Ilon Goldenberg has a magnificent figure showing how the DOD has re-cooked the books.
Everyone is linking to this, but I like my title and note that Goldberg should correct November-07 to November-06.
update: spellling korrected
Friday, August 31, 2007
Thursday, August 30, 2007
Ezra Klein and the non libertarian Megan are waaaay too kind to libertarians here via here.
Hmmm about "econ says" let's see. It is much much too charitable to conclude that what "econ says" is not just "evidence in a form sanctified by academic economics". Much of what "econ says" is theory which follows from assumptions which were explored because they had interesting implications. That is, much of economic theory is a branch of mathematics in which assumptions are made and implications derived without any consideration of evidence whatsoever.
Later, much later, economists added more assumptions to get to testable hypotheses. I am not aware of any such hypothesis which has not been rejected by the data. Then the models are tweaked to fit or "explain" the rejection of the first model. This interaction with the data would occur if economic theory were completely worthless (notice the implication does not go the other way).
Furthermore theorists look for theoretical counter examples -- and always can find them. "Economic theory" as such has no implications. I have claimed repeatedly and publicl, that for any policy you think of, I can invent an economic model such that it is optimal. No one has stumped me so far.
"Econ says" really means assumptions that are obviously false, always known to be false, introduced only to clarify thought and since proven to be false imply.
Another point. In the language of the economics profession redistribution is not inefficient. The only agreed condition under which a reform can be called inefficient is if it makes everyone worse off. The implication of the implausible assumptions is that redistribution with incentive effects is Pareto inferior than an identical redistribution without incentive effects, which is, of course, impossible.
The non-libertarian Megan stated this well a few weeks ago, when she mused that "the people I was arguing with knew their libertarian philosophy well and some econ well, but not, you know, how farming works. So they would prescribe the libertarian economist remedy of markets confident that understanding econ is sufficient to have an accurate opinion. I'd say, 'but the required assumptions simply don't hold', and get back 'but they must, because econ says'...I don't think that libertarians are impervious to evidence, but it has to be evidence in a form sanctified by academic economics. Evidence from the system itself (environment, law) was highly discounted."
Hmmm about "econ says" let's see. It is much much too charitable to conclude that what "econ says" is not just "evidence in a form sanctified by academic economics". Much of what "econ says" is theory which follows from assumptions which were explored because they had interesting implications. That is, much of economic theory is a branch of mathematics in which assumptions are made and implications derived without any consideration of evidence whatsoever.
Later, much later, economists added more assumptions to get to testable hypotheses. I am not aware of any such hypothesis which has not been rejected by the data. Then the models are tweaked to fit or "explain" the rejection of the first model. This interaction with the data would occur if economic theory were completely worthless (notice the implication does not go the other way).
Furthermore theorists look for theoretical counter examples -- and always can find them. "Economic theory" as such has no implications. I have claimed repeatedly and publicl, that for any policy you think of, I can invent an economic model such that it is optimal. No one has stumped me so far.
"Econ says" really means assumptions that are obviously false, always known to be false, introduced only to clarify thought and since proven to be false imply.
Another point. In the language of the economics profession redistribution is not inefficient. The only agreed condition under which a reform can be called inefficient is if it makes everyone worse off. The implication of the implausible assumptions is that redistribution with incentive effects is Pareto inferior than an identical redistribution without incentive effects, which is, of course, impossible.
Sunday, August 19, 2007
Burying the lede II
Blockbuster article in the Post*
Paragraph 20 -- Quoting the lie
Paragraphs 31-32 ! show it's a lie. This was not just sco-ordinating pin, this was directing grants which is totally illegal.
paragraph 33-35(thirty three thrity four and thirty five !!!) the smoking guns
Excellent investigative reporting, but why the hell did I have to read 30 paragraphs of chit chat and lies before getting to the proof of illegal actions ?
Nice close though
I think Kloiber shouldn't be reminded he works for the people of the USA, because we should fire him.
* The Post was scooped by only 1 day by McClatchy (you're getting their WAPO maybe some day you'll reach the McClatchy level ... naaaah but you gotta dream).
Blockbuster article in the Post*
Paragraph 20 -- Quoting the lie
White House officials say Rove had two basic rules: the first was to avoid meddling with grant and contract decisions made by career government employees;
Paragraphs 31-32 ! show it's a lie. This was not just sco-ordinating pin, this was directing grants which is totally illegal.
Between April 2006 and Election Day, Shays was able to announce at least 25 new federal grants or projects totaling more than $46 million [snip]
In contrast, Shays announced just $39 million in grants and got just one visit by a federal official in the prior 15 months, the analysis shows.
paragraph 33-35(thirty three thrity four and thirty five !!!) the smoking guns
Shays wrote Bush on Sept. 8, 2006, to seek the early release -- before the election -- of heating assistance money for low-income residents in his state. Just four days later, the White House released $6 million. Asked to comment on the administration's help, Shays's campaign manager Michael Sohn said, "Chris was grateful to be returned to office based on his record of hard work and accomplishment."
Similar efforts to promote grants in key states took place across the government. When the Department of Health and Human Services, for example, released 22 grants totaling $35.7 million for community health and disease-prevention programs in late September 2004, The Post analysis found, half the awards went to targeted election states or congressional districts, the rest to noncompetitive areas that included Democratic strongholds such as Boston and New Orleans.
The agency's news release about those grants, however, detailed at the top just four recipients -- in Florida, Ohio, Pennsylvania and an Oklahoma congressional district -- that Rove's team identified in earlier 2004 briefings as key to the GOP's reelection strategy.
Excellent investigative reporting, but why the hell did I have to read 30 paragraphs of chit chat and lies before getting to the proof of illegal actions ?
Nice close though
In an e-mail obtained by congressional investigators, Kloiber wrote, "Sometimes these folks need to be reminded who they work for and how their geographic travel can benefit the President.
I think Kloiber shouldn't be reminded he works for the people of the USA, because we should fire him.
* The Post was scooped by only 1 day by McClatchy (you're getting their WAPO maybe some day you'll reach the McClatchy level ... naaaah but you gotta dream).
Talk about burying the Lede
Paragraph 24 ! of a story on Wikiscanner in the New York Times by KATIE HAFNER
, I plan to call her Christie Hefner from now.
Paragraph 24 ! of a story on Wikiscanner in the New York Times by KATIE HAFNER
And The New York Times Company is among those whose employees have made, among hundreds of innocuous changes, a handful of questionable edits. A change to the page on President Bush, for instance, repeated the word “jerk” 12 times. And in the entry for Condoleezza Rice, the secretary of state, the word “pianist” was changed to “penis.”
, I plan to call her Christie Hefner from now.
Saturday, August 18, 2007
On the quest for Matthew Yglesias's Inner Economist and a good Lobster Roll.
Yglesias writes
I comment
Dear Mr Yglesias
I think you are going to have to keep searching to find your inner economist. Simple economic theory does not suggest that a nice location implies lower quality food even on average. Less simple theory can give any implication you want (I have a challenge open for someone to come up with a policy so bad that I can't write a model such that it is optimal).
The aspects of simple economic theory which give your inner restaurant theorist trouble communicating with your inner economist (who is in there somewhere) are infinite greed and separable utility.
Your story about restaurants is not based on profit maximization. You assume that the way the market works is someone opens a restaurant and guesses on a good menu, recipes and prices and some survive and others don't. This is evolutionary economics and is (still) fairly heterodox. Otherwise you have to ask why the Bagaduce doesn't cook actually good food to serve in its nice location, raise prices and make a ton of money rather than just survive.
Also you have to ask how they can afford that location. If your explanation depends on miss-pricing valuable land overlooking reverse waterfalls it is very far from your inner economists heart. If you assume that the Bagaduce's owners could sell the valuable site for more than it is worth to them by finding someone who actually understands mayonaise, you must explain why they settle for less, that is, satisfice (a word loathed by mainstream economists even more than by normal people).
Another possible explanation of the lobster roll problem is that people are not willing to pay a high price for lobster rolls in a shack even though the combined pleasure of decent food and a reverse waterfall gives more pleasure than alternative uses of the money. That is, the sense that a price is unreasonably high causes displeasure beyond the loss of money.
Let's here what a mainstream economist (Robert Hall) has to say about that
Yglesias writes
The family was talking yesterday about why the lobster rolls are better at the Fishnet in Blue Hill than at the Bagaduce Lunch in Brooksville. People were bringing up micro-causal factors -- lobster to bread ratio, quantity of mayo, etc. I, however, equipped with having recently read Tyler Cowen's Discover Your Inner Economist had a macro-level explanation at hand. The Bagaduce Lunch as a very scenic location directly adjacent to an interesting reversing waterfall. Fishnet, by contrast, needs to make due with an uninteresting location in the non-picturesque part of Blue Hill.
