans around said relationships.

We love it more when it's exciting (meaning the competition is close and the outcome uncertain).

We love it more when it reminds us of humanity's higher nature. We can't stop talking about players who achieve super-human heroic feats, or coaches who execute strategies to snatch victory from the clutches of defeat.

We love it more when it makes us feel like winners.

We love it less when it is unjust.

We love it less when it is boring.

We love it less when it is inhumane.

We love it less when we lose connection to players or teams.

Sooooo.....

A good way to kill the sport would be to remove the best available (and best-known) players. Heroes: gone. Relationships: severed. Excitement: weak.

Another good way would be to have no rules or penalties. Justice: betrayed. Heroes: broken. Participation: discouraged. Humanity: degraded.

Yet another good way would be to have too many rules and penalties. Action: mundane. Risks: not taken. Super-humans: enfeebled. Results: predictable.

Helmet-to helmet, launching, spearing, intimidating, crushing hits are designed not to stop the opponent, but to intimidate him. Tru dat, but they also damage him, sometimes permanently. They prevent him from being his best.

For some they may be fun to watch or commit, but they are a net negative to the value of the sport and that's the best reason I can think of to stop them. Football is nothing without it's heroes. We have to let them show off ... but not at the expense of knocking other heroes out of the game. That's exactly what no-holds-barred hits do ... in more ways than one. They can injure, sure. They also can cause a receiver to muff a catch because they're too busy worrying about what semi truck is coming their way. The long-term effects (ALS, etc) might even cause some smart-and-athletic dudes to avoid college and pro ball altogether.

On top of that, menacing hits call attention to the embarrassing base nature of the hitters. These are not heroes. Their lack of humanity exposes that.

Joe Pa agrees:

"I've been saying for 15 years, we ought to get rid of the face mask," Paterno said this week. "I think, then, you go back to shoulder blocking, shoulder tackling, and you wouldn't have all those 'heroes' out there."

I'm not convinced that he's found the best solution, but his point is that these guys are just doing what they can get away with. Whether pain, fines, suspension, or legal proceedings provide the disincentive, the point is that these guys will figure it out. It's unacceptable to cream kickers and QBs (Favre aside). Players have somehow figured out how to avoid those hits. It should be unacceptable to demolish receivers, too. Egregious hits are not required. They are not unavoidable. They're not the result of confusing rules. They're not a necessary part of the psychological game. They're not the natural result of younger quarterbacks. That's all ridiculous. They are an embarrassing lack of discipline on the part of the aggressor, exploiting a loophole in the rules. The loophole should be closed and enforcement should be strict. Players will figure out how to comply ... or they're not the kind of players we want in the game.

Yeah, What HE Said: The Blasphemy of Expressing Opinions

“I mean, look, Bill, I’m not a bigot, but when I get on the plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.”

ALARM! ALARM! BIGOT ALERT! PSYCHO ALERT! INSANE RADICAL CONSERVATIVE RIGHT-WINGER ALERT! CRUCIFY WHOEVER SAID THIS! SEVER ALL TIES TO AVOID GUILT BY ASSOCIATION! ABANDON SHIIIIIIP!

OK, OK, probably ... maybe ... peut-être I'm over-reacting a bit. I mean, it WAS an opinion show, so ... maybe ... but eek - what will people think? That's it. Out he goes!

Apparently that's NPR's idea of a defensible argument for firing one of their most renowned, long-standing employees. That's exactly what they did to Juan Williams for his O'Reilly Factor quote ... or for something ambiguously "larger" as several have suggested.

And therein lies the rub. Juan Williams has long been a bridge across many political worlds. He worked for NPR (for many years) but was happy to participate in political discussions live, in print, on air, and on TV with just about anyone, on just about anything. He has always been willing to try and expand mutual understanding. Problem: Conservative nuts don't understand the real world? Juan's Solution: Go on Conservative shows and explain the opposing viewpoint in refreshingly clear, even-keeled, non-inflammatory terms.

Was his line culturally-insensitive? Yes. Did it reflect a true bias that he ... and many others have? Yes. Did he specifically preface it with the caveat that he's not bigoted? Yes. Did he mis-represent opinion as fact? No. He clearly stated a fact: he gets nervous. In doing so, did he betray his insensitive opinion? Yes.

