You know that trouble we're in?

It's deep.

ZIRP! - Paul Krugman Blog - NYTimes.com

That’s zero interest rate policy. And it has arrived. America has turned Japanese.

This is the thing I’ve been afraid of ever since I realized that Japan really was in the dreaded, possibly mythical liquidity trap. You can read my 1998 Brookings Paper on the issue here.

Incidentally, there were a bunch of us at Princeton worrying about the Japan problem in the early years of this decade. I was one; Lars Svensson, currently at Sweden’s Riksbank, was another; a third was a guy named Ben Bernanke. I wonder whatever happened to him?

Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too.

I encourage the Japanese people to indulge in some schadenfreude. Really, we deserve it. Many Americans (not me though) were quite obnoxious during Japan's long deflation.

Pile it on, friends -- your scorn is the least of our injuries. I'm only sorry we're dragging Japan down to.

As to the creativity bit, I like my plan. But I would, wouldn't I?

The Peak Oil answer to collapsing oil prices: queuing chaos

I waited 5 months after oil zoomed up before making my Peak Oil call.

Shortly thereafter the price collapsed.

You're welcome.

So now I'm in the market for desperate validations of my opinion. Like this one ...

The Oil Drum | Oil Prices Below $40 per Barrel

... This chaotic outcome with respect to commodities prices in face of scarce supply was studied by Ugo Bardi, who found interesting examples of it in the past. I first got to know his work soon after I read Kenneth Deffeyes' book and was especially impressed with the pattern Ugo identified in whale oil prices after the peak in sperm whale catches in 1850. The Whaling Industry was possibly the largest of its time, on a global scale that in many ways can be compared with the modern day Oil Industry. To me a most fascinating aspect about Peak Whale Oil is that in the book Moby Dick, published right about that time, Herman Melville lays down quite clearly the reasons for a coming decline of the Industry: in his view Easy Sperm Whale was over.

With all this information I became convinced an increased volatility in oil prices would unfold, eventually leading to a series of "boom and bust" cycles, just like whale oil prices in the XIX century. Predictions of oil prices would become impossible, and I never attempted to forecast them.

Another important aspect to my understanding of this issue was presented by Carlos Cramez and Jean Laherrère in 2006 at the seminar that kicked off ASPO-Portugal. They showed a chart with oil prices in terms of the number of working hours required to buy the oil in the US and France, and concluded that to return to 1980's levels, the last oil crisis, prices would have to reach something like 125$ per barrel (in 2006 dollars). This number stuck to my mind, and I assumed this would be about the level at which the "boom" would turn around into "bust"...

I'd feel better if he'd linked to past posts where he, you know, actually wrote, for example, that oil prices would crash at $125 / barrel.

I figured they'd go up and down, but not to $40 a barrel.

Of course I didn't figure on the world economy going off a cliff and then splattering on the rocks below.

I still don't know what's going on with oil prices. I really need Paul Krugman or Brad DeLong to speak up but they've been suspiciously quiet. Krugman in particular was very confident that the price rises did not represent speculation, so I think he has moral obligation to say something.

PS. This would be a good time to start slapping a carbon tax onto oil, offsetting the economic burden by reducing some other tax.

The Madoff story and trust in the market

In a normal time, discovering that a highly respected financier was running a $50 billion con would get quite a bit of attention.

These days, the story is almost a blip.

One thing in particular impressed my household...

Bernie Madoff: Wall Street titan who fell to earth | Business | The Guardian:

... Clients describe Madoff as pleasant and easygoing. He was chairman of the technology-focused Nasdaq exchange...

Technically, he was a former chairman, I haven't been able to find out when.

It's getting harder to reassure certain people that the entire American stock market isn't completely corrupt.

Update: This doesn't help.

... There are also warnings from lawyers that practices such as these are more likely to unravel during tricky market conditions. Steven Philippsohn, chairman of the Commercial Fraud Lawyers Association, said: "This is the tip of the iceberg."..

