Monday, July 14, 2008

The Ripples Are Getting VERY Big

The ripples in the financial crisis pond keep getting bigger and bigger. IndyMac was just taken over by the Feds and now the behemoths Fannie and Freddie are, too. Obviously, this is very bad news: hundreds of billions of taxpayer money will be needed. Like I said in the previous post, this is orders of magnitude bigger than all previous bailouts. These are no longer ripples but waves..

And what if it doesn't work out? What if, after an initial positive knee-jerk reaction, the market prudently decides to "give" (sell to) the Treasury as much stock in Fannie and Freddie as it has , while there is big buyer? What will the government do then? Double up and buy even more? Trying to put an artificial floor under stock prices is a fool's game and always ends up creating a bigger mess.

And the size of the two GSEs is so large that a BIG mess is all but guaranteed. The real danger here is that these actions ultimately lead to a cross-infection of the Treasury bond market. If this happens the wave will be a tsunami that will wipe the US off the global financial map.

I have reason to fear, too. This is the same band of incompetents that "managed" New Orleans into near oblivion.


  1. I have to disagree with you on New Orleans. It, just like Iraq, is going just the way Cheney wants; it's called the shock doctrine (Naomi Kline). Before you can reshape a society to your liking, first you must tear it down.

    It's what Pol Pot tried to do in Cambodia before Vietnam intervened but there is no one big enough militarily to intervene against US imperial designs. The only hope for target nations is that the imperial budget collapses before they run out of fighters to resist.

  2. So what exactly would it mean if the US were "wiped off the global financial map"? Everyone (but I'm especially thinking central banks) dumps dollars for euros, European and Asian banks dominate globally, the world economically routes around the USA except to buy its cheap exports? Let's think the unthinkable and see where it leads.

  3. Just let me add the closing paras. of a news item I saw in Sunday mornings “Guardian” on-line:

    Be afraid - be very afraid. The UK government's problems with Northern Rock are dwarfed by those faced by the White House, which is faced with propping up Fannie Mae and Freddie Mac.

    As GFC Economics points out, the banks are on the brink, and Northern Rock might not be the only one that ends up being nationalised. Runs on branches are rare: a much more common cause of default is the unwillingness of investors to stump up fresh capital. As for the housing market, which we have foolishly relied on as an economic crutch, Merrill Lynch suggests it may slump by nearly 30 per cent over the next three years and, as its chart (below right) demonstrates, property prices may show very little recovery in real terms for 20 years. Yes, 20 years.

    What, if anything, can we do as individuals? Assuming you're not an oil sheikh, the best plan if you can do it - and I'm aware it's a big if - is to pay down debt and build up cash as a cushion, or as a war chest for when markets stabilise and bargains begin to emerge in shares and property, though it would take bravery to act now. Oh, and do try to keep your job.

    How bad will it get? I hate to think, but it's time for the tin hats.

  4. I am beginning to be amazed by the titanic scale of the bet the world has made on the GSEs. Via the ever useful Brad Setser:

    China's holdings of long-term Agency bonds are equal to 10% of Chinese GDP. Its holdings of Agencies and Treasuries are equal to about 25% of GDP.

    Russia's holdings, a mix of short-term and long-term Agencies, are equal to 10% of Russian GDP.

    From the comments (#51): "Americans hold 4 trillion in Agency debt... 30% of GDP". The GSEs were levered 100 to 1.

  5. I used to have a sticker on my fridge saying "Stay positive, do what you can do and the Lord will provide." The guys at the fed must have those too. Better start praying.

  6. Good point yoyomo.

    Who even dares remember that when Vietnam stopped that Holocaust the west piled in on the side of Pol Pot!

    Strange times when you root for Russia and China to hold back the forces of darkness.

  7. "I have reason to fear, too. This is the same band of incompetents that "managed" New Orleans into near oblivion."

    By jove I think he's got it!

    Like I said before just imagine the most craven behavior and plan accordingly. You're dealing with demented Trotsykites--nothing must stand in the way of their New World vision.