Under the circumstances, nobody would go to Fishnet unless the food was reasonably compelling. Thus, given that the Fishnet has been in business for years, one should assume that its food is superior to that offered at superficially comparable, but better located, fried seafood outlets. At any rate, this insight mostly seemed to bore my family, but I think this sort of thing is interesting.
I comment
Dear Mr Yglesias
I think you are going to have to keep searching to find your inner economist. Simple economic theory does not suggest that a nice location implies lower quality food even on average. Less simple theory can give any implication you want (I have a challenge open for someone to come up with a policy so bad that I can't write a model such that it is optimal).
The aspects of simple economic theory which give your inner restaurant theorist trouble communicating with your inner economist (who is in there somewhere) are infinite greed and separable utility.
Your story about restaurants is not based on profit maximization. You assume that the way the market works is someone opens a restaurant and guesses on a good menu, recipes and prices and some survive and others don't. This is evolutionary economics and is (still) fairly heterodox. Otherwise you have to ask why the Bagaduce doesn't cook actually good food to serve in its nice location, raise prices and make a ton of money rather than just survive.
Also you have to ask how they can afford that location. If your explanation depends on miss-pricing valuable land overlooking reverse waterfalls it is very far from your inner economists heart. If you assume that the Bagaduce's owners could sell the valuable site for more than it is worth to them by finding someone who actually understands mayonaise, you must explain why they settle for less, that is, satisfice (a word loathed by mainstream economists even more than by normal people).
Another possible explanation of the lobster roll problem is that people are not willing to pay a high price for lobster rolls in a shack even though the combined pleasure of decent food and a reverse waterfall gives more pleasure than alternative uses of the money. That is, the sense that a price is unreasonably high causes displeasure beyond the loss of money.
Let's here what a mainstream economist (Robert Hall) has to say about that
But I will say that I did once try to convince Bob Hall at a restaurant in Palo Alto not to order wine: the fact that the wine would cost four times retail would, I said, depress me and lower my utility. Even though I wasn't paying for it, I would still feel as though I was being cheated, and as I drank the wine that would depress me more than the wine would please me.
He had two responses: (i) "You really are crazy." (ii) "Think, instead, that it's coming straight out of the Hoover Institution endowment, and order two bottles."
Friday, August 17, 2007
REPO Man meats Spinal Tap.
An important aspect of the subprime derivatives meltdown is AAA ratings of senior tranches of securities repackaging securities repackaging liars loans balloon mortgages and such like. The problem (aside from dishonesty on the part of Moody's and Standard and Poor's which are, when I think of it very odd names for firms which are supposed to keep you from getting poor by being immune from market sentiment) is that credit ratings are based on historical performance and thus suggest that being a turkey is a low risk occupation (until thanksgiving). This makes it possible for people to lose their shirts guessing that markets are inefficient, when prices are based on possible events which haven't happened yet (as noted by Milton Friedman of course).
This reminds me of something I once heard about lumbar punctures (spinal taps) while my brother was graduating from medical school. The class speaker contrasted the bedside manner of two medical students who were about to perform a spinal tap on a patient.
student 1 says "Hi how are you. Are you nervous ? Don't feel bad, I'm nervous too. I've never done one of these before"
student 2 says "I have NEVER had any complications with a lumbar puncture"
Student 2 clearly was in the wrong field as he could have made a ton of money running a hedge fund.
update: The typo (one of the typos?) in my title is not a type. It is a salute to the director of "Spinal Tap" Rob "meathead" Reiner.
An important aspect of the subprime derivatives meltdown is AAA ratings of senior tranches of securities repackaging securities repackaging liars loans balloon mortgages and such like. The problem (aside from dishonesty on the part of Moody's and Standard and Poor's which are, when I think of it very odd names for firms which are supposed to keep you from getting poor by being immune from market sentiment) is that credit ratings are based on historical performance and thus suggest that being a turkey is a low risk occupation (until thanksgiving). This makes it possible for people to lose their shirts guessing that markets are inefficient, when prices are based on possible events which haven't happened yet (as noted by Milton Friedman of course).
This reminds me of something I once heard about lumbar punctures (spinal taps) while my brother was graduating from medical school. The class speaker contrasted the bedside manner of two medical students who were about to perform a spinal tap on a patient.
student 1 says "Hi how are you. Are you nervous ? Don't feel bad, I'm nervous too. I've never done one of these before"
student 2 says "I have NEVER had any complications with a lumbar puncture"
Student 2 clearly was in the wrong field as he could have made a ton of money running a hedge fund.
update: The typo (one of the typos?) in my title is not a type. It is a salute to the director of "Spinal Tap" Rob "meathead" Reiner.
Thursday, August 16, 2007
long comment on this Very excellent post by Jonathan Schwarz
I know it is frustrating that people who make false claims on matters of documented fact are treated as experts while you, who describe the actual facts, are therefore marginalized. Still I am sure the truth will come out in the end (don't know how many will die in the mean time but fewer than would die if you gave up).
I would add one point. You note that 1441 clearly did not authorize an invasion based on a decision by the US (or any member country) that Saddam Hussein was violating it. I think you should also stress that Saddam Hussein absolutely obeyed every imperative in resolution 1441. The widespread guess that Iraq was in material breach was based on the false guess that Iraq had hidden chemical and/or biological weapons and/or chemical, biological, and/or nuclear weapons programs. When we discoverd that Iraq had no such weapons or programs we discovered there was no way to argue that the invasion was allowed under international law.
The "I honestly thought that they were doing something forbidden" standard is clearly unacceptable. Anyone can claim to believe anything. If George Bush's violation of international law can only be proven by reading his mind, any violation of international law can never be demonstrated and the whole business is pointless.
Cohen must know this. The fact you note are all well known by anyone who read the papers at the time (except maybe the infiltration of the inspectors and use to try to kill or overthrow Saddam Hussein). No one can seriously argue that the invasion wasn't a violation of international law. Cohen is clearly dishonest.
I know it is frustrating that people who make false claims on matters of documented fact are treated as experts while you, who describe the actual facts, are therefore marginalized. Still I am sure the truth will come out in the end (don't know how many will die in the mean time but fewer than would die if you gave up).
I would add one point. You note that 1441 clearly did not authorize an invasion based on a decision by the US (or any member country) that Saddam Hussein was violating it. I think you should also stress that Saddam Hussein absolutely obeyed every imperative in resolution 1441. The widespread guess that Iraq was in material breach was based on the false guess that Iraq had hidden chemical and/or biological weapons and/or chemical, biological, and/or nuclear weapons programs. When we discoverd that Iraq had no such weapons or programs we discovered there was no way to argue that the invasion was allowed under international law.
The "I honestly thought that they were doing something forbidden" standard is clearly unacceptable. Anyone can claim to believe anything. If George Bush's violation of international law can only be proven by reading his mind, any violation of international law can never be demonstrated and the whole business is pointless.
Cohen must know this. The fact you note are all well known by anyone who read the papers at the time (except maybe the infiltration of the inspectors and use to try to kill or overthrow Saddam Hussein). No one can seriously argue that the invasion wasn't a violation of international law. Cohen is clearly dishonest.
I call on my fellow Peanut Oil drenched dirty Ghoulies to drown NotStephenColbert in Ghoulash.
In spite of my Austrian name, I am, in fact ethnically Magyar (I mean plurality Magyar not absolute majority Magyar). I was delighted to find that my very own ethnic group was mentioned on TV (even in the context of Peanut Oil in which I have never ever bathed).
Not totally a thrill that my ethnic identity (partial and mixed) is so bland that it is safe to make fun of us [on the air] (I mean in the cables or whatever). However I do recall a trace of Magyar pride in my grandmother (born Sipos Erzebet) who suggested that perhaps her husband was descended from a Magyar forced by Maria Teresa to take a Germanic name. And this was a woman voted for Adlai Stevenson every chance she got (actually I'm not sure she didn't write his name in in 1972 considering the fact that he was dead a minor problem given the advantages of being neither Richard Nixon or a DFH (OK I know she didn't but it would have been funny if she did)).
update: don't Kphech I just corrected the spelling
In spite of my Austrian name, I am, in fact ethnically Magyar (I mean plurality Magyar not absolute majority Magyar). I was delighted to find that my very own ethnic group was mentioned on TV (even in the context of Peanut Oil in which I have never ever bathed).
Not totally a thrill that my ethnic identity (partial and mixed) is so bland that it is safe to make fun of us [on the air] (I mean in the cables or whatever). However I do recall a trace of Magyar pride in my grandmother (born Sipos Erzebet) who suggested that perhaps her husband was descended from a Magyar forced by Maria Teresa to take a Germanic name. And this was a woman voted for Adlai Stevenson every chance she got (actually I'm not sure she didn't write his name in in 1972 considering the fact that he was dead a minor problem given the advantages of being neither Richard Nixon or a DFH (OK I know she didn't but it would have been funny if she did)).
update: don't Kphech I just corrected the spelling
Leila Fadel of McClatchy is singled out for praise by Brad DeLong and Matthew Yglesias.