Update 12/18/08: Well, it's not a blip. No-one will remember this story in 10-15 years, but I must confess it's astounding enough that it does stand out.

How to make money in the market - wait for the chumps

It was only an experiment, but isn't it persuasive?

Grasping Reality with Both Hands: The Semi-Daily Journal of Economist Brad DeLong: Monkeys Trade Assets I

... In fact, the people who make the most money in these experiments aren’t the ones who stick to fundamentals. They’re the speculators who buy a lot at the beginning and sell midway through, taking advantage of “momentum traders” who jump in when the market is going up, don’t sell until it’s going down, and wind up with the least money at the end. (“I have a lot of relatives and friends who are momentum traders,” comments Noussair.) Bubbles start to pop when the momentum traders run out of money and can no longer push prices up..."

Good traders in these experiment pay attention to fundamentals, but the best traders play the chumps. They wait until "Joe Sixpack" decides to start buying shares. Then they bail.

Incidentally, in my experience, "Joe Sixpack" is a physician. When surgeons start trading stock tips with the medical types, the chumps are in position. It's time to exit gracefully.

Global warming: have we lost already?

Imagine that we spot a dino-killer coming our way, 10km of space rock due to impact in 80 years.

I think that would concentrate our minds.

So how does a 10km meteor compare to this view of our climate future? (emphases mine)

Too late? Why scientists say we should expect the worst of global warming | Environment | The Guardian

At a high-level academic conference on global warming at Exeter University this summer, climate scientist Kevin Anderson stood before his expert audience ...

.... Anderson, an expert at the Tyndall Centre for Climate Change Research at Manchester University ... pointed out that carbon emissions since 2000 have risen much faster than anyone thought possible, driven mainly by the coal-fuelled economic boom in the developing world...

.... he said it was "improbable" that levels could now be restricted to 650 parts per million (ppm).

The CO2 level is currently over 380ppm, up from 280ppm at the time of the industrial revolution, and it rises by more than 2ppm each year. The government's official position is that the world should aim to cap this rise at 450ppm.

The science is fuzzy, but experts say that could offer an even-money chance of limiting the eventual temperature rise above pre-industrial times to 2C ...

At 650ppm, the same fuzzy science says the world would face a catastrophic 4C average rise. And even that bleak future, Anderson said, could only be achieved if rich countries adopted "draconian emission reductions within a decade". Only an unprecedented "planned economic recession" might be enough. The current financial woes would not come close.

... Many scientists, politicians and campaigners privately admit that 2C is a lost cause. Ask for projections around the dinner table after a few bottles of wine and more vote for 650ppm than 450ppm as the more likely outcome.

Bob Watson, chief scientist at the Environment Department and a former head of the IPCC, warned this year that the world needed to prepare for a 4C rise, which would wipe out hundreds of species, bring extreme food and water shortages in vulnerable countries and cause floods that would displace hundreds of millions of people. Warming would be much more severe towards the poles, which could accelerate melting of the Greenland and West Antarctic ice sheets...

... Garnaut, a professorial fellow in economics at Melbourne University, said: "Achieving the objective of 450ppm would require tighter constraints on emissions than now seem likely in the period to 2020 ... The only alternative would be to impose even tighter constraints on developing countries from 2013...

.... Earlier this year, Jim Hansen, senior climate scientist with Nasa, published a paper that said the world's carbon targets needed to be urgently revised because of the risk of feedbacks in the climate system. He used reconstructions of the Earth's past climate to show that a target of 350ppm, significantly below where we are today, is needed to "preserve a planet similar to that on which civilisation developed and to which life on Earth is adapted". Hansen has suggested a joint review by Britain's Royal Society and the US National Academy of Sciences of all research findings since the IPCC report...

There's not necessarily a lot that's new in this review, more a collection of bad news since the IPCC report. The situation is particularly confusing now because while many believe the island nations are doomed, it's thought that open declaration would sabotage agreements that would benefit everyone else.