Even journalists are allowed to have opinions ... even insensitive ones.

In his own words (on Good Morning America this week)

"This is one of the things in my life that's shocking. I grew up on the left. I grew up here in New York City and I've always thought the right wing was the ones who were inflexible and intolerant. Now, I'm coming to realize that the orthodoxy at NPR, as it's representing the left, is just unbelievable," he said. "And especially for me as a black man, to somehow, you know, say something that's out of the box. They find it very difficult... I think they were looking for a reason to get rid of me. They were uncomfortable with the idea that I was talking to the likes of Bill O'Reilly or Sean Hannity."

NPR's differentiating advantage is that they're like Juan: Clear, non-inflammatory, diverse, and comprehensive, if a bit left-leaning, in their reporting. When I want to get a (much) deeper understanding of an issue than I can get from the talking heads on TV ... and a (much) clearer understanding than I can get from the cacophony of the internet ... I turn to NPR.

And I want to hear Juan.

Yeah! What HE Said: Inspiring Government to Be All It Can

Government is the great fiction through which everybody endeavors to live at the expense of everybody else.
- Frederic Bastiat, French Economist (1801-1850)

A government big enough to give you everything you want, is strong enough to take everything you have.
- Thomas Jefferson, US President (1743-1826)

Image: Despair.com

Talking People to Death

From this week's NY Times:

"[Netanyahu's offer to freeze colonization of contested Palestinian territories] was aimed either at keeping talks with the Palestinians alive and his right-wing coalition partners in check, or at seeking to shift the burden of failure to the Palestinians and escape blame should the talks wither and die. - NY Times 10/12/10

They said "should" but clearly they meant "when." Why the hell did they re-start colonization anyway?? Oh, yeah, so they could offer to stop ... again.

This, to me, summarizes the whole problem. The involved parties, including the Israeli, Palestinian, and US governments as well as the Jewish diaspora, the militant mullahs, the Syrian and Iranian militaries, the arab-royals, the money-siphoning nonprofit organizations, and all the other agents provocateurs have no intention of saving the patient. They just want to make sure they're not blamed for it's death.

Lest they forget among all their strategic positioning (in soft chairs at fancy resort hotels), ego-stroking (whilst sipping tea on private jet they didn't pay for), and diplomatically chortling (while enjoying 5-star cuisine on finer china), there are people dying because of their delays. Some of those people are starving in camps. Others are getting blown to bits during their daily commute. Others are so hopeless and angry about their future that they're letting Bin Laden's clowns whip them into homicidal/suicidal furies. Others still are dying atop Humvees.

Yet everyone just continues talking. One step left, then one step right. Never moving forward lest they accidentally resolve the issue and lose their relevance. If that happened, who would pay for their fancy limos and massive security detail? Who would fund their next European vacation?

Hey Bibi, Hill, Abu! Hey nationalists! Hey settlers! Hey martyrs! Hey donors-to-the-cause! Hey talking heads! You're all wrong. You're all culpable. You're all criminally negligent. Let history reflect that as your true legacy.

Insensitive Cultural Observations: The Chinese Quirky Quant

In the interest of equal opportunity, I'll focus my next cultural-insensitivity at India's top "strategic competitor" ... and ours.

You'd never believe it by the example of Victim Two: The Chinese Quirky Quant.

To stereotype, scientists the world over have quirky tendencies. And Chinese people, to stereotype, are particularly good at choosing a group and flawlessly conforming to its norms.

The Quirky Quant is no exception in that regard. At all hours of the day and night, he will be hunched over a massive PC in an undesirable cubicle of a large tech slash financial company. The famous-er the better. The cube will have reams of paper strewn about among books on fancy maths. Well-worn books. It will be decorated with something red, something growing, and/or something proclaiming what Chinese zodiac animal-year we find ourselves in. The PC will have multiple monitors upon which will be a plethora of windows of code and diagrams suggesting an incredibly active powerful multi-tasking brain. WARNING: DO NOT try to understand what's on these screens. Your head will explode.

The specimen, himself, will have large and squarish glasses. The distance between his belt buckle and the open throat of his light blue button-down will be no more than 6 inches. Yes, his socks will be showing. They will be athletic socks. Preferably white.