  8. Anon,
    Be careful, remembering such inconvenient facts will get you branded as an America-hater.

  9. Regarding this part of your post:

    "And the size of the two GSEs is so large that a BIG mess is all but guaranteed. The real danger here is that these actions ultimately lead to a cross-infection of the Treasury bond market. If this happens the wave will be a tsunami that will wipe the US off the global financial map."

    To wit: From market ticker.

    The question now comes down to "what do we do about this?"

    There are several choices, all of which will have bad side effects. It is critical, however, that we understand those side effects and choose the path forward that represents the least risk to the broader economy and to the government, not just the most expedient or the one that the people who would lose will scream most loudly about.

    Here are the options:

    The Fed "decides" to "open the discount window." This is a non-starter, right up front. Fannie and Freddie need longer-term - years in length - money. Repos for 28 or even 90 days don't do them a damn bit of good and in fact destabilize them further as the rate and thus cost of that money makes hedging their portfolio against interest risk extremely difficult. Forget this one.
    The Fed "decides" to essentially backstop Fannie and Freddie by exchanging what's left of their balance sheet (longer-term bonds and notes) with GSE paper. Down this road lies the immediate implosion of the Treasury market. If they attempt this the dollar will instantaneously implode as The Fed will have converted the "backing" of our currency to houses declining in value while people's jobs and thus incomes necessary to pay the mortgages on same are being lost! If Bernanke is stupid enough to do this (and note that from Friday's Ticker, Ben said he will do whatever he wants unless Congress explicitly passes a law to stop him) you are very likely to need steel and lead, not gold or dollars, as this would almost certainly provoke an immediate currency and treasury market crisis.
    The Federal Government steps in and decides to "formally" guarantee Fannie and Freddie's debt. This is an unmitigated disaster as it does nothing about the risk management policies and procedures in these firms. In fact, The Senate has just passed a bill that will increase, rather than decrease, the risk on Fannie and Freddie's book via their funding of the "mortgage bailout bill." The threat of this possibility is why, on Friday, the risk of default on US Government Debt doubled! In my years in the market I have never seen this kind of bond market dislocation - the spread moved from 9 to 20 basis points in one day. Further, the 10 year bond moved 15 basis points higher on yield on a day when people were scared to death and should have been demanding Treasuries, not selling them. "Risk free" was partially removed from the description of Treasuries and if this path is taken much more damage will accrue to US Government debt. ALL debt costs will rocket higher if this happens as everything is referenced, with a spread, off US Treasuries.

  10. A far more comprehensive discussion of the issue may also be found (no offence intended Hel) on Calculated Risk [] where Tanta goes to great lengths to explore the assertions made by Paul Krugman in his NYT Op-Ed column of 14 July 2008.

  11. H,

    You write a lot of interesting stuff, but you really hurt your credibility when you bring in something unrelated like Katrina, especially when it's something you probably know very little about.

    I think I'm pretty safe in saying that you don't now a whole lot about Louisiana politics and the influence that had on the whole Katrina operation. Think a bit about past natural disasters -- hurricanes in Florida, and the like. Who was out front? The governor, that's who, because ground operations in these things are run by the state.

    Where was Blanco? Where was the state of Louisiana? If Blanco were a republican, would she have gotten away with her incompetence? Not a chance. But the people of Louisiana noticed, and elected a new governor without a runoff election for the first time in a long time.

    And what about the Coast Guard rescue operation? How many lives were saved? Most estimates before the storm would have told you that 15,000 to 25,000 people would die from New Orleans being flooded by a hurricane. The toll, while tragic, was about 4,000.

    So my point is, when I read your blog, 99% of the time I think it's really interesting stuff, and I want to learn more. But a gratuitous, unrelated swipe like that makes me think "maybe this is just a guy with an axe to grind, and if exactly the same thing were happening when a democrat happened to be president, he'd be silent. Maybe I can't trust this".