It makes sense. If you live on an island nation, you may not have much interest in supporting a 550 ppm target since you'll be under water anyway (or live elsewhere). You might push for 400 ppm, though that would require onerous changes in China, and thus we'd have no agreement at all.

So how does 600 ppm, maybe with permafrost and ocean methane release feedback, compare to a 10km meteor impact?

I think the hot earth is preferable, but I'd like to hear from an authority I trust.

Root causes: The elusiveness of low cost videoconferencing

Over the past 10 years or so I've been trying to make low cost webcam based business video-conferencing work. That's almost as long as I've been trying to unify my family, corporate and personal calendars.

In both cases I've come close to the proverbial brass ring several times, only to see it recede from my gasp. I thought we were close with iChatAV and the firewire iSight webcam, but then Apple discontinued the iSight and lost interest in iChat. [1]

Now we're on another go-round. Over in Gordon's Tech I'm updating a brief state of the art summary. Once again the ring feels close, but I'm not willing to say it's a sure thing.

So what makes low cost business videoconferencing so hard. Haven't we had the basic technology for about 10 years?

Here's my current list. Comments are most welcome:

1. Affordable travel: Current videoconferencing solutions, maybe even teleprescence solutions, are a poor substitute for being there. As long as travel was affordable the market for teleprescence was limited.
2. Unlimited flat rate network access: I hate flat rate access. I want my ISP to want me to burn bits. Flat rate access means Comcast is incented to kill BitTorrent and videoconferencing is collateral damage.
3. Perverse customers: Recreational home p*rn was a major driver of 1990s webcam development software. They want blurry images and attract virus-infested software. Not good for business use.
4. Firewire licensing costs: Unwise Firewire patent holders set licensing costs too high. That meant CPU-sucking wimpy voltage USB took over. Uncompressed 800x600 images at 15 fps uses bandwidth that's no problem for Firwire, but seems not to work so well with USB. In theory USB 2 should have more than enought capacity, but firewire camcorders (Canon's for example) and the firewire iSight delivered much better images. I've long wondered if the USB 2 chipsets of years past were really up to the job, or whether there were issues with older CPUs supporting persistently high volume non-bursty USB transactions. I admit I seem to be alone in this suspicion.
5. Limited uplink speeds and limited reliability of many internet connections: It's not only the historically poor uplink speeds, but many net connections aren't reliable. Video conferencing software is pretty demanding.
6. We need h.264 compression and its variants to make this scale, they're pretty new and demand a lot of CPU (or a dedicated chip).

Any other explanations of why we're still not quite there yet?
--
[1] Apple ties their product (ex. iChat) improvements to major OS releases. This doesn't work for me. I think this policy is a strategic blunder.

Do you help a customer hurt themselves? Spolsky speaks.

Customers can be their own worst enemies.

It's obviously true that vendors often fail to deliver what customer's want. It also true that vendors often fail to deliver what customer's need.

It's less obvious that "need" and "want" are sometimes only loosely related, and that, on occasion, wants can be opposed to needs. Ok, so that's obvious for you and I, but it's also true of businesses.

Sometimes vendors, by virtue of hard experience, know that what a customer wants will hurt them. But what do you do when they really insist?

Joel Spolsky, a justly famed software entrepreneur, gives us an example ...

Joel on Software

Mysteriously, about a week ago, Dan, the program manager designing most of the new features in FogBugz 7, came to ask me what features I thought should go in the timesheet reporting plug-in...

... We have a theory, here, that this is a bad idea. Using timesheets as a performance metric can lead to only one thing: bad data in timesheets.

The first time your boss comes into your office and gives you grief because it looks like you only did 7 hours of work yesterday, you’re going to make sure that never happens again. And then, suddenly, behold, the timesheets show everyone working 12 hour days, and all the data in the timesheets becomes instantly bogus. And EBS, our statistical technique for predicting ship dates, suddenly stops working, because you’re feeding it data that is meant to get your boss to stop bugging you, not accurate data.

