The new, crazy, stock market

BW Online | August 6, 2004 | The New Rules of Investing... The long-term investor who checks in occasionally to see what's going on can be alarmed by what's happening. Technical indicators, like the level an index reaches on a analytical chart, can trigger major buying activity, even if there was no positive fundamental news in a particular sector. For example, one reason financial stocks rallied on Aug. 2 in the wake of a government announcement of a new terrorist threat may simply be because, that same morning, they fell to a technical level at which a lot of buyers had decided weeks ago to buy. So while most investors might have expected stock prices to decline in the face of rising fear, they actually rose. Go figure.

Similarly, individual stocks' moves can seem inexplicable until examined in the context of today's trading strategies. Did you wonder why Citigroup (C ) rose the day after its New York headquarters was named as a terrorist target? It may simply be because it was bought that day as part of a basket of bank stocks ...

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We need to stop announcing market moves on the radio as though they were meaningful.

This noise is annoying, but I worry more about corporate governance and our weak financial regulatory environent. Those are the issues that are rigging the market.

Minneapolis is America's most literate city?!

Literate Cities 2004 | introduction

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But St. Paul is number 16!!!

ARGGGHHHH. We St. Paulites will never live this down.

Scenice Byways - America and MN

Learn About Byways: "The National Scenic Byways Program is part of the U.S. Department of Transportation, Federal Highway Administration. The program is a grass-roots collaborative effort established to help recognize, preserve and enhance selected roads throughout the United States. Since 1992, the National Scenic Byways Program has provided funding for almost 1500 state and nationally designated byway projects in 48 states. The U.S. Secretary of Transportation recognizes certain roads as All-American Roads or National Scenic Byways based on one or more archeological, cultural, historic, natural, recreational and scenic qualities."

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Sure looks like a typical pork project!! I ordered a map anyway.

Here's the list for Minnesota.

Will McCain turn on Bush? The right may have gone too far ... again.

Guardian Unlimited | World Latest | McCain Condemns Anti-Kerry Ad

Republican Sen. John McCain, a former prisoner of war in Vietnam, called an ad criticizing John Kerry's military service ``dishonest and dishonorable'' and urged the White House on Thursday to condemn it as well.

``It was the same kind of deal that was pulled on me,'' McCain said in an interview with The Associated Press, referring to his bitter Republican primary fight with President Bush.

The 60-second ad features Vietnam veterans who accuse the Democratic presidential nominee of lying about his decorated Vietnam War record and betraying his fellow veterans by later opposing the conflict.

``When the chips were down, you could not count on John Kerry,'' one of the veterans, Larry Thurlow, says in the ad.

The ad, scheduled to air in a few markets in Ohio, West Virginia and Wisconsin, was produced by Stevens, Reed, Curcio and Potham, the same team that produced McCain's ads in 2000.

``I wish they hadn't done it,'' McCain said of his former advisers. ``I don't know if they knew all the facts.''

Asked if the White House knew about the ad or helped find financing for it, McCain said, ``I hope not, but I don't know. But I think the Bush campaign should specifically condemn the ad.''

Later, McCain said the Bush campaign has denied any involvement and added, ``I can't believe the president would pull such a cheap stunt.''

The White House did not immediately address McCain's call that they repudiate the spot.

Steve Schmidt, a spokesman for the Bush-Cheney campaign, said Kerry's record and statements on the war on terrorism - not his service in Vietnam - are fair game. ``The Bush campaign never has and will never question John Kerry's service in Vietnam,'' he said.

In 2000, Bush's supporters sponsored a rumor campaign against McCain in the South Carolina primary, helping Bush win the primary and the nomination. McCain's supporters have never forgiven the Bush team.

McCain said that's all in the past to him, but he's speaking out against the anti-Kerry ad because he believes it's bad for the political system. ``It reopens all the old wounds of the Vietnam War, which I spent the last 35 years trying to heal,'' he said.

``I deplore this kind of politics. I think the ad is dishonest and dishonorable. As it is, none of these individuals served on the boat (Kerry) commanded. Many of his crew have testified to his courage under fire. I think John Kerry served honorably in Vietnam. I think George Bush served honorably in the Texas Air National Guard during the Vietnam War.''