I have a problem. I think she pushed back against U.S. officials' spin by downplaying the decline in the number of bodies found in Baghdad. I wrote a long comment at Brad's blog which I cut and paste here.
Hmmmm I quote pargraph 27 ! (If I counted correctly (IICC)) of Fadel's article
"One bright spot has been the reduction in the number of bodies found on the streets, considered a sign of sectarian violence. That number was 44 percent lower in July, compared to December. In July, the average body count per day was 18.6, compared with 33.2 in December, two months before the surge."
The decline is on the order of total deaths from car bombings in Baghdad. The U.S. officieal based their bogus claim of a 50% decline in one of two ways -- either they counted only bodies found and not bombing deaths or they cherry picked two convenient brief intervals one pre surge with high bombing deaths and one post surge with low deaths.
Fadel did something similar. She stresses deaths from explosions and briefly mentions the decline in night time executions in paragraph 27 (IICC). The decline in bodies found is on the order of total deaths from explosions, so by McClatchey calculations civilian deaths decline by about one third not one half.
I think that she should have presented the McClatchy numbers immediately after quoting and challenging the U.S. officials' claim, Now the December rate of night time killings was a huge increase over say last year so one could interpret the decline as reversion to the mean (or completion of ethnic cleansing as Fadel quite reasonably hypothesises).
Still such a large difference in the rate of [execution style*] killing should have been mentioned before paragraph 27 (IICC).
* in my comment at Brad's Blog I sloppily left out the qualifier in []
I have a problem. I think she pushed back against U.S. officials' spin by downplaying the decline in the number of bodies found in Baghdad. I wrote a long comment at Brad's blog which I cut and paste here.
Hmmmm I quote pargraph 27 ! (If I counted correctly (IICC)) of Fadel's article
"One bright spot has been the reduction in the number of bodies found on the streets, considered a sign of sectarian violence. That number was 44 percent lower in July, compared to December. In July, the average body count per day was 18.6, compared with 33.2 in December, two months before the surge."
The decline is on the order of total deaths from car bombings in Baghdad. The U.S. officieal based their bogus claim of a 50% decline in one of two ways -- either they counted only bodies found and not bombing deaths or they cherry picked two convenient brief intervals one pre surge with high bombing deaths and one post surge with low deaths.
Fadel did something similar. She stresses deaths from explosions and briefly mentions the decline in night time executions in paragraph 27 (IICC). The decline in bodies found is on the order of total deaths from explosions, so by McClatchey calculations civilian deaths decline by about one third not one half.
I think that she should have presented the McClatchy numbers immediately after quoting and challenging the U.S. officials' claim, Now the December rate of night time killings was a huge increase over say last year so one could interpret the decline as reversion to the mean (or completion of ethnic cleansing as Fadel quite reasonably hypothesises).
Still such a large difference in the rate of [execution style*] killing should have been mentioned before paragraph 27 (IICC).
* in my comment at Brad's Blog I sloppily left out the qualifier in []
Wednesday, August 15, 2007
One Third of the way their
Terry Moran of ABC has gotten a brain
"MORAN : Divisiveness! Anger! Ruthlessness! That's what you call 'Rovian politics.'
Now if his winbgnut blogger brother
and congressman Jerry get brains
I can retire this photograph.
[IMG]http://img.photobucket.com/albums/v296/rjw88/get_a_brain_morans.jpg[/IMG]
Terry Moran of ABC has gotten a brain
"MORAN : Divisiveness! Anger! Ruthlessness! That's what you call 'Rovian politics.'
Now if his winbgnut blogger brother
and congressman Jerry get brains
I can retire this photograph.
[IMG]http://img.photobucket.com/albums/v296/rjw88/get_a_brain_morans.jpg[/IMG]
Blood from a Stone II
TPMmuckraker informs
my bold.
Tehre is a basic statistical problem here. The NYPD is attempting to analyze the phenomenon of USA grown Islamic terror with essentially no data on USA grown Islamic terror. This is like the NSA "data mining" effort to determine patterns of electronic communication typical of Islamic terrorists in the USA with essentially no data on Islamic terrorists in the USA (hence the II in my title).
This is really very simple -- no statistical technique can enable you to understand a phenomenon without data on the phenomenon. A huge pile of other data which you guess might be related is as useful as your guess. Data analysis can't add anything to the original guess. The fact that computers crunch numbers according to sophisticated algorithms can't make data on terrorist appear without data on terrorism.
A few USA grown Islamic radicals have fantasized about acts of terror. It is not easy to draw reliable inference from such a small sample. Also they were all comically inept. The USA may be incubating competent Islamic terrorists but there is no information whatsoever on their characteristics or experiences.
I think that people are irrationally impressed by analysis and especially analysis of massive amount of data by a computer. If the data do not include the variable of interest -- US based or US bred Islamic terrorists, the analysis can not add to the uniformed guesses behind the algorithms.
update:
Spencer Ackerman read the report so I don't have to. He finds that "Contrary to its billing, the report doesn't identify actual Muslim population clusters in the U.S. that incline toward terrorism." and that "NYPD intelligence analysts Arvin Bhatt and Mitch Silber try to construct a model, based on prominent European Muslim and U.S. Muslim terrorists and would-be terrorists, that isolates patterns indicating radicalization." That is to say that Bhatt and Silber looked for patterns in the tiny amount of relevant data. Unsurprisingly they found nothing useful and concede
Which shows that they are admirably honest. Given the size of their data set there is no way Bhatt and Silber could have obtained results worth a Baht.
update: Wow this got a link.
TPMmuckraker informs
As previewed by ABC News, the report warns of over two dozen population "clusters" in the northeastern U.S. "on a path" to terrorism.
In a report to be made public today, New York City Police Commissioner Ray Kelly concludes the 9/ll attacks were an "anomaly" and the most serious terror threat to the country comes from clusters of "unremarkable" individuals who are on a path that could lead to homegrown terror.
The report by the NYPD intelligence division, "Radicalization in the West and the Homegrown Threat," plots "the trajectory of radicalization" and tracks the path of a non-radicalized individual to an individual with the willingness to commit an act of terror, multiple sources say.
"The threat is real; this is not some bogey man we are creating here. There are individuals who are proselytizing, inciting angry young men to go down this path," said [Rand Corporation terrorism expert Brian] Jenkins, who reviewed and contributed to the NYPD report.
It's not entirely clear what a "cluster" means here. ABC reports that the NYPD identifies specific "mosques, bookstores, cafes, prisons and flop houses" as incubators of jihadism, but the 90-page report seems to attempt to craft a psychological and sociological understanding of the conditions that may set American Muslims on a radical path.
my bold.
Tehre is a basic statistical problem here. The NYPD is attempting to analyze the phenomenon of USA grown Islamic terror with essentially no data on USA grown Islamic terror. This is like the NSA "data mining" effort to determine patterns of electronic communication typical of Islamic terrorists in the USA with essentially no data on Islamic terrorists in the USA (hence the II in my title).
This is really very simple -- no statistical technique can enable you to understand a phenomenon without data on the phenomenon. A huge pile of other data which you guess might be related is as useful as your guess. Data analysis can't add anything to the original guess. The fact that computers crunch numbers according to sophisticated algorithms can't make data on terrorist appear without data on terrorism.
A few USA grown Islamic radicals have fantasized about acts of terror. It is not easy to draw reliable inference from such a small sample. Also they were all comically inept. The USA may be incubating competent Islamic terrorists but there is no information whatsoever on their characteristics or experiences.
I think that people are irrationally impressed by analysis and especially analysis of massive amount of data by a computer. If the data do not include the variable of interest -- US based or US bred Islamic terrorists, the analysis can not add to the uniformed guesses behind the algorithms.
update:
Spencer Ackerman read the report so I don't have to. He finds that "Contrary to its billing, the report doesn't identify actual Muslim population clusters in the U.S. that incline toward terrorism." and that "NYPD intelligence analysts Arvin Bhatt and Mitch Silber try to construct a model, based on prominent European Muslim and U.S. Muslim terrorists and would-be terrorists, that isolates patterns indicating radicalization." That is to say that Bhatt and Silber looked for patterns in the tiny amount of relevant data. Unsurprisingly they found nothing useful and concede
There is no useful profile to assist law enforcement or intelligence to predict who will follow this trajectory of radicalization. Rather, the individuals who take this course will begin as "unremarkable" from various walks of life.
Which shows that they are admirably honest. Given the size of their data set there is no way Bhatt and Silber could have obtained results worth a Baht.
update: Wow this got a link.
Presidential Polling Perplexities
Who is more electable Hillary Clinton or Barack Obama ?
In national polls Obama matches up better against Republicans.