You may think to yourself "how does he get away with wearing white socks to work like that?" The answer is that he wore the same white socks to his interview. At which he flubbed the behavioral part of the questioning, sat through the case study, and made generally unintelligible comments which were one part macerated grammar, two parts technical jargon, and three parts baffling accent. At which point the interviewers, from peers to execs, said to themselves ... wow - he must be smarter than me ... I should frown and nod a lot ... and then hire this dude.

Insensitive Cultural Observations: The Indian's Hot Beverage

Let's lighten things up a bit. This blog is smothered in heavy technocratic suggestions to the world's dirge-grimmest ills.

And I'm not a fan of the make-believe of political correctness.

And the world is, according to at least one walrus, flattening and overcrowding.

So since all flavors of humans are gonna be literally rubbing shoulders in the near future, let's get to know each other's idiosyncrasies. These are not criticisms. Just first-person observations and experiences extrapolated, generalized, and mixed with some assumptions.

Stereotype at your own risk.

Victim One: The Indian's Hot Beverage

Go to your local friendly chain of coffee purveyors in a large city's business district. While you order your eight bucks of triple-hot-hafcaf-mocha-latte-atte and scone, look around for the ever-present recent immigrant of India. He'll be the one with the sharp bouffant hairdo, the excessively shiny leather loafers, and the perfectly white button-down shirt. He'll bear the slight scent of the cigarette he inevitably smoked on the stroll from his office. If he has successfully procreated, he'll have a mustache.

He will curtly yet courteously order a "hot coffee" (if he's trying to identify with his adopted land) or a "hot tea" (if he's feeling particularly Indian). He will pay nonchalantly as though simple muscle memory guides his lax hand his wallet to dole out meaningless bits of money.

He will escort his beverage to the milk-and-sugar counter where he will begin the process.

Step 1: remove lid and insert stir stick
Step 2: blow on drink; stir
Step 3: attempt to slurp-sip; determine it too hot; stir
Step 4: blow on drink; stir
Step 5: lose self momentarily in a steamy Bombay Dream as the aroma enters nostrils; stir
Step 6: ponder milks and sugars; stir
Step 7: select a milk (pronounced with no "i" by the way) and pour a spot into beverage; stir
Step 8: blow on drink; stir
Step 9: attempt to slurp-sip; determine it too hot; stir
Step 10: blow on drink; stir
Step 11: attempt to slurp-sip; determine it too hot; stir
Step 12: blow on drink; stir
Step 13: slurp-sip; burn mouth; stir
Step 14: select a sugar and pour into beverage; stir
Step 15: blow on drink; stir
Step 16: lose self momentarily in a zen moment of abstract yet vivid color and movement as the aroma enters nostrils; stir
Step 17: slurp-sip; burn mouth; stir
Step 18: pour another spot of milk into beverage
Step 19: slurp-sip successfully; stir
Step 20: slurp-sip more deeply; stir; regain consciousness of the outside world

And just like that, he'll be gone. Back to his cubicle-mates upstairs.

Follow Up: Talk Amongst Yourselves: Governmental .... Effectiveness??

(specifically ... the part about the likely impact of financial industry regulatory reform)

In a recent blog post, I said:

Financial Institutions will once again be lobotomized. Divided into two classes:
- Utilities (aka retail banking)
- Casinos (aka everything else)

Utilities" are done for as a for-profit enterprise. Just like Amtrak and Con Ed, they will require permanent and heavy subsidy verging on nationalization to survive the tonnage of regulations which will be piled on.

"Casinos" will have to escape to the Bahamas, Monaco, or Indian reservations. I would not be surprised to see these firms further subdivided into firms that are allowed to play with other peoples' money ("brokerages") and those playing with their own money ("proprietary dealers").

Well ... the pudding of proof is starting to pour in ... even without the fancy new regulations:

1. Anglo Irish Bank will be split into a "good bank"which will retain only deposits, and an "asset recovery bank" which will run down its loans over time. Leave it to the Irish to invent a casino that always loses. BTW - Seeking Alpha (blog) doesn't think this is the end of the story.
   
2. Everyone's favorite financial institution, Goldman, has now announced that they're following my advice (at least in the US) by voluntarily winding down slash selling their proprietary equity trading operation called the "principle strategies group." No casinos here, Mr. Regulator, we're just a buncha blue-collar broker-types ... keep mooooving.

