Powerline humiliated by Krugman

Powerline is a notorious anti-rational right wing megaphone. Paul Krugman recalls one of their attacks on a column he wrote 3 years ago ...

Bubble memories - Paul Krugman - Op-Ed Columnist - New York Times Blog

Calculated Risk, in a discussion of home price declines, links to my three-year-old analysis, That Hissing Sound...

... if you google the article, high on the list you find this delightful screed from Powerline, which says that I was just looking for something to complain about amidst the Bush Boom, and concludes:

"[T]here is little reason to fear a catastrophic collapse in home prices.

Krugman will have to come up with something much better, I think, to cause many others to share his pessimism."

A cold dish for Powerline.

Update: Re-reading the article, I recognized it immediately. It's good, but Krugman basically says the bubble is on the coasts, not in "flatland". By which he meant, say, Minnesota. It's true we haven't lost 70% of the value of our home, but last I looked we were down at least 20% from the peak (I don't look too often). So, if anything, he understated the problem. He also didn't imagine that the entire finance sector was going to implode.

Idiots guide to the balance sheet - for finance company

This turns out to be one of the simplest and most enlightening overviews of a publicly traded company balance sheet I've seen: People I agree with, part one - Paul Krugman - Op-Ed Columnist.

It happens to the balance sheet that is keeping America up at night, which makes it all the more memorable. Beyond that, it's a nice reference for non-MBAs who still need to understand the base concepts.

The key takeaway is the difference between liabilities owed to shareholders and to bondholders. Shareholders are a key buffer in a publicly traded company. You can wipe them out and the company can go on. Bondholders can't be wiped out except through bankruptcy; at which point they and customers fight for the scraps.

The original Paulson plan (not the improved but rejected revised plan) might have worked if there was still some Shareholder equity left -- but once they're toast the corporation is dead and the money probably goes to the bondholders.

Delightful Jon Swift column on GD II

Funny, witty, brilliant and scathing. Jon Swift is back and on his game ….

Jon Swift: Can Happy Days Be Here Again?

… Some economists believe that doing nothing could result in another Great Depression, but is that such a bad thing? There is a reason it was called the Great Depression and not, say, the Terrible Depression. According to economist J. Bradford Delong, members of the Hoover Administration, influenced by the theories of Austrian economists like Friedrich von Hayek and Joesph Schumpeter, believed “that in the long run the Great Depression would turn out to have been ‘good medicine’ for the economy.” Unfortunately, Hoover was swept out of office before this theory could be tested and Franklin Roosevelt enacted all kinds of socialistic policies that bedevil us to this day. So perhaps the best thing we could do is do nothing and bring on another Great Depression, but let’s do it right this time. Sure, there would be some temporary pain, and some people might be forced to wait in bread lines and sell apples in the street, but in the long run it would be better for our economy to shake out the weak links. Some Republicans might be reluctant to come out in support of triggering a new Great Depression in an election year so John McCain is going to have to show some leadership, the kind of leadership he showed in scuttling the first bill, to bring Republicans in Congress around. Coming out in favor of a Great Depression would show voters that John McCain really is a new kind of leader and it might just be the Hail Mary pass that wins him the election.

The Onion should ask Jon Swift if they can reprint his columns …

Best of the bad GOP news: David Brooks turns on the loser wing of the GOP

It's been years since I looked a David Brooks column. I don't know why I peaked today. The man is a propagandist for the GOP with a gift for writing, nothing more.

But today he delivers a shocking blow to one part of the party:

Op-Ed Columnist - Revolt of the Nihilists - David Brooks - NYTimes.com:

... Pelosi’s fiery speech at the crucial moment didn’t actually kill this bill..

...House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party.

When the mouthpiece of the party establishment writes this, something is afoot.

Something potentially positive.

We need a healthy GOP. We need a party that represents business, that represents people who dislike change, and that represents the wealthy. If wealthy people don't get "extra votes", they'll destroy democracy (the flip side of the fear that the poor will vote themselves endless benefits -- both have a point).

We need a party that represents "traditional values" -- like integrity, honest accounting, accountability, contracts, and military ethos -- including responsibility to enemy combatants.