    So which is it?

    By the way, some of your commenters are completely nuts.

  12. Anon,
    I'm not contesting your figure but I've never seen 4,000 in the MSM. The highest figures I've seen have all been less than 2,000. Do you remember where you saw that 4,000 figure?

  13. a news item I saw in Sunday mornings “Guardian” on-line

    Actually, that was an opinion piece, not a "news item".

  14. If Blanco were a republican, would she have gotten away with her incompetence?

    If she was a memeber of the Bush administration she would have.

  15. For the prior Katrina comment - To compare Katrina to the other recent disasters is foolish. The size, scope, and scale were not even remotely comparable. And yes, this band of idiots compeletely dropped the ball. Watch the videotape of Bush getting briefed on the impending storm. Terrible things keep happening (9/11, New Orleans, Financial Meltdown) under the watch of these idiots, and it is always someone elses fault. We would be better off with Nero!

  16. "By the way, some of your commenters are completely nuts."

    If you want to see real "completely nuts" just go over to James Kunstler's "Clustefuck Nation" or any other of a half dozen finance/economy blogs. The posters here may on occasion stray from the issue but on the whole they are a very sound lot--and in particular Hel.

  17. To whoever wrote this:

    "I think I'm pretty safe in saying that you don't now a whole lot about Louisiana politics and the influence that had on the whole Katrina operation."

    He knows enough. So, my little Bush apologist friend, congratulations, on not getting, or not wanting to get, Hell's point.

  18. Apropos of today's post.

    Here it is in a nutshell, or rather a punchbowl.

  19. slightly off topic? there was a story on bloomberg about Citi's trillion + off balance sheet assets.

    when citi or other banks say they are moving something off balance sheet to on balance sheet, is the amount included when they say they are also taking a writedown in assets? or are they separate?


    when they do say they are taking a writedown are off balance sheet assets commingled into the figure?

    when they move off balance sheets assets onbalance sheet do they automatically end up in the Tier three category ?


  20. forgot the bloomberg link:

    Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings

    By Bradley Keoun

  21. It makes sense that the 4,000 was cited in a foreign paper, in the US only the alternative press have cited figures in the 4-5k range. The MSM adamantly refuses to consider that more people died in Katrina than on 9/11 and use only sub 2k figures in their "reporting".

  22. Hel,
    Why is your comments clock set to the Mid-East (or is it Moscow) time zone? I used to think it was an oversight but it's been that way for so long, just wondering in case you care to reply.

  23. I didn't know that Ray Nagin and Kathleen Blanco were working at the Fed or Treasury Department.

  24. Comments Clock? Eh, I never paid any attention to it, just left Blogger the way it was when I first signed up.. I don't even know how to change it, but I'll see if I can change it to EST..

  25. They're not incompetent. They're evil. Well, maybe both.

  26. well there was a very interesting parallel on Minyanville between SIVs for banks and GSEs for the USA Tresaury.

    GSEs effectively hide 5 trillions public debt off USA 9 trillions balance sheets.

    Same tune (not explicitely, but nuances) on NY Times latest coverage.

  27. wow, spam poetry in an undeleted comment-
    "home refinance id identity create same day payday slip buy house home auto vehicle state create template sample scam scam child support solution"

    not what i was going to comment on, but interesting social data mining on the economically stressed and unwise.

    my comment was that i tried to convince DW to bug out with our savings and investments to central america last year before it got too dark, but the desire to stay and fight for the homefront (and her nesting instinct) prevented it. i'm old enough to have experienced hard times, it ain't romantic. but buckling up and being a good leader in your community or larger is one of our country's old and hopefully current strengths.

  28. Big Bidness 101:

    Fannie, Freddie spent $200M to buy influence: Politico

    "That ain't workin that's the way ya do it..."

  29. The Ripples might be getting VERY big but so are the gaps between Hellasious' postings. This one is so old it's got moss growing on it.