Yeah! What HE Said: Fidel on Communism

"The Cuban model doesn't even work for us anymore"
- Fidel Castro, at a smallish lunch table, 2010

http://www.theatlantic.com/international/archive/2010/09/fidel-cuban-model-doesnt-even-work-for-us-anymore/62602


Nuff said.

Talk Amongst Yourselves ... Liberty ... Build it and they will come

Take THAT Paranoid Saudi/UAE/India

(ad placed by the government of Bahrain in the August 19th Economist)

New Newspeak

Years ago, as a consultant, I decided I would get the industry to start using the word "crisp" .... like a clean white shirt ... like a Monday morning ... with a colon.

Well, clients I've never met now say we need to be crisp and I secretly high-five my 2-year-ago self.

What could I possibly do to top that?

Here's my next 2-fer-1:

Shepherd (v) - Take responsibility for a "flock" (=set of business goals) and see it safely home to successful accomplishment ... and then butcher it and eat it with mint sauce at the last minute.
Nimble (v) - Not just agile. Not just quick-to-market. Not just flexible. All of that an more. Nimble like Jack Be Quick ... jumping over the candlestick ... not getting burned or even setting his underpants on fire. The ability to move quickly and change directions nearly instantly without losing the beat. Even if you're a hippo in a tutu. Nimble is the new grail of business.

Bingo ... Corporate Newspeak just got two new toys.

Mark my words - they're coming soon to a cube farm near you.

Talk Amongst Yourselves: Governmental .... Effectiveness??

Unlikely. But they are moving through the agenda at a pace which, adjusted for the fact that they are complete and utter idiots who live on another planet, is nearly mentionable. In fact, they're going so fast, I have not time to drawl on for paragraphs about each item. The following will have to do.

Sadly, they're going so fast, they also haven't time to hire a fancy Madison Ave team to sex up and connect the whole thing thematically. Fear not, Congressmen. I have a name for the whole agenda.

I dub this session: "the hour of our de-embarrassment."

Someone slightly less numb than average must have realized that some US policy is downright embarrassing ... just like good ole Cousin Eddie.

Health care:
Kudos. With universal (well, near as the US government will ever get to such absolutes) coverage, finally, arrogant socialist countries (cough, cough, Europe, cough) have one fewer reason to feel superior. Shame you forgot all about that whole cost containment/efficiency/quality bit. Maybe next time.

Discrimination:
Again, kudos on removing some of the most ridiculously embarrassing bits of 16th-century discrimination still enshrined in US law.

Legally preventing a gay man or woman on their death bed from seeing the one person who they love most was ... well ... maybe not such a solid idea. I know it was supposed to prevent the coming of Lucifer, but now, what with Bunker Busters and Missile Defense, I think he's less of a threat.

Discrimination makes a guy wanna kill someone. What better place to do that than in the Army? So, kudos again for taking the logical step to reexamine Don't Ask Don't Tell. Instead of making recruiters scrape the bottom of the barrel to meet their quotas, just let a few angry gays in. They always spruce up the place!

Now let's get rid of that whole blood donor ban thing.

Financial Regulation Reform:
Without injecting my own opinion (yet), allow me to predict the most likely outcome. Financial Institutions will once again be lobotomized. Divided into two classes:
- Utilities (aka retail banking)
- Casinos (aka everything else)

"Utilities" are done for as a for-profit enterprise. Just like Amtrack and Con Ed, they will require permanent and heavy subsidy verging on nationalization to survive the tonnage of regulations which will be piled on.

"Casinos" will have to escape to the Bahamas, Monaco, or Indian reservations. I would not be surprised to see these firms further subdivided into firms that are allowed to play with other peoples' money ("brokerages") and those playing with their own money ("proprietary dealers").

Over the past 10 years, the US Financial Services industry has made up more than a third of corporate profits, aka a third of the returns upon which the entire US equity market is based. Over the next 10 years, that entire industry will go the way of the Dodo and Bear Stearns.

Witch Hunting:
Exhibit A: the SEC's civil suit against Goldman. This thing is such a political charade. We're gonna end up in the Supreme court debating the definition of "is" again. GS is too smart to get caught red-handed. Even if they were fined a billion bucks, the 17% market cap drop is a ridiculous over-reaction, but they won't pay that either. Their max exposure SHOULD be the $15 million they charged for their services. Sadly, this court case isn't going to be decided in a court of law, but in the court of public opinion.