Clearly today's GOP does none of these. They don't even represent the long term interests of the wealthy, because they're destroying the foundations of future security and wealth.

Could there be a group of internal GOP reformers who, at this point, want the party to crash and burn? They may know that only a devastating loss will build the foundations for political recovery and renaissance.

If that group exists, it will be interesting to see if Brooks begins to channel their agenda.

The silver lining of financial collapse: my industry looks better

Those of us who work in Health Care IT are often asked why we can't use IT the way the finance sector uses IT.

The implication is that we're ... well ... dumb.

Which may be true.

True or note, it may be a while before anyone uses the financial sector as a good example. John Halamka says it best (emphases mine):

Life as a Healthcare CIO: The Wall Street Crisis

During the decade I've been CIO, IT operating budgets have been 2% of my organization's total budget, which is typical for the healthcare industry.

During the same period, IT budgets for the financial services industry have averaged 10% or higher.

Since 1998, I've often been told that Healthcare IT needs to take a lesson from the financial folks about doing IT right...

... Given the recent challenges of Lehman, Merrill, AIG, Washington Mutual, and others, you wonder just how effective the IT systems of these companies have been.

Of course they had great transactional systems, disaster recovery, infrastructure, and data warehouses.

However, did they have the business intelligence tools and dashboards that could alerted decision makers about the looming collapse of the industry?

Did the financial services industry have controls, risk analysis, or a memory of previous crisis - the Depression, the Japanese banking crisis, Enron/Worldcom? Was it greed, irrational expectations or too much data and not enough information that brought down these great institutions?

I'm sure many books will be written about the causes and those who are to blame.

One thing is for certain, In 2008, no one is going to tell me that healthcare IT should run as well as Lehman Brothers. I've even talked to folks in the industry who are rewriting their websites and resumes to remove historical references to their overwhelming historical successes in financial services IT..

Everyone thinks their professional domain has the greatest IT challenges.

In my case, I know that's true. [1]

[1] The hardest thing about Healthcare IT? It's embedded in a strange fusion of a market economy, soviet style central planning, and the antimatter triangle of provider, consumer and payor.

The GOP killed the bailout bill

Just in case you make the mistake of following the low quality mainstream media instead of classy blogs...

Talking Points Memo | Look at the Numbers

...There's a lot of talk out there from commentators who you'd think would know better claiming that this was basically a bipartisan failure -- that both parties, Republicans and Democrats, failed to carry their members for this bill.

But look at the numbers. 60% of Democrats in the House voted for this bill. 33% of Republicans. Face it, that's not even close...

The GOP killed the bill. That isn't making their business donors very happy. In fact I'd wager their donors are livid today ...

Melamine sickened infants: 53,000 and counting

This weekend's NYT Magazine reports 53,000 infants have been poisoned by fraudulent milk products.

The number, of course, will rise.

Not surprisingly the story was suppressed by the Chinese federal government lest the bad news tarnish the Olympic glow.

In the old days we'd feel a bit of pride about our superior government, but those days are gone. The Bush administration does the same sort of thing. Back to The Jungle reviews a book written after the pet food poisoning last year. The Bush-devastated FDA earns plenty of scorn.

I suspect, because it's only human, that many Chinese citizens thought Americans were making an unseemly fuss about dog food problems. I know several American right wingnuts expressed similar feelings early in the story.

53,000 children. This could have been avoided.

It will happen here if we don't get the GOP out of power.

In the meantime, I think we'll reduce the powdered milk that goes into my son's "peanut butter snack".

Update 9/30/08: Great NYT Editorial on the 1858 New York "swill milk" fraud by Bee Wilson, author of “Swindled: The Dark History of Food Fraud From Poisoned Candy to Counterfeit Coffee." Same framework, same horrors. I don't even want to bother thinking about how libertarians answer these things.

Miracle statins: I'm such a cynic

How cynical am I?

I read this ...

BBC NEWS | Health | Statins 'prevent artery ageing'

... The research found that statins appear to increase levels of a protein called NBS-1, which is involved in the repair of DNA within cells. This means they may be able to hold off the effects of old age in the artery wall for a little longer.