However, there are a large number of state level polls with awful news for Obama. No one seems to notice because, even though the sample size from pooled state polls is huge compared to the sample size of national polls. I found out late because poll reporting sites tend to demand money for state level polls.
I am very alarmed by some SurveyUSA polls like this horror (from May 2) which shows Giuliani beating Obama in Massachusetts !!?!??!
This (again May 2 may have been a bad day for Barack) from Virginia
This 10% behind in deep purple New Mexico
thin 1% lead in must win California
5% in must win Iowa
Giuliani by 6 in Minnesota
Well you get the picture. All from May 2 (a very bad day for Barack).
IIRC this was the peak of Giuliani mania but Clinton polls much better against Giuliani in all of these states. These are all surveyUSA polls but each has a separate sample.
Who is more electable Hillary Clinton or Barack Obama ?
In national polls Obama matches up better against Republicans.
However, there are a large number of state level polls with awful news for Obama. No one seems to notice because, even though the sample size from pooled state polls is huge compared to the sample size of national polls. I found out late because poll reporting sites tend to demand money for state level polls.
I am very alarmed by some SurveyUSA polls like this horror (from May 2) which shows Giuliani beating Obama in Massachusetts !!?!??!
This (again May 2 may have been a bad day for Barack) from Virginia
This 10% behind in deep purple New Mexico
thin 1% lead in must win California
5% in must win Iowa
Giuliani by 6 in Minnesota
Well you get the picture. All from May 2 (a very bad day for Barack).
IIRC this was the peak of Giuliani mania but Clinton polls much better against Giuliani in all of these states. These are all surveyUSA polls but each has a separate sample.
Monday, August 13, 2007
Italian Arms smugglers supplying the Iraqi interior ministry
If this isn't fantapolitica, what is ?
It seems that Mr Razzi is a given to understatement. I'd say totally weird not just "strange"
Interestingly, La Repubblica doesn't seem to have anything up on Bettinotti (I searched for Razzi and found a lot of articles about rockets). Neither does il corriere della sera.
I think fantapolitica scooped them :-)
If this isn't fantapolitica, what is ?
Operation Parabellum, the investigation led by Dario Razzi, anti-Mafia prosecutor in this central Italian city, began in 2005 as a routine investigation into drug trafficking by organized-crime figures, branched out into an inquiry into arms dealing with Libya, and then widened to Iraq.
Court documents obtained by the AP show that Razzi's break came early last year when police monitoring one of the drug suspects covertly opened his luggage as he left on a flight to Libya. Instead of the expected drugs, they found helmets, bulletproof vests and the weapons catalog.
Tapping telephones, monitoring e-mails, Razzi's investigators followed the trail to a group of Italian businessmen, otherwise unrelated to the drug probe, who were working to sell arms to Libya and, by late 2006, to Iraq as well, through offshore companies they set up in Malta and Cyprus.
Four Italians have been arrested and are awaiting court indictment for allegedly creating a criminal association and alleged arms trafficking — trading in weapons without a government license. A fifth Italian is being sought in Africa. In addition, 13 other Italians were arrested on drug charges.
In the documents, Razzi describes it as "strange" that the U.S.-supported Iraqi government would seek such weapons via the black market.
Investigators say the prospect of an Iraq deal was raised last November, when an Iraqi-owned trading firm e-mailed Massimo Bettinotti, 39, owner of the Malta-based MIR Ltd., about whether MIR could supply 100,000 AK-47 assault rifles and 10,000 machine guns "to the Iraqi Interior Ministry," adding that "this deal is approved by America and Iraq."
It seems that Mr Razzi is a given to understatement. I'd say totally weird not just "strange"
Interestingly, La Repubblica doesn't seem to have anything up on Bettinotti (I searched for Razzi and found a lot of articles about rockets). Neither does il corriere della sera.
I think fantapolitica scooped them :-)
More Kelp
It seems that there are kelp forests right next to the driest desert on planet earth in Northern Chile.
I go back to my view that harvesting from a climax (kelp) forest implies increased carbon sequestration. I would guess that dragging kelp a few miles from the coast to the desert would imply a more or less permanent burial of the Carbon. I would also guess that sustainable harvesting of kelp would have moderate one off effect on the amount of carbon in the kelp forest where growth is limited by kelp shading kelp.
If so a huge flow of carbon out of the biosphere and into the dead dry desert could be managed for what I would guess is the modest cost of hauling the waste from agar production a few miles.
Kelp is currently harvested to extract agar (technically alginate) (beloved by molecular biologists but mostly used to make Ice cream slimy and I think the main ingredient in McDonald's thick shakes which contain no milk). I assume this leaves a lot of cellulose and other junk which is left to rot (an agar yield of over 50% of dry weight is big news kelp is, of course, wet being 80 to 90% water). It if were shipped and buried in the desert to rot over millenia that would make the world a cooler place.
It seems that there are kelp forests right next to the driest desert on planet earth in Northern Chile.
I go back to my view that harvesting from a climax (kelp) forest implies increased carbon sequestration. I would guess that dragging kelp a few miles from the coast to the desert would imply a more or less permanent burial of the Carbon. I would also guess that sustainable harvesting of kelp would have moderate one off effect on the amount of carbon in the kelp forest where growth is limited by kelp shading kelp.
If so a huge flow of carbon out of the biosphere and into the dead dry desert could be managed for what I would guess is the modest cost of hauling the waste from agar production a few miles.
Kelp is currently harvested to extract agar (technically alginate) (beloved by molecular biologists but mostly used to make Ice cream slimy and I think the main ingredient in McDonald's thick shakes which contain no milk). I assume this leaves a lot of cellulose and other junk which is left to rot (an agar yield of over 50% of dry weight is big news kelp is, of course, wet being 80 to 90% water). It if were shipped and buried in the desert to rot over millenia that would make the world a cooler place.
Kelp Range
What with concern about deforestation in Siberia and Amazonia (via Mark Thoma) I think of drowning my sorrows in the cool Pacific and viewing some Kelp forests.
[IMG]http://img.photobucket.com/albums/v296/rjw88/kelp_forest_15_4.jpg[/IMG]
Kelp fixes Carbon fast.
The problem is that Kelp only grows in cool water. It seems that the limiting factor is the extreme vulnerability of kelp gametocytes (very very roughly like pollen for flowering plants) to warm temperatures. Kelp grows in warm water, but it doesn't reproduce.
I think
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Journal Article Printable view
Marine Biology
Effects of ocean temperature on the southern range limits of two understory kelps, Pterygophora californica and Eisenia arborea , at multiple life-stages
Journal Marine Biology
Publisher Springer Berlin / Heidelberg
ISSN 0025-3162 (Print) 1432-1793 (Online)
Issue Volume 151, Number 5 / June, 2007
Category Research Article
DOI 10.1007/s00227-007-0630-3
Pages 1941-1949
Subject Collection Biomedical and Life Sciences
SpringerLink Date Tuesday, February 13, 2007
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Research Article
Effects of ocean temperature on the southern range limits of two understory kelps, Pterygophora californica and Eisenia arborea, at multiple life-stages
Paul G. Matsonand Matthew S. Edwards, the authors of this article might have a secret dream that some day kelp forests will be extended by cool kelp nursuries. I bet they also have thought about the economics of kelpthonol. However limited by the restrictions of scientific seriousness their abstract (which I steal in full) only says
What with concern about deforestation in Siberia and Amazonia (via Mark Thoma) I think of drowning my sorrows in the cool Pacific and viewing some Kelp forests.
[IMG]http://img.photobucket.com/albums/v296/rjw88/kelp_forest_15_4.jpg[/IMG]
Kelp fixes Carbon fast.
The problem is that Kelp only grows in cool water. It seems that the limiting factor is the extreme vulnerability of kelp gametocytes (very very roughly like pollen for flowering plants) to warm temperatures. Kelp grows in warm water, but it doesn't reproduce.