All of this ... for better or for worse. Talk Amongst Yourselves.

Yeah! What HE Said: Greenspan on the Hill (again)

They just won't let him alone. But Maestro is still too solid to be shaken by a few pols.

The surging demand for mortgage-backed securities was heavily driven by Fannie Mae and Freddie Mac which were pressed by the Department of Housing and Urban Development and the Congress to expand affordable housing commitments.
- Alan Greenspan, Congressional Testimony 4/7/10

Nuff said. If they don't want to know the real answers, maybe they should stop asking the questions.

Happy Reagan Day!

And I quote:

They say the world has become too complex for simple answers. They are wrong. There are no easy answers, but there are simple answers. We must have the courage to do what we know is morally right.

In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden.

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

It is time for us to realize that we're too great a nation to limit ourselves to small dreams. We're not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope. We have every right to dream heroic dreams. Those who say that we're in a time when there are no heroes, they just don't know where to look.

You and I are told increasingly that we have to choose between a left or right, but I would like to suggest that there is no such thing as a left or right. There is only an up or down — up to a man's age-old dream; the ultimate in individual freedom consistent with law and order — or down to the ant heap totalitarianism, and regardless of their sincerity, their humanitarian motives, those who would trade our freedom for security have embarked on this downward course.

You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we're not bound by that same limitation? We must act today in order to preserve tomorrow.

This is not the time for political fun and games. This is the time for a new beginning. I ask you now to put aside any feelings of frustration or helplessness about our political institutions and join me in this dramatic but responsible plan to reduce the enormous burden of Federal taxation on you and your family

The size of the Federal budget is not an appropriate barometer of social conscience or charitable concern

I am not worried about the deficit. It is big enough to take care of itself.

Freedom is the right to question and change the established way of doing things. It is the continuous revolution of the marketplace. It is the understanding that allows to recognize shortcomings and seek solutions.

America's best days are yet to come. Our proudest moments are yet to be. Our most glorious achievements are just ahead.

You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on Earth, or we will sentence them to take the last step into a thousand years of darkness

We will always remember. We will always be proud. We will always be prepared, so we may always be free.

Corporate Newspeak 7

Talk Around: (v) 1. Share opinions on tangents related to a topic on which decisions are pending without any expectation that any decisions will be taken, thus taking all pressure off the decision-making leadership at the table. 2. Tongue-in-cheek play on the literal interpretation of the term "talk about."
Also: Waste Time, Chat, Think On, Building a Base, Laying Groundwork
Usage: "Can we make a decision here today, boss?" / "Well, Johnny, of course - we do need to move on this, which is why I think we need to talk around the nuances of the constraints and dependencies to make sure we've covered off all that first."

Draw a Line Around: (v) Avoid talking further about once and for all. Usually used by someone who has argued their side of an issue unsuccessfully.
Also: Ring-fence
Usage: "But, but ... okay folks, clearly we need to think on that niche issue a bit more. I don't want it to keep us from moving forward on the overall strategic vision. Let's draw a line around that and continue the larger discussion."

Friction-Free: (adj) Of a mythical business process which produces economic value without any ongoing cost, often expected to move at the speed of light. Used only in the context of corporate sloganeering or in the context of empty sales promises.
Usage: "Don't worry about what it costs to implement, Donnie. By leveraging technology and enterprise synergies, this friction-free solution pays for itself."

Enterprise: (adj) Of a mythical type of business process which is entirely uniform across all groups, departments, lines of business, divisions, or other factions of a corporation, run under the direction of a single group, yet paid for by all groups. Used when one group starts to implement a new business process, and then realizes they don't have enough money to pay for it.

What Will Tomorrow (Today?) Bring: Private Spaceflight

Conservative gut-check. Can you stick to your conservative, limited-government guns, even for the "cool" stuff? Apparently Dick Shelby goes all bedwetty at the prospect:

"The president's proposed NASA budget begins the death march for the future of U.S. human space flight," said Sen. Richard Shelby (R., Ala.). - WSJ.com 2/1/2010

Maybe Dick should read January's Popular Science cover story, "Who needs NASA? This Year Civilian Space Indusrty Finally Takes Off."