Professor Martin Bennett, who led the research, said: 'It's an exciting breakthrough to find that statins not only lower cholesterol but also rev up the cells' own DNA repair kit, slowing the ageing process of the diseased artery.

'If statins can do this to other cells, they may protect normal tissues from DNA damage that occurs as part of chemotherapy and radiotherapy for cancer, potentially reducing the side-effects.'...

and I think "Hmm. Rev up DNA repair, probably means down-regulate the mechanisms that terminate ill-behaved cells, means more malignancies emerge ...".

Whenever you read of a new benefit of an old drug, you also have to think of the other side of the coin. Researchers didn't think of Statins as anti-aging drugs, so they wouldn't have looked for dark side of that class of drug ....

OS X Leopard's windows server icon jest

This was old news a year ago but I've only recently, painfully, upgraded to OS X Leopard (10.5).

So it's only today, and only when looking at the properties for my windows share, that I realized the benign looking windows share icon is the beloved "blue screen of death".

It's beautifully done, and quite subtle. I would never have noticed at the standard icon size.

I do hope Microsoft returns the failure. OS X has a multilingual gray screen of death, or Microsoft could show the spinning pizza of death.

Has Microsoft responded yet?

GOP 2008: Monty Python does the Fall of Rome

History repeats itself, first as tragedy, second as farce.

In 2008, this is the rerun of the Fall of Rome ...

Talking Points Memo | It Would Be Fantastic.

... Inside John McCain s campaign the expectation is growing that there will be a popularity boosting pre-election wedding in Alaska between Bristol Palin, 17, and Levi Johnston, 18, her schoolmate and father of her baby. It would be fantastic, said a McCain insider. You would have every TV camera there. The entire country would be watching. It would shut down the race for a week...

Yes, it's probably nonsense.

The GOP, however, has made this believable.

I really wouldn't be surprised.

What McCain really did during his "rescue" mission

Frank has the round-up. Payoffs to key McCain staffers from Fannie Mae/Freddie Mac, McCain's inane trip to Washington, his non-suspended campaign, and how he spent the "crisis" ...

Op-Ed Columnist - McCain’s Suspension Bridge to Nowhere - Frank Rich - NYTimes.com

... Yet even as he huffed and puffed about being a “leader,” McCain took no action and felt no urgency. As his Congressional colleagues worked tirelessly in Washington, he malingered in New York. He checked out the suffering on Main Street (or perhaps High Street) by conferring with Lady Lynn Forester de Rothschild, the Hillary-turned-McCain supporter best known for her fabulous London digs and her diatribes against Obama’s elitism. McCain also found time to have a well-publicized chat with one of those celebrities he so disdains, Bono, and to give a self-promoting public speech at the Clinton Global Initiative.

There was no suspension of his campaign. His surrogates and ads remained on television. Huffington Post bloggers, working the phones, couldn’t find a single McCain campaign office that had gone on hiatus. This “suspension” ruse was an exact replay of McCain’s self-righteous “suspension” of the G.O.P. convention as Hurricane Gustav arrived on Labor Day. “We will put aside our political hats and put on our American hats,” he declared then, solemnly pledging that conventioneers would help those in need. But as anyone in the Twin Cities could see, the assembled put on their party hats instead, piling into the lobbyists’ bacchanals earlier than scheduled, albeit on the down-low...

The GOP's game of chicken - let's crash

Once again, as it has so many times before, the GOP plays a game of chicken ...

Conservatives Viewed Bailout Plan as Last Straw - NYTimes.com:

...If Democrats believe the only plan that will save the economy is the Paulson plan, they have the power and the moral responsibility to go ahead and pass it,” said Mr. Hensarling. “They don’t have to have Republican votes to get it done...

We've seen this game before. It usually involves a financial crisis of one sort or another.

In past episodes the grown-ups turn the car aside. The crisis is averted. The GOP then savages the grown-ups.

That would be fine, except for what happens next.

It works. The GOP win, and once they win they create more crises. For the grown-ups to solve. In the long run, being grown-up only makes things worse.

Being grown-up doesn't work when a large chunk of the electorate is clueless.

Better to crash and burn now, because if the GOP isn't reformed we'll only crash harder next time. The GOP needs to spend four years in the desert, purging the torturers and the loons, and rebuilding as a respectable alternative.