McCain himself spent more than five years in a Vietnam prisoner of war camp. A bona fide war hero, McCain, like Kerry, used his war record as the foundation of his presidential campaign.

The Kerry campaign has denounced the Swift Boat Veterans for Truth, saying none of the men in the ad served on the boat that Kerry commanded. The leader of the group, retired Adm. Roy Hoffmann, said none of the 13 veterans in the commercial served on Kerry's boat but rather were in other swiftboats within 50 yards of Kerry's.

Jim Rassmann, an Army veteran who was saved by Kerry, said there were only six crewmates who served with Kerry on his boat. Five support his candidacy and one is deceased.

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Overreach is always a danger. McCain is putting Bush into a corner. Either Bush repudiates the ad, or he's exposed as supporting it. Rove won't allow repudiation. But if Bush is shown to be a supporter, then he exposes his true nature -- and McCain may join the fight on Kerry's side.

So what happened when the marines invaded Fallujah? And then withdrew?

The Atlantic Online | July/August 2004 | Five Days in Fallujah | Robert D. Kaplan

A hundred and thirty thousand U.S. soldiers in Iraq were simply not enough to deal with a small fraction of that number of insurgents. It wasn't only because insurgencies, pace C. E. Callwell, arise from the soil itself, and thus have whole categories of advantages that a military force from the outside, alien to the culture, lacks. It was also because—as the large number of American troops near the Baghdad airport attested—the U.S. defense establishment was still organized for World War II and the Korean War, with too many chiefs at enormous rear bases, and too few Indians at the edges. In the weeks ahead the Marines at Fallujah would attempt to avoid large-scale bloodshed by seeking Iraqi surrogates to patrol the city. Such an expedient may provide a hint as to how the U.S. military will deal with Iraq as a whole.

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I remember the Fallujah episode as a series of puzzling and inconsistent news reports, ending in an odd sort of stalemate. This story provides more context.

The Marines Kaplan describes are classic warriors -- samurai -- violently devout, righteous, often compassionate, aggressive, lusting for battle and glory, courageous and prepared to die in battle. They seem to resemble their opponents, save that the Marines seem far more concerned about civilian casualties. I suspect for the insurgents there is no such thing as a "non-combatant". Women and children are combatants too; and those who are not combatants do not merit life.

The Marines entered Fallujah thinking there were a minority of enemies in a civilian population that wanted them out. They discovered that "minority" was pretty large -- too large to kill. They found every mosque was a military facility. They had far too few men to pacify a city like Fallujah -- unless they were to kill tens of thousands of men, women, and children. Ultimately they were withdrawn. It was the least bad alternative given fundamentally mistaken assumptions.

Kaplan on the old data alert: a reasoned condemnation

Waving the Orange Flag - Did the Bushies overplay the latest al-Qaida threat? By Fred Kaplan

Given what the Times' counterterrorism source said about the vast set of blueprints that al-Qaida keeps on the shelf, U.S. intelligence might discover lots of laptops with lots of apparent plans. If the alert goes up to orange or red with each discovery, very soon nobody is going to take these alerts at all seriously—and that includes the local law enforcement agencies tasked with enforcing the alerts on already overstretched budgets.

If president Bush is truly serious about preventing terrorist attacks, he has to ensure that these alerts, even when they're wrong, are at least perceived as sincere and untainted by political motive. By this standard, Tom Ridge last Sunday proved himself a dreadful homeland security secretary, and the Bush administration (by association, if not collaboration) diminished the trust that a president must inspire on such matters.

During the news conference where he announced the heightened alert, Ridge made the following remark: 'We must understand that the kind of information available to us today is the result of the president's leadership in the war against terror.'

As far as I can tell, only Jon Stewart, host of Comedy Central's The Daily Show, quoted this line. On one level, the 'real' news media might be lauded for ignoring the sentence and thus separating the news from the propaganda. But on another level, by censoring Ridge's spin, aren't they distorting the news? Isn't his spin part of the news? Could it be that the spin spurred the news, supplied (at least in part) the rationale for the announcement—especially given the broader context of its timing just a few days after the Democratic Convention?