Follow Up: Less is More

As if responding to the Kramer and Greenspan quotes I blogged about here in December, folks on today's Talk-Shops had the following to say:

"That's what I think people beyond the beltway find so hard to believe. Why can't you find things that they agree on and pass that into legislation? But somehow that never seems to happen." - Bob Schieffer, Face the Nation 1/31/2010

Okay, Bob, but now we have Hope and Change, right?

David Brooks tackled the same core issue from a very different angle:

"If you ask people, 'why aren't you investing? Why aren't you lending?' it all comes down to uncertainty ... If bankers and entrepreneurs don't have any sense of certainty, they're just not going to invest ... We've not only got this economic problem, but its compounded by a psychological problem, magnified by the fact that distrust of institutions is at its highest level in history." - David Brooks, Meet the Press 1/31/2010

Exactly.

I'm frequently asked, "As someone in finance, what do YOU think of the government's proposal on ... "

• New bank taxes
• New windfall taxes
• Bailouts
• Evil banker hunts
• Prop trading bans
• Goldman Sachs
• Too big to fail
• The National Debt

My uniform answer, no matter what topic they bring up: "I'm against it. Whatever 'it' is." Does that make me the exemplar member of the Party of No?

Nope. I'm against that too. And I'm in good company.

"Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny." - Thomas Jefferson

"And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude." - Thomas Jefferson

"That government is best which governs least." - Thomas Jefferson

"Government is not a solution to our problem. Government IS the problem." - Ronald Reagan

Bloated bureaucrazies, by definition, separate pieces of the incentive mechanism. He who makes the decisions is never he who must implement them, nor he who pays for them, nor he who is impacted most greatly by them. This problem is no less present in large corporations than it is in governments the world over. To me, the only cure for bureaucratic inefficiencies and mistakes ... is LESS bureaucracy. Second best is a paralyzed bureaucracy. That, at least, leaves individuals and businesses the liberty they crucially need to maximize their own happiness/wealth/utility/economic value. Least best is an erratically spasming bureaucracy.

As we all know, investors and entrepreneurs make a risk-vs-reward decision every time they choose what to do with their capital (money, ideas, and energy). As I've explained in past blogs, risk is equivalent to unpredictability. The more able one is to predict the future, the lower the risk and the more confidently one can make moves today which create a nice return tomorrow. Conversely, when the rules of the game may significantly change tomorrow or next year, risk is dramatically increased. This raises the risk-vs-reward bar such that fewer investment options are viable.

Governments can increase or decrease this risk. Those with the discipline to stick to a stable, sensible, transparent industrial policy over a long period build tremendous "trust equity" with investors. The benefit should be self-evident to the most causual observer: stability reduces perceived risk, which encourages investment, the fuel of economic activity. Ideas become businesses become economic value. Govermnents, too, reap the benefit by being able to borrow cheaply.

Unfortunately, being based entirely on intangibles (consensus expectations), this trust equity is a very fragile thing. Governments can quickly sabotage themselves, their economies, and thus their citizens by giving off even the whiff of erratic or ill-advised behavior.

Don't take my word for it. Look at successful economies the world over. There is ample empirical evidence that, while stability is not the only factor of economic success, its absence is certainly a factor of economic failure. Contrast North and South Korea. Contrast Argentina and Costa Rica. Contrast Greece and Germany. The success stories plodded quietly for decades, one reassuring yet boring step at a time, to amass their trust equity.

Let's be clear: governments do not create economic value. Governments limit (regulate) its creation in order to make sure one person or business doesn't take advantage of another. We grant them permission to exert this control based on some stew of goals which we've set for them.

Here's another one. Goverments don't own any economic value. Governments are simply temporary stewards of value which they've taken (taxed) from individuals and businesses. By definition, this regime of regulation and taxation reduces economic activity to the extent it limits and dis-incentivizes investors and entrepreneurs. Sometimes we accept this reduction because we understand that we're trading it for our social goals, such as stability, security, equality, or fairness.

But let's combine this with my earlier point. The dis-incentive of regulation and taxation is multiplied by a risk factor which captures its future volatility (=unpredictability). When the future amount of this dis-incentive cannot be confidently predicted, risk is higher and thus fewer opportunities are worth the risk-vs-reward dice roll. Money drifts to the sidelines and the whole economy slows down.