NYT - informative review of AIG's fall

A lot of important background I'd not heard elsewhere ...

Behind Insurer’s Crisis, a Blind Eye to a Web of Risk - NYTimes.com

...Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.

Days later, federal officials, who had let Lehman die and initially balked at tossing a lifeline to A.I.G., ended up bailing out the insurer for $85 billion.

Their message was simple: Lehman was expendable. But if A.I.G. unspooled, so could some of the mightiest enterprises in the world...

... Although America’s housing collapse is often cited as having caused the crisis, the system was vulnerable because of intricate financial contracts known as credit derivatives, which insure debt holders against default. They are fashioned privately and beyond the ken of regulators — sometimes even beyond the understanding of executives peddling them.

Originally intended to diminish risk and spread prosperity, these inventions instead magnified the impact of bad mortgages like the ones that felled Bear Stearns and Lehman and now threaten the entire economy.

In the case of A.I.G., the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models. It nearly decimated one of the world’s most admired companies, a seemingly sturdy insurer with a trillion-dollar balance sheet, 116,000 employees and operations in 130 countries.

“It is beyond shocking that this small operation could blow up the holding company,” said Robert Arvanitis, chief executive of Risk Finance Advisors in Westport, Conn. “They found a quick way to make a fast buck on derivatives based on A.I.G.’s solid credit rating and strong balance sheet. But it all got out of control...

Walmart DRM: and consumers still don't care?

Another seller of DRMd music is making their music worthless ...

Slashdot: News for nerds, stuff that matters: "'So, you thought you did well to support the fledgling music industry by purchasing your tracks legally from the Wal-Mart store? Well, forget about moving these tracks to a new PC! Since they started selling DRM-free tracks last year, there's no money to be made in maintaining the DRM support systems, and in fact, support is being shut down. Make sure you circumvent the restrictions by burning the tracks to an old-fashioned CD before Wal-mart 'will no longer be able to assist with digital rights management issues for protected WMA files purchased from Walmart.com.' Support ends October 9th.'"

This is at least the 3-4th time a DRMd music vendor has shutdown and taken their customer's music with them.

The interesting aspect is that consumers don't seem to worry about DRM at all.

Why is that? Here are my guesses:

1. Tyranny of the mean: people just can't get their heads around this stuff.
   
2. Just too complicated: people have to much complexity going on to even think about it.
   
3. Bigger things to worry about: I'm about to lose my house. F*** my music.
   
4. It's not that much money: Pocket change. Don't care.
   
5. Only buy Apple, assume Apple is immortal. (See #1.)
   
6. 21st century transience: Nothing is expected to endure. All is transient. Music is the same.
   
7. Never buys music, steals it.
   
8. Doesn't buys DRMd music, buys used CDs, rips music, resells 'em (legally equivalent to #7).
9. Doesn't buy DRMd music, buys CDs, rip them, and keep them. (us)
10. All of the above.

All of the above, of course, but 7-9 are important. People who like music either buy CDs and convert, or they steal it outright. I also think that younger consumers expect transience, they live in an ethereal world.

Every time some vendor turns off their DRMd music they make stealing music more respectable, and make buying music look foolish.

At this point I think music thieves occupy the moral high ground.

Apple puts pressure on China's telecoms

Apple and China's leading telecoms have been sparring over iPhone terms for over a year.

Apple has just increased the pressure.

Apple selling unlocked iPhone 3G in Hong Kong - International Herald Tribune

Apple Inc. has begun selling unlocked iPhones in Hong Kong that can be used with any cell phone carrier.

The move appears to depart from the company's previous strategy of selling the popular device capable of working with 3G, or third-generation cellular networks, through specific service providers, usually with a required service contract.

On its Hong Kong Web site, the Cupertino, California-based company is advertising unlocked iPhones, saying people can 'buy directly from Apple' and choose their own carrier.

'iPhone 3G purchased at the Apple Online Store can be activated with any wireless carrier,' the Web site says...

These phones, of course, are for the mainland market.

It's quite a bold move. I'm sure Apple thought very long and hard about when and how to do it.

Should be interesting to see what happens next!