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Homeland security, like the Fed, should be appointed independently of the ruling party with congressional oversight. Kaplan's reasoning is persuasive. It was understandable that security heads and government wanted to announce the findings, but they are indeed old data. Given that, extra attention should have been paid to the perception of sincerity. Bush failed that test, but Rove passed his test.

When a black hole burps ...

The New York Times > Science > Space & Cosmos > Songs of the Galaxies, and What They Mean

The most recent outburst, they estimated, was about 11 million years ago and was the equivalent of about 10 million supernova explosions.

This black hole sits in M87, a nearby galaxy. If the black hole at the center of our galaxy were to output the energy of 10 million supernovae ...

Lessons on the slippery nature of intelligence information: WMDs, Iraq and yellowcake uranium

Talking Points Memo: by Joshua Micah Marshall: August 01, 2004 - August 07, 2004 Archives

...The US has long known that the Italians had the forged documents in their possession at least as early as the beginning of 2002. And what we've uncovered is that at the same time Italian intelligence operatives were surreptitiously funnelling copies of the documents to this document peddler with the knowledge that he would sell them to other intelligence services and likely to members of the Italian press.

Now, a few more notes on the ‘security consultant’. The Financial Times story said that he “had a record of extortion and deception and had been convicted by a Rome court in 1985 and later arrested at least twice.” Several of the particulars here are incorrect. But he does have a criminal record. And I’m told by a very reliable source that he is now trying to sell his the detailed version of his story to members of the British press for 30,000 euros. Whether he's successful in doing so we'll probably find out in the next few days.

We already have his account. And needless to say, we didn’t pay him. But it’s reasonable to ask how trustworthy his account is since he seems to be someone of rather less than spotless integrity. The answer is that we’ve confirmed the key details of the story I outlined above independently.

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The Niger yellowcake documents MAY have been authored by Italian intelligence, then funneled via an active "asset" who was supposed to be "inactive" to a shady information broker who passed them on the British intelligence ...

Ok.

Maybe we have the wrong people running intelligence services in the west.

Our latest terror alert -- based on 2-3 year old research?

The New York Times > Washington > The Overview: Reports That Led to Terror Alert Were Years Old, Officials Say

Much of the information that led the authorities to raise the terror alert at several large financial institutions in the New York City and Washington areas was three or four years old, intelligence and law enforcement officials said on Monday. They reported that they had not yet found concrete evidence that a terrorist plot or preparatory surveillance operations were still under way.

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Ooookaaay. This data was obtained prior to the 9/11 attack?

I'm sure that it suggests some very professional research, but why go to organge alert now? If only I had even an iota of confidence in GWB ...

The credit reporting industry: dysfunctional and without hope

The New York Times > Business > Your Money > Spending: How to Mend a Credit Report That's Not Really Broken

'What we have is an industry that has completely run amok and is continuing to publish inaccurate information that harms consumers and does so without giving consumers an adequate remedy,' said Ian Lyngklip, a lawyer in Detroit who is representing Mr. Graham. 'Every one of these cases is like taking a little day excursion into the twilight zone.'

Lawyers and consumer advocates say the system is overwhelmed. Rather than truly investigating complaints, they say, the big credit bureaus make only cursory checks...

In June, U.S. PIRG, the Washington lobbying office for state Public Interest Research Groups, released a survey showing that 80 percent of credit reports had mistakes; one in four had errors serious enough that credit could be denied.

Complicating matters, lawyers say, collection agencies increasingly place even questionable debts on credit reports.

... Consumers should be sure to find lawyers familiar with the laws. Mr. Graham said he found his lawyer by going to the Web site of the National Association of Consumer Advocates.

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The reporting agencies are in a competive environment. They are punished when they omit a problem from a credit report, they are not punished for falsely including a non-existent problem. QED -- everything else follows from these incentives.

Many of the post-911 proposals for population surveillance have even fewer safeguards than the credit reporting industry.

Billions of our dollars lost to fraud in the CPA (Iraq)

INTEL DUMP - Home: ".... fraud, waste and abuse were the norm - rather than the exception - in the disbursement of funds by the agency charged with the post-war administration of Iraq. The management of funds was so bad that nearly 27 separate criminal inquiries were launched, and potentially billions in U.S. taxpayer money was wasted."

