Are large institutional investors betting the US market will continue to flatline?

I continue to read cheery essays on why we should invest in the market for our self-funded retirements. I also notice that, overall, our family investments have flatlined for about 6 years. Reminds me a bit of how things were in the US of the 1970s, or Japan of the 1990s. Greenspun makes an interesting assertion that one smart investor seems expect this trend to continue ...

Philip Greenspun's Weblog:

Harvard has picked a new investment manager for its $26 billion in liquid assets (the university is weathier than this but much of its wealth is in real estate). According to this New York Times story, Mohamed A. El-Erian is "an emerging markets bond specialist" from "the bond powerhouse Pimco". Choosing someone like this to manage its money is essentially a vote that public equities (stocks) will continue to perform poorly for some years to come. How is it possible for stock prices to remain stalled while corporations earn reasonably good profits and only pay out a small percentage of those profits as dividends (the average S&P 500 company pays out 32 percent of profits as a dividend)? Looting and dilution by managers granting themselves stock options. So Harvard, which has been mostly right since World War II and earned more than 19 percent in the last fiscal year, seems to be betting on the continued looting of American corporations by their managers and is apparently planning to put its money to work in foreign countries and via debt instruments.

The US feels more and more like 1989 Japan.

Good news on war

This is good news for a hurting world.

BBC NEWS | Americas | Wars 'less frequent, less deadly'

The Human Security Report found a decline in every form of political violence except terrorism since 1992.

Civil wars are now the most common form of war, but they have been less lethal than wars involving nations.

Life in the new world -- don't even think of being in any way different

A nerdly sort looks too different. So he's arrested. Eventually released, a large quantity of his personal possessions are removed from his home and not returned.

Guardian Unlimited | Special reports | Suspicious behaviour on the tube

This Reuters story was written while the police were detaining me in Southwark tube station and the bomb squad was checking my rucksack. When they were through, the two explosive specialists walked out of the tube station smiling and commenting: 'Nice laptop.' The officers offered apologies on behalf of the Metropolitan police. Then they arrested me.

Don't look different. Look like everyone else. This is our world now.

Stop net fraud - make the banks pay for the externalities

I said this in the mid-90s, when I was peripherally involved in exposing one of the early international credit card frauds (today's operators are much more clever than those guys were). Bruce Schneier has been saying it for years.

The only way to reduce net fraud (phishing, identity theft, etc) is to make the banks and financial intermediaries pay more of the real cost of these frauds (the 'externalities' of victim suffering). The banks have known for over 10 years what they need to do, but the costs are substantial. Even if a bank wanted to put better security in place, they can't. If they tried they'd be forced out of business by any competitor who didn't introduce the same procedures. The only way the banks can do this is if they're all forced to move together. That takes governmental action.

Here's Schneier:

Crypto-Gram: October 15, 2005

Earlier this month, California became the first state to enact a law specifically addressing phishing. Phishing, for those of you who have been away from the Internet for the past few years, is when an attacker sends you an e-mail falsely claiming to be a legitimate business in order to trick you into giving away your account info -- passwords, mostly. When this is done by hacking DNS, it's called pharming.

Financial companies have until now avoided taking on phishers in a serious way, because it's cheaper and simpler to pay the costs of fraud. That's unacceptable, however, because consumers who fall prey to these scams pay a price that goes beyond financial losses, in inconvenience, stress and, in some cases, blots on their credit reports that are hard to eradicate. As a result, lawmakers need to do more than create new punishments for wrongdoers -- they need to create tough new incentives that will effectively force financial companies to change the status quo and improve the way they protect their customers' assets. Unfortunately, the California law does nothing to address this.

... The actual problem to be solved is that of fraudulent transactions. Financial institutions make it too easy for a criminal to commit fraudulent transactions, and too difficult for the victims to clear their names. The institutions make a lot of money because it's easy to make a transaction, open an account, get a credit card and so on. For years I've written about how economic considerations affect security problems. They can put security countermeasures in place to prevent fraud, detect it quickly and allow victims to clear themselves. But all of that's expensive. And it's not worth it to them.

It's not that financial institutions suffer no losses. Because of something called Regulation E, they already pay most of the direct costs of identity theft. But the costs in time, stress, and hassle are entirely borne by the victims. And in one in four cases, the victims have not been able to completely restore their good name.

In economics, this is known as an externality: It's an effect of a business decision that is not borne by the person or organization making the decision. Financial institutions have no incentive to reduce those costs of identity theft because they don't bear them.

Push the responsibility -- all of it -- for identity theft onto the financial institutions, and phishing will go away...