Now, this theory may be completely off the wall, but it is our theory, and until we hear something better, that’s the one we’re going with.

So our policy has been that if you want to get the timesheet data, well, yes, you can, we’ll give you a way to get it in CSV format or XML format or something and then you can abuse it all you want... go ahead, hang yourself, but we’re sure as heck not going to make it easy for you with a pretty report all tied up with a bow that you might click on by accident, as you browse around, because thou shalt not put a stumbling block before the blind...

... Apparently nice people email us and ask for that exact feature and offer to give us little green rectangular things that can be exchanged for other goods and services if we do the feature...

In my own vastly smaller way, I used to lean towards Joel's former position. Don't indulge the customer's self-destructive tendencies. It might boost sales, but in the medium-run the customer will be unhappy. That will translate to lesser sales.

Nowadays I lean towards trying hard to understand if there's an underlying problem that could be solved another way. If all else fails I'll accede to the customer's request, while trying to make their learning period as short as possible -- and to provide an alternative better path when they're ready.

It's like raising kids. Sometimes you just have to ride the train over the cliff.

Besides, things can be more complicated than they seem. Bogus numbers may seem worthless, but what if the project is capitalized? Maybe errors in ship dates will harm one part of the business, but better capitalization numbers will help another part of the business.

It's a messy world. It's nice to know even Spolsky struggles at least sometimes.

Funny. Detroit's new ad

Brilliant (jpg). Worth of The Onion, really.

Why the iPhone calendar may stay locked away

If we add Steve Job's undeniable passion for corporate secrecy to this thesis, and add in the current received wisdom that the future of software profit is in bundled services, then we end up with the conclusion that Apple will never allow 3rd parties to work with the iPhone calendar.

I need to research how Google is approaching the work/home calendar issue. If Google has a solution more to my taste that alone would push me off the iPhone and off AT&T.

Apple's MobileMe transition - worse than we realize

In retrospect, it's shocking how badly Apple bungled their .Mac (dotMac) to MobileMe transition.

Today I ran across one more reminder of how screwed up the entire migration strategy was. From Apple's current iChat documentation (emphasis mine) ...

Mac 101: iChat

...To use iChat, all you need is access to the Internet and one of the following: A .Mac account or a free AIM (AOL Instant Messenger) account. Here's how to set up and use iChat...

Ok, except .Mac accounts don't exist any more. (And AOL is going down, but that's another story.)

The page was last revised "November 21, 2008". Four months after MobileMess.

.Mac was deeply embedded in Apple's operations. It's distributed throughout the OS, it's everywhere in their documentation, it was integral to their identity management and thus their DRM (Apple's identity and account system was still screwed-up a few weeks ago -- thanks to the migration).

The .Mac to MobileMe transition wasn't a routine "we're-off-by-a-month" screw-up. It was a titanic "we're-off-by-a-year" screw-up.

A disaster on this scale should have led to a top-to-bottom internal post-mortem, but I suspect Apple has simply executed a scapegoat or two. This was too big to be one executive's error, and it suggests Apple's shakier than most of us think.

Root causes: Why you can't sync your work and home calendars to your phone

Tales of the Audrey have put me in a reflective mood. I've been thinking about my calendar sync wars.

I've spent a lot of time and energy trying to get an integrated view of my work, personal, and other assorted calendars -- without putting all my personal life on the corporate server.

Ten years ago the answer seemed at hand. I could sync my Palm with Outlook at work, and with Palm desktop at hand. Alas, sync bugs did me in. The brass ring slipped from my fingers.

I settled for synchronizing KeySuite at work, and DateBk4/5 at home. So I had two calendars on one device, but they had nothing to do with one another. It really wasn't a great solution, but there was still hope.