I think
* Content Types
o All
o Publications
o Journals
o Book Series
o Books
o Reference Works
* Subject Collections
o Architecture and Design
o Behavioral Science
o Biomedical and Life Sciences
o Business and Economics
o Chemistry and Materials Science
o Computer Science
o Earth and Environmental Science
o Engineering
o Humanities, Social Sciences and Law
o Mathematics and Statistics
o Medicine
o Physics and Astronomy
o Professional Computing and Web Design
Journal Article Printable view
Marine Biology
Effects of ocean temperature on the southern range limits of two understory kelps, Pterygophora californica and Eisenia arborea , at multiple life-stages
Journal Marine Biology
Publisher Springer Berlin / Heidelberg
ISSN 0025-3162 (Print) 1432-1793 (Online)
Issue Volume 151, Number 5 / June, 2007
Category Research Article
DOI 10.1007/s00227-007-0630-3
Pages 1941-1949
Subject Collection Biomedical and Life Sciences
SpringerLink Date Tuesday, February 13, 2007
Add to marked items
Add to shopping cart
Add to saved items
Request Permissions
Recommend this article
Research Article
Effects of ocean temperature on the southern range limits of two understory kelps, Pterygophora californica and Eisenia arborea, at multiple life-stages
Paul G. Matsonand Matthew S. Edwards, the authors of this article might have a secret dream that some day kelp forests will be extended by cool kelp nursuries. I bet they also have thought about the economics of kelpthonol. However limited by the restrictions of scientific seriousness their abstract (which I steal in full) only says
Abstract Environmental factors have long been shown to influence species distributions, with range limits often resulting from environmental stressors exceeding organism tolerances. However, these abiotic factors may differentially affect species with multiple life-history stages. Between September 2004 and January 2006, the roles of temperature and nutrient availability in explaining the southern distributions of two understory kelps, Pterygophora californica and Eisenia arborea (Phaeophyceae, Laminariales), were investigated along the coast of California, USA and the Baja California Peninsula, Mexico, by limiting either: (a) tissue nitrogen uptake and storage by adult sporophytes during periods of elevated temperature, and/or (b) production of embryonic sporophytes by microscopic gametophytes. Results suggest that while adult sporophytes of both species are tolerant of high temperatures and low nutrients, reproduction by their microscopic stages is not. Specifically, while E. arborea produced embryonic sporophytes at both 12 and 18°C, temperatures commonly observed throughout the southern portion of its range, P. californica produced sporophytes at 12 but not at 18°C. As a result, it appears that the southern distribution of P. californica, which ends in northern Baja California, Mexico, may be limited by temperature acting on its microscopic stages. In contrast, the ability of E. arborea’s microscopic and adult stages to tolerate elevated temperatures allows it to persist in the warmer southern waters of Baja California, as well as to the north along the California coast where both species co-occur.
Major C02 Event
An area of Siberian Taiga roughly the size of Rumenia has turned into ashes smoke and C02 so far this summer (no link and it's in Italian anyway). Most of the fires were set by arsonists. It appears that the main aim is to harvest timber without cutting through underbrush (see also Indonesia). Referring to other latitudes, I have stressed the fact that trees grow back and resequester carbon. I fear that this doesn't happen so fast in Siberia which is rather cold and has short growing seasons.
An out of date image shows smoke covering most of lake Baikal which is very large and very long from North to South.
[IMG]http://img.photobucket.com/albums/v296/rjw88/siberfire.jpg[/IMG]
There is no way to police Siberia which is also rather large. However, the timber trade could, in principle, be regulated if there were any respect for the rule of law in Russia or China (the destination). Of course it is more realistic to hope that reforestation will be accelerated by fertilization with flying pig guano.
An area of Siberian Taiga roughly the size of Rumenia has turned into ashes smoke and C02 so far this summer (no link and it's in Italian anyway). Most of the fires were set by arsonists. It appears that the main aim is to harvest timber without cutting through underbrush (see also Indonesia). Referring to other latitudes, I have stressed the fact that trees grow back and resequester carbon. I fear that this doesn't happen so fast in Siberia which is rather cold and has short growing seasons.
An out of date image shows smoke covering most of lake Baikal which is very large and very long from North to South.
[IMG]http://img.photobucket.com/albums/v296/rjw88/siberfire.jpg[/IMG]
Original Caption Released with Image:
During the 2003 fire season, blazes in the taiga forests of Eastern Siberia were part of a vast network of fires across Siberia and the Russian Far East, northeast China and northern Mongolia. Fires in Eastern Siberia have been increasing in recent years, and the 2003 spring and summer seasons are the most extensive recorded in over 100 years. Overall, the Russian Federation experienced a record-setting fire year, with over 55 million acres burnt by early August, according to the Global Fire Monitoring Center . These data products from the Multi-angle Imaging SpectroRadiometer (MISR) illustrate the extent and height of smoke from numerous fires in the Lake Baikal region on June 11, 2003.
There is no way to police Siberia which is also rather large. However, the timber trade could, in principle, be regulated if there were any respect for the rule of law in Russia or China (the destination). Of course it is more realistic to hope that reforestation will be accelerated by fertilization with flying pig guano.
Sunday, August 12, 2007
Robert's Rules
Mark Kleiman writes "the conventions of reportorial objectivity give a big advantage to liars, who get their lies reported on equal terms with the truth."
Kevin Drum asks how reporting could be improved.
I answer at length with a vehemence matched only by my ignorance
I's say "Insert contrary evidence in their own voice whenever they decide someone has crossed the line" with two restrictions and a requirement -- The contrary evidence has to be based on a solid citation -- an official staistic, a well sourced news story, something clear (often a contradictory statement by the same person will do). The solid evidence has to contradict the claim. A failure to note available proof that the claim is a lie should be censured (as it is by mediamatters but by the journalistic community)
Contrary evidence in the reporters own voice should not be presented if it is relevant but does not contradict the claim of the original source (that would be nit picklering). When there is a legitimate debate (then the reporter should find someone to quote). I think the valid objection to the reporting of Nedra Pickler is that she debated candidates by presenting relevant contrary but not contradictory evidence. The convention is that this is done only to indicate a lie without using the word, thus her reporting was improper.
The restrictions I propose are not too restrictive to mean I am not proposing a major change in journalistic practice. If reporters always noted objective evidence which contradicts false claims, Karl Rove would have been out of business decades ago.
They are not subject to abuse if reporters are considered to have erred if they can not prove claims made in their own voice or can not convincingly argue that they show the public figure lied when they are challenged on that point.
I'd say contradictory evidence not the word lie when one could use the word lie and win a libel suit without claiming that the plaintiff is a public figure. This is very restrictive and would not give reporters the power to present opinions as fact, It would totally destroy the Republican slime machine. They assume that if they are caught in a lie, the costs will be tiny because it might or might not be noted and, if noted, will not be publicized as much as their claim. If it is standard practice to indicate that the claim is a lie by presenting available truth whenever the claim is mentioned, the costs will be high.
Also what about interviews and questions in press conferences. I would say that when someone is caught lying, the press shouldn't let it go until they confess. Two or three press conferences in which all questions address one demonstrated lie in an earlier press conference would change the way Washington works. The principle is that lies are unacceptable. The other principle is that reporters not use the not libel unless known to be false or with reckless disregard for the truth if they accuse someone of lying and don't stop until the person confesses.
Mark Kleiman writes "the conventions of reportorial objectivity give a big advantage to liars, who get their lies reported on equal terms with the truth."
Kevin Drum asks how reporting could be improved.
In theory, everyone agrees with this. The problem is, I haven't yet come across a single person who's proposed a workable solution. Who gets to decide whether an issue is still debatable? The reporter? But most reporters aren't subject matter experts. Would you trust the average reporter to take on this role on a daily basis? And even if we do believe reporters should be routine arbiters of the truth, how exactly should they express this? Flatly call things lies? Insert contrary evidence in their own voice whenever they decide someone has crossed the line? Something more subtle?
I answer at length with a vehemence matched only by my ignorance
I's say "Insert contrary evidence in their own voice whenever they decide someone has crossed the line" with two restrictions and a requirement -- The contrary evidence has to be based on a solid citation -- an official staistic, a well sourced news story, something clear (often a contradictory statement by the same person will do). The solid evidence has to contradict the claim. A failure to note available proof that the claim is a lie should be censured (as it is by mediamatters but by the journalistic community)
Contrary evidence in the reporters own voice should not be presented if it is relevant but does not contradict the claim of the original source (that would be nit picklering). When there is a legitimate debate (then the reporter should find someone to quote). I think the valid objection to the reporting of Nedra Pickler is that she debated candidates by presenting relevant contrary but not contradictory evidence. The convention is that this is done only to indicate a lie without using the word, thus her reporting was improper.
The restrictions I propose are not too restrictive to mean I am not proposing a major change in journalistic practice. If reporters always noted objective evidence which contradicts false claims, Karl Rove would have been out of business decades ago.
They are not subject to abuse if reporters are considered to have erred if they can not prove claims made in their own voice or can not convincingly argue that they show the public figure lied when they are challenged on that point.
I'd say contradictory evidence not the word lie when one could use the word lie and win a libel suit without claiming that the plaintiff is a public figure. This is very restrictive and would not give reporters the power to present opinions as fact, It would totally destroy the Republican slime machine. They assume that if they are caught in a lie, the costs will be tiny because it might or might not be noted and, if noted, will not be publicized as much as their claim. If it is standard practice to indicate that the claim is a lie by presenting available truth whenever the claim is mentioned, the costs will be high.
Also what about interviews and questions in press conferences. I would say that when someone is caught lying, the press shouldn't let it go until they confess. Two or three press conferences in which all questions address one demonstrated lie in an earlier press conference would change the way Washington works. The principle is that lies are unacceptable. The other principle is that reporters not use the not libel unless known to be false or with reckless disregard for the truth if they accuse someone of lying and don't stop until the person confesses.