  30. Ratcatcher,
    Quality over quantity; who wants to read just for the sake of reading? Try keeping up with the posts at Naked Capitalism or the Automatic Earth, it's a full time job.

    Remember the motto:
    An economy of words
    A wealth of information

  31. Something to keep in mind about New Orleans. The levees are paid for by levee districts. The levee districts are paid for by the local landowners. The levee district boards are elected by the local landowners.
    When they complain about the levees being to low and it's the Corps of Engineers fault, all they are saying is that the Corps of Engineers wrongly certified the levees as being high enough and wide enough, not that the Corps did a bad job building them.

  32. I like Hell's blog, because he posts so few but almost all of his posts are elegantly written. The guy is smart/wise, and wise people are not known to always open their mouth.

  33. not that the Corps did a bad job building them.

    Apparently the Corps itself disagrees:

    "The U.S. Army Corps of Engineers has accepted responsibility for the failure of the New Orleans levee system during Hurricane Katrina. In a massive 6,000 page report, the Corps of Engineers, the builders of the levee system, admitted that the levees failed due to faulty construction based on outdated data."

  34. Stay positive, do what you can do and the Lord will provide.What, if anything, can we do as individuals?"I have reason to fear, too. This is the same band of incompetents that "managed" New Orleans into near oblivion."
    Debt Consolidation

  35. "I like Hell's blog, because he posts so few but almost all of his posts are elegantly written. The guy is smart/wise, and wise people are not known to always open their mouth"- Greenie

    You're blowing my mind, Greenie. Whenever I think I have you pegged, you change. WHAT'S YOUR AGENDA?!?! ;)

  36. "WHAT'S YOUR AGENDA?!?!"

    At this time, all I want is to get oil price down.

  37. So Hel,
    When you first signed up for Blogger, were you posting from three time zones east of Greenwich? Do you have international experience? The reason I ask is because I can't discern if you have considered the possibility of foreign inflation offsetting domestic deflation with $11T of US financial assets in foreign possession, the scenario.

  38. "Dink, what was the peg?"

    The first peg was stock market gambling addict.

    The second peg was people-hating troll who enjoyed heckling blog hosts.

    Now he's said something amusing ("comparing apples to porcupines") and said nice things about Hell.

    The pattern is complex; complexity breeds uncertainty; uncertainty breeds fear....:)

  39. Ho-hum--let's get a fresh post going Hel. You think?

  40. Dink,
    I think that 'apples to porcupines' was meant to be condescending.

  41. Ok, to stay on topic then...

    in congress are asking 'limits' be placed on the amount the US taxpayer will be held liable for in any Freddie-Fannie bailout.

    Does anyone know what that size limit will likely be?

    If Freddie and Fannie used it all up, what % of the problem would it fix?

    I am gettig increasingly worried about the safety of my company's payroll.

  42. Thai,
    Once a bail-out or govt backstop is instituted there will be no realistic way to limit its size. The losses will be fully and permanently transferred to the govt.

    A consideration which raised your concern previously, capital controls, seems to be morphing into existence. Anyone wanting to relinquish citizenship or permanent resident status will face an immediate exit tax equal to unrealized capital gains on holdings above $600K.

    BTW, your response on NewOrleans levees (voters failed to concentrate enough on that one issue) contradicts your immediately previous position that voters corrupt their issues by concentrating too much on one issue to the exclusion of others; what some might quaintly characterize as prioritizing.

  43. Yoyomo, how do you see this as a contradiction?

    And absolutely "yes", it really is the same thing as prioritization (I was wondering when you would realize this).

    If you think thru all the problems around the seemingly innocuous term 'prioritization', you should realize that these problems are the same fundamental problems information science/complexity science grapples with which leads to things like 'the infinite scalabilty of risk' or 'The Black Swan' Problem.

    Please look at my PowerPoint

    If it helps you, just substitue the word 'prioritization' for where I have written 'reputation'...
    If you follow my presentation, you should realize 'prioritization' and 'reputation' are functioning as equivalents in information science.