Sound familiar?

So, here's something I'm FOR: minimizing the risk multiplier while maximizing the return ... financially, socially, environmentally, and any other -ly.

Follow Up: Baseless Blames and Bangless Bucks ... oh, and Healthcare

Exactly 6 months ago on this blog, I said:

"David Axelrod, himself, said this week there was universal agreement on 80% of their ideas. Sounds like enough for a plan to me. Let's pass it and start to get at least a little relief. Would we delay a heart bypass in the ER until everyone had agreed what to do about the patient's high cholesterol? Of course not. That is not to suggest we should choose Band-Aid surgery over treating the insidious underlying problems. Its just a sensible triage. Nurse?"

Maybe the White House is finally listening:

"Mr Obama has instead hinted that he would like to build support for a bill “around those elements of the package that people agree on.” - Economist.com, 1/26/10

Sadly, the same article continues ...

"It is not clear what other elements the president believes could be agreed on."

What Will Tomorrow (Today?) Bring: Virtual War

Given China's love for child labor, these guys may be teens, but it's not idle curiosity that is motivating them. Nor individual malice. Make no mistake, this is Cyber Warfare.

Researchers identify command servers behind Google attack

The cyber-assault came to light on Tuesday when Google disclosed to the public that the Gmail Web service was targeted in a highly-organized attack in late December. Google said that the intrusion attempt originated from China and was executed with the goal of obtaining information about political dissidents ...

"The source IPs and drop server of the attack correspond to a single foreign entity consisting either of agents of the Chinese state or proxies thereof," the report says ...

http://arstechnica.com/security/news/2010/01/researchers-identify-command-servers-behind-google-attack.ars

This Isn't A Child's Game, Folks, but it Ain't Rocket Science

Surprise surprise a bloated, non-functioning, politically-motivated organization run by a revolving-door president is ineffective.

And I'm talking about the White House.

"The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack, but our intelligence community failed to connect those dots,"
Barack Obama criticises CIA failures over Detroit bomb plot

Obama's own report, as paraphrased by Guardian.co.uk, said:

They said that the biggest US crisis in intelligence-gathering since 9/11 had
been brought about mainly because no single agency is in charge, with a dozen agencies fighting for their own turf.

Gee, last time we blew the dots game, I was just sure Washington would fix it:

A key congressional committee opened its investigation Thursday into the November 5 Fort Hood shootings with a pledge to find out if authorities failed to "connect the dots" and could have prevented the attack.
Senate panel seeks to 'connect the dots'

Must have gotten lost somewhere in the bureaucrazy. But that's OK, because the problem should have already been fixed. We realized we sucked at dot connection years ago and did something about it:

It is said that prior to the attacks of September 11th, our government failed to connect the dots of the conspiracy ... So to prevent another attack – based on authority given to me by the Constitution and by statute – I have authorized a terrorist surveillance program.
George Bush, 2006 State of the Union address

Maybe that, too, got drowned in bureaucrazy. Kinda like THIS one way back in 2002:

The Department of Homeland Security consolidates 22 agencies and 180,000
employees, unifying once-fragmented Federal functions in a single agency
dedicated to protecting America from terrorism

But back to the dot-connection game currently at hand. Last I checked, you had to have a visa to get on a plane to the US. Funny, I thought the State Department issued Visas into the US. I agree with Hill on this one:

We are, in the State Department, fully committed to accepting our responsibility for the mistakes that were made
Secretary of State Clinton on plane bomb blame

But, wait, we fixed visa procedures with THIS back in 2008:

The Visa Security Program was established in the Homeland Security Act of 2002 to increase the security of the visa process at U.S. embassies and consulates. The program enhances national security by preventing terrorists, criminals, and other ineligible applicants from receiving visas ... The program assigns experienced special agents to Visa Security Units overseas to review visa applications, initiate investigations, and provide advice and training to consular officers. Agents bring valuable resources to posts and add a layer of security to the visa process

No, wait, that one got lost in bureaucrazy too.

When the cause of failure is bureaucrazy, how can we keep expecting that bureaucrazy to fix it? Maybe more childish games should be part of the Civil Service Exam. Or maybe we'd be better at a different game. Tic-tac-toe, anyone?

"We can't solve problems by using the same kind of thinking we used when we created them."-Albert Einstein