Saturday, August 11, 2007
More Corn
A record corn harvest in the USA partly due to genetically modified varieties
Kenneth G. Cassman and Adam J. Liska in the debut issue of a new academic journal, Biofuels, Bioproducts, and Biorefining (warning pdf) write
As a biotech enthusiast and genomics skeptic, I couldn't be more pleased.
via Mark Thoma
A record corn harvest in the USA partly due to genetically modified varieties
A Financial Times report on the new numbers suggests that bleeding-edge varieties of genetically modified corn partially explain the yield-per-acre gains. "U.S. farmers have been using record levels of new-generation seeds from suppliers such as Monsanto which are more resistant to drought and pests, boosting yields."
Kenneth G. Cassman and Adam J. Liska in the debut issue of a new academic journal, Biofuels, Bioproducts, and Biorefining (warning pdf) write
U.S. maize yield trends since the mid-1960s have been supported by a powerful train of research and technology development. New breeding methods, expansion of irrigated area, soil testing and balanced fertilization, conservation tillage, and integrated pest management were the driving forces of innovation in the first 30 years of this time series. Insect resistant "Bt" maize, which is a transgenic crop variety produced by genetic engineering (commonly called a GMO), was introduced in the mid-1990s. However, despite investment of hundreds of millions of dollars in genomics and crop genetic engineering by both the public and private sectors since then, there has been little additional impact of biotechnology since Bt maize other than incorporation of herbicide resistance through the "Roundup Ready" trait, which also was discovered before the advent of genomics...
As a biotech enthusiast and genomics skeptic, I couldn't be more pleased.
via Mark Thoma
Repo Man
There is much concern about the lack of liquidity of mortgage based bonds, that is, the endogenous thin-ness of markets for such securities. It is certainly true that most concerned people have no idea that this is the problem. I think it might be useful to explain one of the meanings of the abbreviation "Repo". I don't really mean reposession as in repo man although foreclosure of mortgages is the basis of the financial storm. I refer to "repo accounts" opened by hedge funds at investment banks.
Hedge funds manage to obtain immense leverage without any credit rating at all. I think they still do it this way. They open "repo" accounts at investment banks. In such an account the hedge fund is notionally long some securities (that is the bank owes the fund the value of those securities) and short other securities (the fund owes the bank the value of those securities). Part of the deal is that the amount the bank owes the fund must always be positive. Thus the bank doesn't have to worry about the fund defaulting, going bankrupt, being some hackers with a pc and a modem. The bank, in contrast, has deep pockets (lots of money) so it can certainly pay the fund what is owed if the fund or the bank decides to close the account. Once upon a time, given the fact that prices change fast and suddenly selling a bunch of assets drives down their price (that is in bankerspeak assets are not infinitely liquid) banks required that the net value of the repo account (amount the bank owes the fund that is value of the assets the bank owes minus value of the assets the fund owes the bank) was at least 2% of the gross long position (total value of the assets which the bank owes the fund). The bank closes the fund sells and buys assets and transfers the resulting money to the fund if the fund doesn't respect this limit. If the net value of the repo account to the fund falls below 2% of the gross long position, the fund must transfer highly liquid safe assets (basically cash) into the account.
The requirement that repo accounts have positive value (plus 2%) is necessary given the fact that the bank has no way of knowing the financial soundness of the hedge fund (the fund will typically have risky accounts open at many banks). It also reates financial fragility. A decline in the value of assets for which the fund is long may force it to reduce its gross long positions, that is liquidate, that is sell. This creates positive feedback and is dangerous.
When there is a risk of such an event, markets can freeze up, become thin, cease to be liquid. That is no one wants to buy or sell the assets. It is very important that the problem is not just that people have decided that the value of the assets is much less than they thought. In that case, the price just falls and trading continues. The problem is that the asset price becomes very unpredictable, because it depends on possible distress selling by hedge funds. No one wants to buy because the asset value could tank, no one wants to sell because it could recover.
Hedge funds manage to make huge returns without huge risk by hedging, that is going long and short assets with highly correlated returns so the variance of the value of their repo account is much less than the variance of the value of the long position (and of the short position). They can't, even in principle, hedge against the risk that they will have to liquidate (unwind) their account. The theorists who proved that hedge funds are not risky (Black and Scholes) assumed that the hedge fund's transactions have no effects on prices (Scholes was a founder of Long Term Capital Management and lost most of his shirt).
There is another very deadly problem with REPO accounts when people stop buying and selling assets. The whole scheme depends on knowing the current prices of the assets. When trading volume is high one just looks at the current transaction price. When trading stops, one must rely on the list price, the price at which investment banks offer to buy or sell the asset.
Ah investment banks. The same entities which are betting against the hedge funds in the REPO account. If no one wants to buy an asset, the investment asset can say it is worth very little. If no one wants to sell it the bank can say it is worth a lot.
When markets freeze up because hedge funds might have to close REPO accounts, the banks can decide how much they owe the hedge fund. This would tend to be zero not 2% of the gross long position wouldn't it ? Thus, when people fear that the hedge fund will have to close an account and drive down the price of assets for which it is long and up the price of assets for which it is short, the investment bank can make money by listing made up prices so that this happens.
Nothing about worsening economic prospects, increasing fundamental risk or general badness elsewhere is required. Long Term Capital Management (LTCM) was driven under principally by an increase in the value of options to buy European stock market index funds. Such an increase would normally correspond to good economic news about European profits. In this case it went this way. LTCM bet that such options were overpriced and sold short. They were in trouble because of the Russian default. People thought they might have to liquidate their short position (buy options to cover their promise to pay banks the value of the options) this drove the price of the options up. More importantly, the uncertainty about what LTCM would have to do prevented people from trading. This allowed investment banks to offer to buy the options for a huge price without actually having to fork over the money. This forced LTCM to liquidate, transferring the options at the huge price to the banks.
The lesson ? Markets don't freeze up because of bad news, they freeze up due to risk. Possible future forced closure of hedge funds' REPO accounts creates such risk. When markets freeze up investment banks can make the current price whatever they want and force hedge funds to close their REPO accounts. This can happen whenever there is a shock of any kind. It does not require bad news.
There is much concern about the lack of liquidity of mortgage based bonds, that is, the endogenous thin-ness of markets for such securities. It is certainly true that most concerned people have no idea that this is the problem. I think it might be useful to explain one of the meanings of the abbreviation "Repo". I don't really mean reposession as in repo man although foreclosure of mortgages is the basis of the financial storm. I refer to "repo accounts" opened by hedge funds at investment banks.
Hedge funds manage to obtain immense leverage without any credit rating at all. I think they still do it this way. They open "repo" accounts at investment banks. In such an account the hedge fund is notionally long some securities (that is the bank owes the fund the value of those securities) and short other securities (the fund owes the bank the value of those securities). Part of the deal is that the amount the bank owes the fund must always be positive. Thus the bank doesn't have to worry about the fund defaulting, going bankrupt, being some hackers with a pc and a modem. The bank, in contrast, has deep pockets (lots of money) so it can certainly pay the fund what is owed if the fund or the bank decides to close the account. Once upon a time, given the fact that prices change fast and suddenly selling a bunch of assets drives down their price (that is in bankerspeak assets are not infinitely liquid) banks required that the net value of the repo account (amount the bank owes the fund that is value of the assets the bank owes minus value of the assets the fund owes the bank) was at least 2% of the gross long position (total value of the assets which the bank owes the fund). The bank closes the fund sells and buys assets and transfers the resulting money to the fund if the fund doesn't respect this limit. If the net value of the repo account to the fund falls below 2% of the gross long position, the fund must transfer highly liquid safe assets (basically cash) into the account.
The requirement that repo accounts have positive value (plus 2%) is necessary given the fact that the bank has no way of knowing the financial soundness of the hedge fund (the fund will typically have risky accounts open at many banks). It also reates financial fragility. A decline in the value of assets for which the fund is long may force it to reduce its gross long positions, that is liquidate, that is sell. This creates positive feedback and is dangerous.
When there is a risk of such an event, markets can freeze up, become thin, cease to be liquid. That is no one wants to buy or sell the assets. It is very important that the problem is not just that people have decided that the value of the assets is much less than they thought. In that case, the price just falls and trading continues. The problem is that the asset price becomes very unpredictable, because it depends on possible distress selling by hedge funds. No one wants to buy because the asset value could tank, no one wants to sell because it could recover.
Hedge funds manage to make huge returns without huge risk by hedging, that is going long and short assets with highly correlated returns so the variance of the value of their repo account is much less than the variance of the value of the long position (and of the short position). They can't, even in principle, hedge against the risk that they will have to liquidate (unwind) their account. The theorists who proved that hedge funds are not risky (Black and Scholes) assumed that the hedge fund's transactions have no effects on prices (Scholes was a founder of Long Term Capital Management and lost most of his shirt).