    So while my critique of voters may be a little 'unfair' at times, I often chose to blame voters over leaders because:
    1. The voters consistently remain myopic, always focusing on the immediate future at the expense of longer time periods.
    2. The voters seem to refuse to learn from history.
    3. The voters often refuse to see (deliberately?) the recurrent patterns that come up over and over thru history.
    4 The voters refuse to admit that these recurrent patterns MIGHT represent something 'fundamental' (like why have there always been rich and poor?)
    5. The voters continue to hope for 'leaders who will lead them to the promised land' but then refuse to pay the piper when they follow their leaders
    6. The voters usually deny their own personal role in the mess
    7. No one else ever seems to be willing to take them to task as it is just so much more socially acceptable to blame 'the leaders' than it is to blame your neighbors.

    But Yoyomo, I live in a world where most things are 'shades of grey'. If it makes you feel better to hear me say it, "I do see that leaders are just as guilty as voters"... but that admission will not get me to absolve the voters from their sins.

  44. Maybe if the mainstream media took seriously the need to educate the voters...

  45. Anon, maybe. But remember, the Media is a business like anything else.

    And who is it that keeps reminding us:

    "It's hard to get someone to understand when their salary depends on them not understanding."
    -Upton Sinclair

  46. Thai:

    I think I am the one who keeps reminding you.

  47. Okie! Good to read your voice.

    I was wondering when we would hear from you next... Hope your summer is going well?


  48. I was actually trying to make contact with you ... can you get back to me ... (not the rest of the world though lol)

    Sad thing about today's situation is that the advantages we have today for not slipping into major debt far outweigh the opportunities at the last recession.

  49. Thai,
    I blame the voters for their own faults (many people are racist) but I blame politicians 10x for manipulating those faults for nefarious ends (terminating aid to needy people). Many politicians appeal to the worst instincts in people and lie and obfuscate when that isn't enough. Let's invade Iraq and steal the oil (appeal to worst instinct) but if you object to that rationale then there's always the WMD threat that must be neutralized (lies and obfuscation). So a large segment of the electorate were tricked into going along with something they never would have if they hadn't been lied to.

    BTW, did you know that in the first Gulf War that the daughter of the Kuwaiti ambassador posed as a maternity ward nurse and falsely testified that Iraqi soldiers threw the preemies on the 'cold' floor to die so they could steal the incubators for Iraqi hospitals? And that half the congressmen at the hearing knew who she was and that she was lying but pretended to believe and be shocked by her story so they could get the other congressmen who were opposed to the war to vote for it? This was on 60Minutes and Mike Wallace interviewed a StateDept official who was at the hearing and admitted to sitting through it and not saying anything even though he knew who she was and that everything she was saying was a lie that she had been carefully coached to say by a PR team from Hill&Knowlton. Even the tearful pauses and choking gasps in her testimony were written into the script which she practiced at the office of H&K with instant replay video so as to simulate and prefect maximum authenticity.

    What chance do unsophisticated voters (the vast majority) have against such duplicity?

    As for the contradiction; in one entry you berate voters for voting for a candidate based on one issue w/o sufficient consideration to his positions on other issues and in the following entry you berate the them for not paying enough attention to only one (admittedly very important to the people of NO) issue. cont...

  50. cont...

    A greater than B; A less than B. Both can't be true.

    BTW, the problem of the levees was too big for NO to address on its own and not important enough to anyone else to care about. No amount of persistence on the part of NOers could have saved them especially since a nice little flood would clear the city of all the undesirable elements and allow 'proper' development to proceed.

  51. Bullshit.
    Building bigger levees (highe and wider) was much, much, cheaper than building another New Orleans. It would have cost less than five billion dollars to build those levees to Cat five, much less to build them to a Cat three like Katrina.

  52. Yoyomo... it is tough explaining myself to you because we clearly think so differently.

    I am not berating the citizens of New Orleans for not putting in larger levees (though I think they were awfully stupid to ignore this issue).