If there's one general precept of security policy that is universally true, it is that security works best when the entity that is in the best position to mitigate the risk is responsible for that risk. Making financial institutions responsible for losses due to phishing and identity theft is the only way to deal with the problem. And not just the direct financial losses -- they need to make it less painful to resolve identity theft issues, enabling people to truly clear their names and credit histories. Money to reimburse losses is cheap compared with the expense of redesigning their systems, but anything less won't work.

Since this will take governmental action, if you don't like identity theft, vote against Bush.

Condi Rice: we invaded Iraq to change the world

Apparently the Bush administration now confesses that their motivation in invading Iraq was unrelated to a direct threat from Iraq but was rather an attempt to change the middle east:

Obsidian Wings: Killing Innocent Iraqis to Try to Protect Ourselves

...Condi argued that after 9/11 we had two choices: we could go after and eradicate bin Laden and Al Qaida and then turn toward protecting ourselves against other threats, or we could go after the roots of Islamic terrorism and change the landscape in the Middle East. She argued that no one who understands the Middle East could imagine the landscape there changing until Saddam Hussein was out of power.

Obsidian Wings puts it well. If that was the standard, then Bush et al are guilty of war crimes.

You can't do things that directly and indirectly kill about 100,000 civilians because you want to change the geopolitical landscape. That's wrong in so many different ways. Ursula LeGuinn dealt with this in a clever short story some time ago. I don't remember the title, but the premise was that a utopian society's happiness was guaranteed only by torturing and executing one innocent person a year. Wrong solution.

I can imagine reasons I'd accept for invading Iraq, even in the absence of an overt direct threat, but Condi isn't making those arguments. Moreover, if one must act in these circumstances, one must be willing to pay a high price in american lives and money to reduce the collateral damage.

Splogs (spam blogs) infest the web

Once blogs became searchable, it was inevitable that spam blogs would emerge. Now they're showing exponential growth.

These are computer generated blogs; the structured nature of a blog, and the RSS interfaces, make it trivial to create software that constructs new blogs from bits and pieces of original work. Spam blogs are to real blogs as some blogs are to OpEd pages -- merely amplifiers. They are relatives of web pages that parasitize and repackage Amazon postings and sales. I expect the best of them will fool many readers, and may even be interesting in a random sort of way.

I knew this was coming because a young coder friend of mine is drawn to the dark side, and he told me he'd done some work in this area. Sigh. I do hope he finds a better outlet for his talents.

Again I wonder how the anti-Darwinists can make any sense of a world where evolution occurs in human timeframes.

Heroes among the bureaucrats

Ayn Rand's fantasy was that the giants of industry would move away, leaving the parasitic world of incompetent bureaucrats to collapse behind them.

In Bush World the 'giants of industry' become incompetent political appointees, and the bureaucrats heroically walk away.

I've known quite a few giants of industry, and quite a few Washington bureaucrats. From my perspective they each have their place, but I think the giants are easier to replace. Indeed, the replacements for the giants would often be improvements.

Is Amazon.com in trouble?

Is Amazon.com in good health? I've been wondering lately. I've been a customer since the initial launch, back before they were sending customers Amazon.com mugs. Over that time I've seen some performance and customer service issues, but their core software systems have been remarkably reliable. Lately, however, I'm running into bugs. Mostly they're cosmetic or irritating, like a wish list that can't be accessed (server error). Most recently, however, I have an order that's stuck in limbo. It can't be cancelled, but it doesn't ship. It is 'being prepared for shipping' - apparently they're mining the metals to build it.

Amazon's always tweaked their UI (annoying), but lately the tweaks have been moving backwards. I used to usually be able to sort a search result by ranking, sales, etc -- but that ability is increasingly constrained. Also, Amazon hasn't removed negative reviews, but they are increasingly obscured.

My sense is they've lost some important software people. Maybe it was an outsourcing move. Maybe some relatively senior people vested and left. Maybe they've downsized. Whatever they've done, it's not working ...

Why does Miers horrify a part of the GOP? Because to see her is to see Bush

Obsidian Wings objects to Miers feeble writing abilities. Should an inability to communicate, or to reason clearly, disqualify someone from the Supreme Court?

The assertion that Miers lack of writing ability should disqualify her would be more persuasive if, for example, George Bush were capable of clear writing, or even of clear speech. Molly Ivins has written on this. George Bush used to be quite articulate speaker, but in later years he lost the ability to speak clearly. It appears this is not simply an affectation, he simply can't do it any more.