There is another very deadly problem with REPO accounts when people stop buying and selling assets. The whole scheme depends on knowing the current prices of the assets. When trading volume is high one just looks at the current transaction price. When trading stops, one must rely on the list price, the price at which investment banks offer to buy or sell the asset.
Ah investment banks. The same entities which are betting against the hedge funds in the REPO account. If no one wants to buy an asset, the investment asset can say it is worth very little. If no one wants to sell it the bank can say it is worth a lot.
When markets freeze up because hedge funds might have to close REPO accounts, the banks can decide how much they owe the hedge fund. This would tend to be zero not 2% of the gross long position wouldn't it ? Thus, when people fear that the hedge fund will have to close an account and drive down the price of assets for which it is long and up the price of assets for which it is short, the investment bank can make money by listing made up prices so that this happens.
Nothing about worsening economic prospects, increasing fundamental risk or general badness elsewhere is required. Long Term Capital Management (LTCM) was driven under principally by an increase in the value of options to buy European stock market index funds. Such an increase would normally correspond to good economic news about European profits. In this case it went this way. LTCM bet that such options were overpriced and sold short. They were in trouble because of the Russian default. People thought they might have to liquidate their short position (buy options to cover their promise to pay banks the value of the options) this drove the price of the options up. More importantly, the uncertainty about what LTCM would have to do prevented people from trading. This allowed investment banks to offer to buy the options for a huge price without actually having to fork over the money. This forced LTCM to liquidate, transferring the options at the huge price to the banks.
The lesson ? Markets don't freeze up because of bad news, they freeze up due to risk. Possible future forced closure of hedge funds' REPO accounts creates such risk. When markets freeze up investment banks can make the current price whatever they want and force hedge funds to close their REPO accounts. This can happen whenever there is a shock of any kind. It does not require bad news.
Friday, August 10, 2007
ONE bit of good news
A poll (in New Hampshire of primary voters who are politically engaged with leading questions but still a real live poll) shows strong support for foreign aid, historically the program Americans hate more than welfare. I am encouraged.
via think progress.
Consider Yourself Encouraged
A poll (in New Hampshire of primary voters who are politically engaged with leading questions but still a real live poll) shows strong support for foreign aid, historically the program Americans hate more than welfare. I am encouraged.
via think progress.
Consider Yourself Encouraged
Last month, ONE enlisted the help of Peter D. Hart Research Associates and McLaughlin and Associates to conduct a bipartisan survey of likely Democratic and Republican New Hampshire primary voters. ONE will release the full results this afternoon, but as an exclusive to our ONE Blog readers, some key findings are below.
*Nearly all Democrats (97%) and 70% of Republicans agree that America’s standing has suffered in recent years. In addition to a strong military, Democrats (91%) and Republicans (78%) agree that the United States also needs to improve diplomatic relations by doing more to help improve health, education and opportunities in the poorest countries around the world. Both Democrats (81%) and Republicans alike (70%) agree that reducing poverty, treating preventable diseases and improving education in poor countries around the world will help make the world safer and the United States more secure.
*Democrats and Republicans agree that America has a moral obligation as a compassionate nation to help the world’s poorest people through foreign assistance. More than nine in ten Democrats (93%) and 84% of Republicans agree that when millions of children around the world are dying from preventable diseases and hunger, we have a moral obligation to do what we can to help. Similarly, Democrats (90%) and Republicans (85%) agree that it is in keeping with the country’s values and our history of compassion to lead an effort to solve some of the most serious problems facing the world’s poorest people.
*When it comes to addressing these issues, Democrats (86%) and Republicans (67%) agree that it is important for Presidential candidates to discuss their plans for addressing global hunger and poverty issues in this campaign. Additionally, eight in ten Democrats (81%) and Republicans (80%) agree that the next president should keep the commitments made by President Bush to prevent and fight the spread of AIDS in Africa.
Check back a little after 2pm EST when I can post the full survey memo.
ONE bit of good news
A poll (in New Hampshire of primary voters who are politically engaged with leading questions but still a real live poll) shows strong support for foreign aid, historically the program Americans hate more than welfare. I am encouraged.
via think progress.
Consider Yourself Encouraged
A poll (in New Hampshire of primary voters who are politically engaged with leading questions but still a real live poll) shows strong support for foreign aid, historically the program Americans hate more than welfare. I am encouraged.
via think progress.
Consider Yourself Encouraged
Last month, ONE enlisted the help of Peter D. Hart Research Associates and McLaughlin and Associates to conduct a bipartisan survey of likely Democratic and Republican New Hampshire primary voters. ONE will release the full results this afternoon, but as an exclusive to our ONE Blog readers, some key findings are below.
*Nearly all Democrats (97%) and 70% of Republicans agree that America’s standing has suffered in recent years. In addition to a strong military, Democrats (91%) and Republicans (78%) agree that the United States also needs to improve diplomatic relations by doing more to help improve health, education and opportunities in the poorest countries around the world. Both Democrats (81%) and Republicans alike (70%) agree that reducing poverty, treating preventable diseases and improving education in poor countries around the world will help make the world safer and the United States more secure.
*Democrats and Republicans agree that America has a moral obligation as a compassionate nation to help the world’s poorest people through foreign assistance. More than nine in ten Democrats (93%) and 84% of Republicans agree that when millions of children around the world are dying from preventable diseases and hunger, we have a moral obligation to do what we can to help. Similarly, Democrats (90%) and Republicans (85%) agree that it is in keeping with the country’s values and our history of compassion to lead an effort to solve some of the most serious problems facing the world’s poorest people.
*When it comes to addressing these issues, Democrats (86%) and Republicans (67%) agree that it is important for Presidential candidates to discuss their plans for addressing global hunger and poverty issues in this campaign. Additionally, eight in ten Democrats (81%) and Republicans (80%) agree that the next president should keep the commitments made by President Bush to prevent and fight the spread of AIDS in Africa.
Check back a little after 2pm EST when I can post the full survey memo.
Sunday, August 05, 2007
After WW III all that will be left are cockroaches, Cher and Ahmed Chalabi
He is still head of the Iraqi de-baathification commission and
he is still getting quoted in the Washington Post.
And, much worse, serious news outlets are linking to the article which quotes him without objecting.
What does the poor overworked man have to do to retire ? He was a "hero in error" on prewar intelligence, admitting he was wrong with enough cheer to make it clear he was lying. His intelligence chief was spying for Iran. His followers "requisitioned" houses when they arrived. His party financed itself by counterfeiting. His house was raided by the police. He allied with Moqtada al Sadr, then split. Finally his party got 1% of the vote and no seats in the most recent elections.
And yet he is still there in high office (although re-baathification is the current US policy) and still being quoted as if her were not known to be completely dishonest.
He is still head of the Iraqi de-baathification commission and
he is still getting quoted in the Washington Post.
"Some of the coterie of Maliki fear their friends more than they fear their enemies," said Ahmed Chalabi, a Shiite who heads Iraq's Supreme National Commission for De-Baathification. "You can't separate people from their backgrounds. Most of them were used to secret-society politics, not open politics."
And, much worse, serious news outlets are linking to the article which quotes him without objecting.
What does the poor overworked man have to do to retire ? He was a "hero in error" on prewar intelligence, admitting he was wrong with enough cheer to make it clear he was lying. His intelligence chief was spying for Iran. His followers "requisitioned" houses when they arrived. His party financed itself by counterfeiting. His house was raided by the police. He allied with Moqtada al Sadr, then split. Finally his party got 1% of the vote and no seats in the most recent elections.
And yet he is still there in high office (although re-baathification is the current US policy) and still being quoted as if her were not known to be completely dishonest.
Wednesday, August 01, 2007
Harry Potter predictions update.
cut and paste from this blog on April 25 2007.
Added comments in italics. I have read the book and the added comments are spoilers.
spoiler alert
spoiler alert
spoiler alert.
below all from April except for comments in italics.
Bloggers often write about books which they have read, but rarely admit to reading Harry Potter books (come one don't be ashamed everyone does it)
Silly me. Cooler bloggers aren't embarassed to admit they read Harry Potter books.
I'm goint to try to guess some of the content of the final book. Spoiler warnings when appropriate.
I don't see many hints from books 1-4 except that Peter Pettigrew has to do something useful (like Gollum).
1 correct.
In book 4 (Chalice of fire) Dumbledore shows an expression of fierce triumph when he learns that Voldemort has reconstituted his body using Harry's blood. He doesn't explain, but this must be important.
2. Correct. Very important. Not exactly in the way I guessed
In book 5 (order of the Phoenix) we learn that only one of Harry and Voldemort can live. Not sure that means what it seems to mean.
A) I was careful with my guess, but I was wrong. It meant what it seemed to mean.
Snape had 3 very bad memories and we have only shared one.