    I am trying to use one example of where 'priotitization' (to use your term) got the people of NO in trouble when they 'misjudged'.

  53. $5B or $5T, it doesn't matter, NO is a poor city and can't fund a major project w/o outside aid which was never forthcoming.

    I respect your intentions, I simply disagree with you. No hard feelings I hope.

  54. Thai,
    I forgot, did you know about the ambassador's daughter and Hill&Knowlton?

  55. Yoyomo, of course not :-)

    Please recognize when you say "A greater than B; A less than B. Both can't be true". I think this may be one of the ways we look at things differently.

    I am saying that both are SIMULTANEOUSLY true. It is one of those 'frame of reference issue'. Kind of like Schrodinger's cat, if you remember that problem.

    Understand, at some level, I see things like 'the only right way to solve social issues' as somewhat meaningless. There are hundreds (nay millions) of equally valid solutions, it is just they all have different consequences.

    The 'truth' of each solution is entirely dependent on what one's intital beliefs are.

    In the world of physics, these are called hysteresis solutions.

    And in case you are wondering how I mesh a fractal view of the world with a hysteresis view, let me just answer they are also completely compatible.

  56. I did read a little about it at the time, but I am not intimately familiar with the details.

  57. Thai,
    As long as we're referencing history, did you know that the Reagan admin took continuous delivery of Chinese (commie) weapons and transported them thru Thailand to Pol Pot's forces to bleed Viet Nam while it was trying to put a stop to the killing fields?

    Also, the father of the guy that shot Reagan is a close family friend of BushSr. You have to admit there are alot of fishy coincidences that aren't easily explained away.

  58. Yoyomo, I agree the coincidences are intriguing, and I would be willing to accept that they may be even more than sheer coincidence (like the british twins seperated at birth who unknowingly ended up marrying each other)... but I don't want to agree too much for fear agreement will set my tooth off again ;-)

  59. Had to post the entertaining Jim Kunstler's first paragraph this week for you deprived souls:

    "The comprehensive bankruptcy of the United States, at every level, in all corners, atop each hill and mole-hill, and down not a few rat-holes, is preceding like some kind of hideous multi-media, inter-dimensional cosmic grand opera as produced and directed by the Devil. Every week, some bizarre new subplot is introduced by the stage managers, each turn and twist geared to produce maximum pain and carnage in the US economy, as if to foreclose any possibility of redemption on the way down. Well, the absence of hope is, after all, the essential nature of Hell (setting aside, for the moment, J.P. Sartre's quaint notion that Hell is other people)."

    My favorite passage:

    "Finally, Mr. Bush presides at a remove from all this, sitting just offstage in his own special velveteen loge of Hell, watching this opera-to-end-all-operas, and waiting for his reputation to be sealed as the historical equivalent of something found in a colostomy bag."

    But then ol' Jim veers off into familiar territory--fantasy:

    "Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires. He could go out of office much the way he came in: by means unconventional. Mrs. Pelosi will keep the seat in the oval office warm for a few months. Then the prosecutions will begin."

    Now, with the courts and congress we have, does anybody believe in justice in this country anymore? Pure fantasy.

  60. Marcus- thanks! :-)

    Yoyomo (Dink, you may find this interesting as well)-- I read this NYT article today and smiled based on our recent conversations.

    You blame leaders, I blame voters. It's just who's hypocrisy are you more sensitive towards?

    To quote and old Chinese proverb-- "Fool me once, shame on you; fool me twice, shame on me"

  61. Thai,
    I've read about that experiment a couple of weeks ago and I've never excused the voters' self-delusion (or worse, pretending to be deluded, when they really do know better, because it might benefit them). However, leaders have far more information at their disposal and so have less excuse for disregarding reality.

    That said, are you trying to be a sly old coot comparing the married twins (genuine coincidence w/o any possible hidden motive) to Hinkely's dad being close to BushSr (fishy with plenty of room for hidden motives)?