Now I have an iPhone, but in many ways it's a step back from the Palm III. Heck, it's even regressing from iPhone 1.0; Apple recently pulled corporate Outlook support from its Windows MobileMe control panel. (A wikipedia article claims this is by design; the function won't be restored.)

All the solutions that now work for an iPhone either require extensive corporate support and wipe out your personal calendar (Exchange) [1], or they require synchronizing corporate calendars to an Internet service [3].

Corporations don't like sending corporate data to the net. With good reason. Imagine a billion dollar acquisition going down the tubes because someone left their phone on the bus, or accidentally made their net calendar public.

So why do corporations tolerate Blackberries? Because of a killer feature of the Blackberry (or is it an ActiveSync feature?) that Apple has emulated. If an iPhone is lost, it can be sent a remote instruction to wipe its Exchange server records. That's not possible if you sync Outlook to MobileMe, which is probably why Apple removed that feature.

So we see clearly now. We understand why something that's merely hard to do has become impossible Your work calendar, and your work contacts, don't belong to you -- even if you're the CEO. They belong to your corporation. Indisputably. Your corporation, who doesn't want to risk losing that data.

I could live with that if, say, work ran from 9-5 every day and we didn't have business travel.

Problem is, work and life aren't set like that any more. Today I started work at 9:30 and finished at 7:00 -- by choice. As long as I don't miss my meetings nobody cares too much when and where I work.

The downside of this flexibility is that work and family calendars mix all over the place. I need to have access to both ... all the time.

Oh, and like most oddball R&D types I don't fit the corporate rules for a Blackberry, so I can't even carry a BB for work and an iTouch for home.

This data ownership and life/work overlap problem is why, ten years after the Palm, we're moving backwards. We used to be able to "sneak" corporate calendars onto our Palms and MobileMe via Outlook and USB/serial data cables, but those options have gone away.

There's only one option now, the Exchange server option and over-the-air sync. That requires your corporate IT department's support, and if you go this route the only option for a personal calendar on the iPhone is MobileMess.

Or you can give up, embrace the public self, and put all your personal and family data on the work calendar -- but then you can't share that with your spouse and children. It becomes locked to the corporation.

I think the only plausible way forward is to push corporations to support iPhones with Exchange server (very hard) while also pushing Apple (much harder) to either fix MobileMe or give other vendors MobileMe's magic power to coexist with Exchange synchronized data.

I wonder what the gPhone does?

-- footnotes --

[1] Unless you also pay for a MobileMe account, but MobileMe doesn't support CalDAV or even iCal publication/subscription.
[3] Apple won't give 3rd party vendors access to the physical cable -- probably to protect their FairPlay franchise. So, unlike the Palm days, vendors can't create products to sync Outlook/Exchange data over the cable.

Update 12/23/08: See an earlier post with a similar theme.

Update 1/31/09: "Democratic Republics" never are. The same logic that can be applied to Citrix's "Project Independence". If we're going to have work/home calendar integration it will be entirely on the terms of the corporate IS department.

The 3Com (Palm) Audrey

I'd almost forgotten the Audrey, the high water mark of the Palm PDA platform ...

An Apple in your kitchen - The Unofficial Apple Weblog (TUAW)

... 'Welcome to Audrey.' With those three words, I experienced my first Internet appliance. 3Com's Audrey was meant to deliver lightweight 'internet snacking' from a user's kitchen, and offered email and internet access, a calendar and contacts database, plus synchronization of up to two Palm devices. It had a touch-sensitive screen, wireless keyboard and a clear plastic stylus that would glow green when new mail arrived....

This was a time when 3Com imagined that everyone would have a Palm device. They'd all beam appointments and contacts and even software (peer-to-peer IR-based viral app distribution) back and forth.

Families would sync to Audrey, and view the family calendar.

Sigh. Those were the glory days. Back then Palms used Graffiti One, not the evil spawn-of-Jot that came before Palm's long fall. Palm devices were going to be wallet, key, planner, memory manager, aide and more.