I've sometimes speculated that Bush suffers from some complex and probably undefined progressive environmental and genetic organic brain syndrome. Eight years ago Bush was still a very capable person, I suspect his condition has progressed. Perhaps as a consequence of his own disability, Bush does not value rationality and clear reasoning. He may feels Miers' spiritual and emotional/reactive behaviors are much more important than her cognitive or linguistic abilities. In other words, he accepts the very lefty-liberal squishy idea of 'alternative intelligences'.

Miers is Bush as he would be on the supreme court. It would not surprise me if he expects to go there himself some day; Miers is his precedent.

This pattern of appointing people that are in his mold (athletic, anti-intellectual, evangelical, emotional, charismatic -- ESFP on the old Myers-Briggs) is very Bush (nee Andrew Jackson, king of the spoils system). This can be seen in the infamous list of his 15 most incompetent appointees and especially in his very troubled scientific/technical appointees (they don't last).

The horror for Republicans is that the more they look at Miers, the more they see Bush. That's why this is tearing apart the 'know-nothing' party.

Katrina - what happened in the prisons?

The lost and forgotten. The criminals. You know, your kids.

Democracy Now! | After the Hurricane: Where Have All the Prisoners Gone? More Than 500 From New Orleans Jail Still Unaccounted For

Will anyone ever know what happened there?

Feverish update on the Fitzgerald investigation

Since the mainstream media doesn't really cover Fitzgerald's grand jury investigations, one must subsist on the speculative fever of bloggers: Obsidian Wings: The Plot Thickens.... Beats reading nothing at all! Bush's hatred of Fitzgerald must be a thing of terrible beauty.

Firefox is less supported now than it was a year ago

I'm finding more sites like this AMEX site. Firefox worked well on the American Express site until they redesigned it, now it doesn't work (I'm using 1.5b2, maybe it still works with the release version?). I'm seeing that more often now. I have a sneaking suspicion the new generation of Microsoft's web tools break non-IE browsers. Shocked, shocked I am.

This might explain why Firefox use is declining.

There's no place on the AMEX site to complain of course.

[Update 10/11: My caveat about 'maybe it's the beta' may have needed more emphasis. My sister-in-law reports the site still works with the release version of Firefox. I've submitted a report to Firefox on this site.]

Minnesota was almost a creationist state

I live here, read the papers, and had no idea this was going on. I learn about it today in FLORIDA blog posting. We have the most unbelievably incompetent newspapers in creation.

Minnesota was almost a creationist state; religious fundamentalists came, very quietly, with a hairsbreadth of writing creationist "science" standards:
Florida Citizens for Science - A Brief History of the Minnesota Academic Standards in Science.

What is the inconvenient fact about Miers?

Shrillblog welcomes the foul National Review into the world of the anti-Bush shrill, and tells the Lovecraftian tale of Miers:

Shrillblog: Corner of Shrillness

Harriet Miers... the crawling chaos... I am the last... I will tell the audient void...

And it was then that Harriet Miers came out of the West Wing. Who she was, none could tell, but she was of the old Bush-loyal Texas blood and looked not like a member of the Federalist Society. The state Republican Party chairmen knelt when they saw her, yet could not say why. They said she had risen up out of decades of loyal Bush service, and that she had heard messages from places not of the reality-based community. Into the lands of the judicial branch came Harriet Miers, always buying strange instruments of glass and metal and combining them into instruments yet stranger. Conservative men advised one another to endorse Harriet Miers, and shuddered. And where Harriet Miers went, rest vanished, for the small hours were rent with the screams of conservative activists betrayed and undone. Never before had the screams of nightmare been such a public problem; now the Bush functionaries almost wished they could forbid sleep in the small hours, that the shrieks of conservative judicial activists might less horribly disturb the pale, pitying moon as it glimmered on green waters gliding under bridges, and old steeples crumbling against a sickly sky...

It doesn't make sense though. There must be an 'inconvenient fact' somewhere, something our journalists prefer not to mention -- less they ruin the party?

My guess? It's religious fundamentalism. The great alliance that forged the modern GOP was a dark blood oath sworn between regulated industries (new military-industrial-regulated complex) and christian fundamentalists. Miers is first and foremost a christian fundamentalist. I think the MIR complex is losing its love for Bush (the only thing worse than taxes and regulation is a trashed world), and Miers's fundamentalism is the last straw.

It's a thought. There's got to be an inconvenient fact, something neither side in the battle wants to bring up, somewhere ...