  62. No, not old coot.

    I am not sure the twins marriage really was a coincidence, though I do not think there was any conscious 'perversion' in what happened.. similarly it may not be a coincidence at all that there is a link between Hinkley and Bush senior, but 'the link' does not need to be a malicious motive.

    As for your statement "leaders have far more information at their disposal and so have less excuse for disregarding reality", again I think this is where we see things differently (it was in fact just the opposite of this point I was trying to get across to you in my PowerPoint).

    This statement actually contradicts a fundamental law of information science which is something like "As you manipulate information to make it useful, you also make it wrong" or "as the amount of information increases, the amount of inaccuracy also increases".

    Haven't you ever been in a leadership role over large numbers of people and screwed something up big time because of your error in judgement? You thought things looked one way, when they really turned out to be another? Yet there was no mal intent on your part.

    I wish I could say I haven't made this error, but I would be a liar if I did.

  63. Thai-
    Fairness/ has to be scaled on the consequences to the person making the determination. Take eating mammals: I have access to many sources of nutrition so I choose to pass on the things that will suffer if I eat them. If my access changed would I choose differently? Yep. But I don't consider it hypocrisy to sneer at carnivores who have access to other nutrition. And I still say Greenie has an agenda!

    Politicians and voters are both points along the human spectrum. And they all need to be slapped upside the head (except myself and perhaps other commenters on this blog when I agree with them).

  64. Greenie is OK...

    Of course I can take say this because he takes less pot shots at me than he does Hell-- and don't get any ideas Greenie ;-)

    Greenie's no idiot, he may tease Hell about his communism (which I sincerely doubt even Greenie actually believes), but he keeps coming back (actually has Hell on his blog's 'favorites' link-- and he just dumped CR so that says a lot) because he still recognizes Hell's wisdom (I doubt he comes back to speak with you and me).

    Dink, have you ever considered the possibility that Greenie is all the things you pegged him with simultaneously? The apparant complexity/paradox does not bother me in the least (actually I find it rather refreshing... I can rent a DVD or watch TV if I want stereotypes).

    I agree he could be a little less 'borderline' in cyberspace, but: 'he is what he is'

    And, IMHO, everyone has an agenda

  65. "Greenie's no idiot"
    "have you ever considered the possibility that Greenie is all the things you pegged him with simultaneously?"

    I think the traits you mentioned above are what made Hannibal Lechter such an intriguing fictional character. With intelligence and no moral compass you can be many things.

    Perhaps in regards to the ongoing Yoyomo/Thai debate, the majority of voters are guilty of not being curious enough and the majority of politicians are guilty of not limiting their behavior with ethical boundaries. Then in both camps you have the evil who luckily aren't smart enough to cause too much damage (well..) and the smart and self-limiting nice (there have got to be at least 6 or 7 of these people in the world :O).

    BTW, I read this book called "Better" by Atul Gawande. It gave glimpses into the medical world by a M.D. Freaking fascinating. The AMA forbids doctors from assisting in legal executions. Some still do because they believe its inhumane to let an amateur give IVs. And then the author went to India to help at a hospital in his parents home village and found that the local doctors found him too specialized to be of much use. Really interesting stuff.

  66. Dink,
    I would go further than you in accusing voters of being incurious, I think many people insist on being willfully ignorant of certain inconvenient facts they think they will benefit from but know that they can't defend in polite company.

    In the 80's many people pretended to be afraid of commies in Nicaragua so they could have a "respectable" reason for justifying support for the Contras (US supported death squads so we mustn't call them terrorists). The prospect of Nic posing a threat to the US is 10X more ludicrous than WMD in Iraq but if you pretend to be afraid that they're going to kill you then you can justify killing them first. Not something you can get away with if your only justification is cheaper bananas.

    As for the truly evil, like you said (well...)

    WRT the Thai/yoyomo dichotomy, I see my world as black & white plus a few shades of grey over which reasonable people can disagree. The best I can gather, Thai's world resembles more the Quantum realm where nothing is as it appears and objects can occupy different states and positions simultaneously. It all seems way too mathematically complicated and I don't even try to engage him on that level cuz it makes my head hurt.