The economics of mercenaries: the cost of war is rising

Dispatches From Fallujah - Why would anyone volunteer to be an infantryman? By Owen West

Paying civilians to play soldier makes no sense. Today the United States employs between 7,000 and 17,000 civilians in infantry roles. The pay is extraordinary, hovering between $500 per day and $1,000 per day for everything from site security (for government compounds throughout Iraq) to convoy/company security to personal security (for dignitaries). This money comes tax-free in a combat zone. There are four problems here: morale deflation, gross monetary waste, tactical confusion, and direct competition for a tiny talent pool.

Soldiers look at security contractors and think: Why the hell is he making eight times my salary for performing the same job? Is the military that pock-marked with overage and inefficiency? Using bottom-up cost-accounting, the military is essentially buying out its most experienced soldiers and luring them out of the active ranks (if Stop-Loss is ever lifted, that is) with rich contracts, even as it desperately seeks new recruits. Worse, it's paying introduction fees to private security companies like Dynacorps and Blackwater for the people it recruited in the first place. How in the world did this happen?

The answer may lie in the marginal recruit. Congress just passed legislation to increase the number of soldiers by 30,000. But the Army is just barely meeting its current recruiting goals. To attract these new hires, the Army will have to come up with a pay structure that lures the 30,000th recruit. The problem is, the military pay structure is so antiquated that if you pay one soldier more money, you pay all soldiers more money. So it's not a question of paying 30,000 recruits. It's a question of paying those 30,000, then upping the pay of the other 1.4 million active members and the other 1.1 million reservists. It's an expensive prospect, this reverse Dutch auction. Perhaps it's cheaper to shift 10,000 infantry jobs over to the privateers, jack up the pay of private contractors, and pay the brokerage fee to the company.

This conclusion still omits the inherent problems created when armed civilians operate in a battlefield controlled by the military. The Blackwater security crew that was ambushed in Fallujah was operating in the Marine Corps zone without their knowledge and specific consent. As a result, Marine plans to systematically build up goodwill in the Sunni Triangle were scrapped. In Abu Ghraib, contractors held sway over soldiers, yet took no responsibility in the aftermath. In sum, contractors operating outside the chain of command clashes with common sense.

This is not to denigrate contractors themselves—they are experienced soldiers who have been there and done that. Which is precisely why we need to keep them in the Army. Less than one-tenth of 1 percent of the U.S. population chooses to become an infantryman. It is a profession—a public expression of commitment—rather than a job. This is a tiny talent pool. We need everyone who heeds the call to carry a rifle working toward a common goal, and the best way to do that is to keep these folks in the government.

How, then, should these elite infantrymen be compensated so that we can attract and retain the best? By revamping the military pay structure. Today the 9-to-5 corporal disbursing pay on some base in Florida earns the same salary as the corporal working 20 hours a day who is on his third deployment in three months. As for elite infantrymen, who we need for special security in war zones, offer them the same pay structure we give today's contractors and then take a look at re-enlistment rates. They'll skyrocket. What's more, the military will pay no brokerage fees and will retain the flexibility to reassign these men as the battlefield shifts. The military needs an escalating, bonus-based pay system that coincides with performance and hardship, not rank and time-in-grade."

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I'd been impressed by the arguments for the fairness of the draft, but Kaplan convinced me a draft would be extraorinarily ineffective. He and Owens agree -- the answer is a LOT more money for active fighters.

How to destroy a nation: assasinate the intelligentsia

Dispatches From Fallujah - Why would anyone volunteer to be an infantryman? By Owen West: "The Viet Cong assassination program destroyed South Vietnam's intelligentsia and put a country on its knees."

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Hundreds of physicians and scholars have been assasinated in Iraq. Someone's been reading the Viet Cong manual.

Dispatches From Fallujah - mercenaries and soldiers

Dispatches From Fallujah - Why would anyone volunteer to be an infantryman? By Owen West: "There's an incubating firestorm of stress that will gut the military if left unchecked, and this—private soldiers earning five to 10 times what the comparable serviceman earns—is one of its fuels."

Dispatches From Fallujah - a series to read

Dispatches From Fallujah - Why would anyone volunteer to be an infantryman? By Owen West

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He's writing a series. Essential reading.