Editing memories and a thought on how AA might work

The Economist's science writers have a particular interest in research on the nature and manipulation of memory; a science which seems to be advancing quickly. This article has an excellent overview of some of the latest techniques for memory deletion, and the possible benefit for addiction (misuse, of course, is inevitable).

Economist.com -
Brainwashing

Abolishing addiction
Sep 15th 2005
From The Economist print edition
A new way to treat drug abuse (in rats, at least)

A DRUG addict's brain alters in response to the drugs he takes. There is the instant change that provides the chemical high, of course, but there are also more subtle, long-term modifications. It is these that turn a user into an addict. Some of them are responses to the drug itself. But some are responses to the circumstances in which the drug is taken. Such things as viewing the paraphernalia of drug taking, for example, serve to remind abstinent addicts of forbidden pleasures and tempt them to relapse.

Two pieces of research just published in Neuron, a specialist journal, suggest that it is possible to impair the brain's memory of such associations—at least, if the brain concerned is a rat's. Courtney Miller and John Marshall, of the University of California, Irvine, have worked out how to disrupt the memories that cocaine-taking rats develop for the place where they get their fix. And a team led by Jonathan Lee, of the University of Cambridge, has prevented rats from using environmental cues to seek cocaine.

Three regions of the brain are thought to be linked to addiction: the prefrontal cortex, the nucleus accumbens and the amygdala. All three have a multitude of receptors for a chemical called dopamine, which is part of the nervous circuitry involved in the perception of desire, and all are involved in the laying down of long-term memories.

That process, surprisingly, is not a one-off event for each memory. Every time a memory is recalled, it seems to be actively refiled afterwards—a process known as reconsolidation. This is why people are vulnerable to suggestion when recalling memories of, for example, childhood abuse. Observing this, Dr Miller and Dr Marshall wondered if they could manipulate the refiling process to abolish a memory altogether.

To do so, they first had to establish the memory they wanted to abolish. They did this by putting their rats into an apparatus containing two chambers and teaching them to associate one of those chambers with cocaine use. (Rats are at least as keen on Bolivian marching powder as humans are.) The two “rooms” had different colours, textures and smells, so the rats could easily tell them apart. In normal circumstances, when trained rats were allowed to chose which room to enter, they preferred to spend most of their time hanging out in the cocaine chamber even when no cocaine was available.

Having established this preference, Dr Miller and Dr Marshall then sought to abolish it using a drug that inhibits the production of a protein called Extracellular Signal-related Kinase. This protein, which is generated in the core of the nucleus accumbens, causes long-term changes in gene expression that are thought to be involved in the storage and retrieval of memories, including those of drug use.

Two days after being trained to associate one of the chambers with cocaine, the rats were divided into three groups. Some were given the inhibitor drug and then returned to their cages. Some were given it and then returned to the two chambers. And some were first returned to the two rooms, giving them the opportunity to remember the cocaine chamber, and were then given the inhibitor drug. In these tests, rats in the first group—who had not been given the opportunity to retrieve their memories of cocaine when they received the treatment drug—preferred to spend time in the cocaine chamber. But rats in the other two groups showed no particular preference for either room. Their previously strong memories had become disrupted.

Dr Lee and his colleagues, meanwhile, were studying the amygdala. This part of the brain serves as a “Pavlovian” learning machine that associates a pleasurable event, such as being fed, with a neutral event, such as the sound of a bell ringing. Dr Lee's rats learned that they received cocaine when they poked their noses into a particular hole. At the same time, a light went on. The rats were then put into a similar set-up, but this time they received no cocaine when they poked their noses into the hole, and there was no light.

Dr Lee and his team then treated their rats to shut down the gene that produces a protein called Zif268, which seems to have a similar role in the amygdala to that of Extracellular Signal-related Kinase in the nucleus accumbens. (They did this using pieces of “anti-sense” DNA that attach themselves to the gene in question and stop it being read by the cellular machinery that transcribes genes.) Several days later, the rats were returned to the test site, but this time two levers had been installed in it. One of these levers did nothing. The other lit the light associated with cocaine use. The rats who had not received the treatment pressed the lever that lit the light many more times than did the rats who had received the injection, suggesting that only they remembered the light's association with cocaine.

Both teams of researchers believe that the amnesia they have induced relates only to memories of drug use, because those were the memories that were being recalled at the time the inhibitor drugs were given...

Which led me to wonder again how and why AA might work -- when it does work. My guess is that it works by editing memories -- specifically by reinforcing the most negative memories associated with an addiction. Since contemporaneous memories seem to conflict for neuronal resources, emphasizing the negative while removing reminders of the positive might lead to an altered balance, one that prejudices against the original experience.