  67. Yoyomo-- "yes", now you understand (existential moment :-0)

    I see the world as endless shades of grey with endless frames of reference.

    But it isn't so mathematical, it was just orignially math and science that taught me to look at the world this way.

    Haven't you ever studied any philosphy of science?

  68. Thai,
    Honest (& short) answer: no.

  69. Yoyomo

    Here is a wonderful (and brief) video on the infamous double slit experiment made as part of a movie for mainstream US theaters titled What the Bleep Do We Know.

    Notice that the wave and particle simultaneously exist. But this 'duality' or 'paradox' goes away when a research actually decides to become part of the experiment.

    This is the same thing as a frame of reference issue.

    So to refrence the example I wrote in my blog essay, I looked at the bathroom in our condo as a grubby mess (and this thought made me unhappy). My six year old son however, looking at exactly the same bathroom, saw it as a 'secret room' that he didn't know existed a moment earlier (and this thought made him very happy).

    Both views of the bathroom were simultaneously correct-- it all depended on how you looked at the bathroom (this is an example of hysteresis by the way).

    This same issue, frame of reference, complicates absoultely everything. And I mean everything!

    I am more than willing to accept that the way I look at the world must seem very strange to someone who does not look at it this way, especially when they are talking to me about issues like politics (as an aside, this is one of the things I like about Obama-- my gut says he intuitivly understands this issue better than many others).

    I might seem occasionally inconsisten from your frame, because sometimes I will look at something from many frames of reference, and decide to choose one frame, and yet on other issues I will look at it thru multiple frames of reference, and choose another-- and a person who is locked in one particular frame might say 'hypocrit' (and from the way they look at it, they would be correct).

    It can be hard since there are so many ways to look at things...

    But let me ask you to think about the following issue: do you acccept that the atomic bomb, nuclear power, the internet, computers and modern telecommunications are real?

    Because if you do, the same science that created these 'realities' is very very clear: frame of reference is real. There are simply an infinite ways of looking at things which are simultaneously correct/accurate/ truthful/moral/ethical... choose whatever word is most meaningful to you.

    Different views can exist simultaneously and still both be correct. The accuracies or inaccuracies from another view simply from the boundaries of the information you are looking at.

    Your current black and white is only one reality. Others do exist, and good moral people are looking at the world from them (when judged from their frame of reference).

    As a friend of mine once said to me without meaning in any way to be condescending, so too will I suggest to you--

    open your mind.

  70. Thai,
    Thank you for the generosity of spirit but I'm not as ossified as you may suspect. I'm casually familiar with the duality of light and Hisenberg(sp?) uncertainty principle. HUP makes sense to me in that any minute object will be altered by any force that attempts to measure it. I understand that light photons behave as both waves and particles under different circumstances but don't pretend to know how to reconcile the two realities. I've read about the double slit experiment (the why is beyond me) and I vaguely remember the name Mohr and something about black-box radiation for what that's worth.

    However you try too hard to draw parallels between quantum particles & mathematical abstractions vs. human behavior. I don't agree with you that the analogy is as strong as you make it. I also don't accept that everything is open to endless interpretation, there are some absolutes that are black and white to me. I enjoy observing what people do and trying to guess their angle more than trying to model their behavior but then I'm not a psychologist.

  71. And like the Hedge fund managers who tried to make models of the market, your assumptions about humanity will be mostly correct and your models will work, until a black swan comes along, and destroys everything you know.


  72. Sorry if I disappoint you Thai but we all interact with our environment in the way that conforms most closely to our thought processes. There's room for the both of us and what one of us misses the other might be better positioned to see from his different vantage point. As for BlackSwans, neither of us has a crystal ball but my macro judgment since the early 80's has been generally close to the mark even though my timing has been premature.

  73. YOyomo, we are in 100% agreement.