3. Correct if "bad" is read as "painful" this is correct. Snape's memories are very important. However, there are many more than 2 ones which are new to Harry. Some date from after "The Order of the Phoenix" but some don't. Do I dare suggest that Rowland hadn't planned this perfectly in advance ?
When cleaning 12 Grimauld Place a heavy locket which no one could open was found.
Kreacher tries to hide Black family heirlooms.
In book 6 (half blood prince) we encounter the concept of Horcruxes which are various objects which hold part of Voldemort's soul. One bit is in his reconstructed body, another was in the Riddle diary (killed in book 2), another was in a ring destroyed by Dumbledore.
One is clearly in a locket once belonging to Slytherin.
This was replaced in its former hiding place by an ex follower of Voldemort who signed R.A.B. . One Regulus Black (brother of Sirius) was once a follower of Voldemort. He was quickly killed after he tried to switch sides. I assume he is RAB and that the locket is the one found in 12 Grimauld place. I guess that there will be an effort to find where Kreacher hid it, then it will be discovered that Fletcher sold it. This should be good for hundreds of pages.
4. mostly correct. The word "sold" and "quickly" are not exactly. Also not hundreds of pages on the topic.
Another is likely to be Helga Hufflepuff's teacup. No idea where it is. Hundreds more pages to find if it is the horcrux and, if so, where it is,
5 correct but obvious. No doubt was ever expressed on the teacup issue. Brilliant deduction by Harry and *not* me on where it was.
The sixth bit is likely to be in the Snake Nagini (so guessed by Dumbledore)
6 correct but guessed by Dumbledore.
The seventh is, I am quite sure, in Harry Potter. Clearly he is linked to Voldemort and Nagini. I don't know how we are supposed to pretend we haven't noticed.
7 correct and explicitly so stated. The numbering is unclear, that is, it is not clear to me even now if there are 7 bits of soul including the one in Voldemort's body or 7 separated bits one of which I did not guess.
As to the denoument, I risk ruining much better books, which also feature a school of magic, written by Ursula LeGuin (A Wizard of Earthsea, The tombs of Atuan and The farthest shore, Tehanu all well worth reading). I think the key is to be found either in denoument of A Wizard of Earthsea or that of The Farthest Shore. Won't say what they are, but each has a moral and both seem to potentially fit the Potter series. I'd say that Dumbledore's unexplained expression in book 4 suggests that it will be a Wizard of Earthsea moral. Others claim to know it will be the other.
Not correct. The ending does not correspond to either Earthsea book.
Other matters.
The ring bears the "Peveral" crest. This family is not otherwise mentioned. This must be a hint somehow.
8 correct.
The injury Dumbledore received when destroying the ring was never described. I think that in books 6 and 7 as in book 1 Snape is set up to appear to be guilty but is innocent.
Roughly, I guess something about destroying the ring made it necessary to kill Dumbledore (as in the bit of Voldemort was in him or something). Snape promised Mrs Malfoy that he would. Later he is arguing with Dumbledore that he doesn't want to do something and Dumbledore says he promised so he must. For some reason Dumbledore freazes Harry when he could have saved himself. He seems very calm till he sees Snape who kills him. It all makes sense if Dumbledore wanted Snape to kill him and feared Snape wouldn't do it. The aim may have been to give Snape absolute credibility with Voldemort.
9 correct that it was necessary to kill Dumbledore but no bit of Voldemort in him
Neville Longbottom has moved from being a geek to being an extraordinarily brave hero type. The prophesy could refer to him not Harry. He might have to do something very unpleasant to end the series.
c) the transformation from buffoon to model of courage is completed in the last book. However, his final act was not unpleasant at all.
I count 9 correct and 3 incorrect, but I am being generous to myself. I thought that Neville would have to kill Harry to destroy him as a horcrux and that, in some way, Harry would survive. Voldemort did the killing himself. Dumbledore was just doomed to die, not horcruxed. My guess as to possible endings were wrong, which might explain why I was disappointed by the actual ending.
cut and paste from this blog on April 25 2007.
Added comments in italics. I have read the book and the added comments are spoilers.
spoiler alert
spoiler alert
spoiler alert.
below all from April except for comments in italics.
Bloggers often write about books which they have read, but rarely admit to reading Harry Potter books (come one don't be ashamed everyone does it)
Silly me. Cooler bloggers aren't embarassed to admit they read Harry Potter books.
I'm goint to try to guess some of the content of the final book. Spoiler warnings when appropriate.
I don't see many hints from books 1-4 except that Peter Pettigrew has to do something useful (like Gollum).
1 correct.
In book 4 (Chalice of fire) Dumbledore shows an expression of fierce triumph when he learns that Voldemort has reconstituted his body using Harry's blood. He doesn't explain, but this must be important.
2. Correct. Very important. Not exactly in the way I guessed
In book 5 (order of the Phoenix) we learn that only one of Harry and Voldemort can live. Not sure that means what it seems to mean.
A) I was careful with my guess, but I was wrong. It meant what it seemed to mean.
Snape had 3 very bad memories and we have only shared one.
3. Correct if "bad" is read as "painful" this is correct. Snape's memories are very important. However, there are many more than 2 ones which are new to Harry. Some date from after "The Order of the Phoenix" but some don't. Do I dare suggest that Rowland hadn't planned this perfectly in advance ?
When cleaning 12 Grimauld Place a heavy locket which no one could open was found.
Kreacher tries to hide Black family heirlooms.
In book 6 (half blood prince) we encounter the concept of Horcruxes which are various objects which hold part of Voldemort's soul. One bit is in his reconstructed body, another was in the Riddle diary (killed in book 2), another was in a ring destroyed by Dumbledore.
One is clearly in a locket once belonging to Slytherin.
This was replaced in its former hiding place by an ex follower of Voldemort who signed R.A.B. . One Regulus Black (brother of Sirius) was once a follower of Voldemort. He was quickly killed after he tried to switch sides. I assume he is RAB and that the locket is the one found in 12 Grimauld place. I guess that there will be an effort to find where Kreacher hid it, then it will be discovered that Fletcher sold it. This should be good for hundreds of pages.
4. mostly correct. The word "sold" and "quickly" are not exactly. Also not hundreds of pages on the topic.
Another is likely to be Helga Hufflepuff's teacup. No idea where it is. Hundreds more pages to find if it is the horcrux and, if so, where it is,
5 correct but obvious. No doubt was ever expressed on the teacup issue. Brilliant deduction by Harry and *not* me on where it was.
The sixth bit is likely to be in the Snake Nagini (so guessed by Dumbledore)
6 correct but guessed by Dumbledore.
The seventh is, I am quite sure, in Harry Potter. Clearly he is linked to Voldemort and Nagini. I don't know how we are supposed to pretend we haven't noticed.
7 correct and explicitly so stated. The numbering is unclear, that is, it is not clear to me even now if there are 7 bits of soul including the one in Voldemort's body or 7 separated bits one of which I did not guess.
As to the denoument, I risk ruining much better books, which also feature a school of magic, written by Ursula LeGuin (A Wizard of Earthsea, The tombs of Atuan and The farthest shore, Tehanu all well worth reading). I think the key is to be found either in denoument of A Wizard of Earthsea or that of The Farthest Shore. Won't say what they are, but each has a moral and both seem to potentially fit the Potter series. I'd say that Dumbledore's unexplained expression in book 4 suggests that it will be a Wizard of Earthsea moral. Others claim to know it will be the other.
Not correct. The ending does not correspond to either Earthsea book.
Other matters.
The ring bears the "Peveral" crest. This family is not otherwise mentioned. This must be a hint somehow.
8 correct.
The injury Dumbledore received when destroying the ring was never described. I think that in books 6 and 7 as in book 1 Snape is set up to appear to be guilty but is innocent.
Roughly, I guess something about destroying the ring made it necessary to kill Dumbledore (as in the bit of Voldemort was in him or something). Snape promised Mrs Malfoy that he would. Later he is arguing with Dumbledore that he doesn't want to do something and Dumbledore says he promised so he must. For some reason Dumbledore freazes Harry when he could have saved himself. He seems very calm till he sees Snape who kills him. It all makes sense if Dumbledore wanted Snape to kill him and feared Snape wouldn't do it. The aim may have been to give Snape absolute credibility with Voldemort.
9 correct that it was necessary to kill Dumbledore but no bit of Voldemort in him
Neville Longbottom has moved from being a geek to being an extraordinarily brave hero type. The prophesy could refer to him not Harry. He might have to do something very unpleasant to end the series.
c) the transformation from buffoon to model of courage is completed in the last book. However, his final act was not unpleasant at all.
I count 9 correct and 3 incorrect, but I am being generous to myself. I thought that Neville would have to kill Harry to destroy him as a horcrux and that, in some way, Harry would survive. Voldemort did the killing himself. Dumbledore was just doomed to die, not horcruxed. My guess as to possible endings were wrong, which might explain why I was disappointed by the actual ending.
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