It was a noble vision. Maybe the gPhone will get us there some day. In the meantime, the Audrey deserves a special place in the museum of extinct computers, an alternative reality artifact.

So how bad are the rest of the governors?

Maybe Blagojevich is the worst of the worst. He comes from a bad place ....

Rod Blagojevich's bad hair day | Salon

... Three of his last six predecessors -- Otto Kerner, Dan Walker and George Ryan -- have gone to prison. Ryan, who as secretary of state sold drivers' licenses for bribes, is languishing in a federal pen in Wisconsin, pining for a Christmas pardon from President Bush...

Even if he's the worst though, there's a lot of darkness between Blagojevich and merely adequate. He makes Palin look good, but we know Palin abused her power as Governor to settle a family feud.

So how bad are the rest of the governors? Is there a rogue's gallery ranking somewhere? How does our current level of political corruption compare to the past forty years?

Oh, and what the hell is wrong with Illinois?

Shoot, this guy makes Jesse Ventura look like the pinnacle of good government.

Krugman's rules for research

From Paul Krugman's Nobel prize lecture slides:

nobelslides.pdf (application/pdf Object)

My rules for research:

1. Listen to the Gentiles
2. Question the question
3. Dare to be silly
4. Simplify, simplify

Unfortunately, I have only the vaguest idea of what he means be any of these. I'm not getting up at 2am CT to hear him explain, but I suspect there will be a transcript somewhere.

Mumbai's Muslim patriots carry signs in English?

NYT journalists observing a demonstration of patriotism by Mumbai's Muslim community quote some banners ...

Muslims in India Put Aside Grievances to Repudiate Terrorism - NYTimes.com

... The cluster of banners all around him, held aloft by marchers, seemed to bear out his point. Some read “Our Country’s Enemies are Our Enemies,” others, “Killers of Innocents are Enemies of Islam.” A few declared, in uncertain grammar, “Pakistan Be Declared Terrorist State.”..

The journalists don't seem to find it remarkable that the signs are written in English (note grammar comment), and use English acronyms. I'm guessing that's not unusual.

This Mumbai tourist site provides some linguistic context ...

... Marathi is recognized as the official language of the Mumbai city of India. It is the most widely spoken language in the city. Apart from Marathi, there are many other languages that are spoken and understood in Bombay. Mumbaiya or Bambaiya Hindi is the slang language of Mumbaikars. This colloquial speech is a blend of Marathi, Hindi and English. Mumbaiya Hindi is extensively used on the streets of this Island city. The literacy rate in the city is above 86%, subsequently people have flair of education and culture.

Hindi, English and Marathi are counted amongst the major languages in Mumbai, spoken by the common masses. Hindi, being the national language, forms the dialect of 30% of the people. English, nevertheless, enjoys an associate status and is used for national, political as well as commercial communication. English is largely spoken by the people. Infact, it is the major language of the professional and managerial personnel in the city...

Wikipedia has a great overview of Marathi, but it doesn't tell us if there are religious/ethnic determinants of which Mumbaikars speak Marathi. (A friend of mine is a Mumbai native; I'll ask her and update this post).

Given the many languages and language blends of Mumbai, and the likely cultural implications of using one or the other, it seems plausiable that written English could be the universal language of protest signs.

Of all the places I visited in my well spent but callow youth, I though India was the most fascinating and complex. Still do.

Update 12/16/08: My friend explained this to me, but I'm not sure I've got it right. Elite Mumbaikars commonly speak 4 languages - Hindi, Marathi, English and Gujarati (sp?). Marathi is the regional language and would be used by both Muslims and Hindus. Muslims prefer not to use Hindi. English is neutral ground. The signs could have been written in the script form of Marathi though, so the English was probably for foreign consumption as well as local use. Although Hindi, Marathi and Gujarati are different languages they are structurally quite similar.