notes nov 25 2008

November 26, 2008 § Leave a comment


pretty rough here.

some links.


a note

While you have always celebrated your attachment to conservative thinkers like Michael Oakeshott, your views often strike me being most closely aligned with John Rawls.  Your discussion today about modernity smashing the social good into little bits could have been a passage out of Political Liberalism.  You captured the essence of the book in this sentence:

"That way is to agree that our civil order will mean less; that it will be a weaker set of more procedural agreements that try to avoid as much as possible deep statements about human nature."

Rawls found that in the modern world we’ve come to accept that the differences between comprehensive theories of the good embodied in various religions, cultures, and individual belief systems (i.e. the "deep statements about human nature") will never be conclusively resolved.  They are too much

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The case for negative interest rates now: Pervasive negative rates would underpin equity market recovery, and governments can levy taxation of banknote hoards to achieve that

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A proposal for forced lending: Forcing banks to renew loans, and extend credit lines or overdraft facilities may be a violation of normal commercial practice and an infringement of voluntary exchange. So be it.

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Japan’s former top currency official told Asia Times yesterday. "The dollar now looks strong for a technical reason. The money the U.S. financial firms had invested in the world is being repatriated into the homeland, causing dollar buying. But once this conversion into the dollars is done, the currency will head south."

“Faced with the unprecedented growth of the U.S. budget deficit,” the Times explains, “and the prospect of an increasingly weaker dollar compared with the yen reducing the value of Treasury debt held by Japan, economists in Tokyo are calling for the administration of President-elect Barack Obama to issue U.S. Treasuries denominated in yen and other currencies…

"‘The U.S. will be forced to issue foreign currency-denominated U.S. Treasuries in its hour of need,’ said [Tokyo chief economist for Mitsubishi UFJ Securities Kazuo] Mizuno. ‘The U.S. cannot finance its deficit by itself. The U.S. financial system cannot survive without foreign investors. We will see “Obama Bonds” in the future

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The primary purpose of the bill,” said Hank Paulson yesterday, effectively slamming the door shut on an automaker bailout, “was to protect our financial system from collapse. The rescue package was not intended to be an economic stimulus or an economic recovery package.”

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people not in the work force show the number of people not looking for work because they’re discouraged about finding jobs has risen from 276,000 in September 2007 to 467,000 in September 2008—up 70 percent. The percentage of people unemployed for more than 15 weeks stood at 2.3 percent in September 2008, up from 1.6 percent in September 2007, a rise of nearly 45 percent. But the most troublesome is the U6. The U6 is sort of the summa of job angst, a shorthand tally for the aggregate of job-related frustration. (Moneybox covered some of this terrain back in 2004.) To compile the U6, the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers.

The U6 in September rose to 11 percent, its highest level since the data series started in 1994 and significantly higher than it was in the last recession, in 2001. The ratio between the U6 and the official unemployment rate has remained relatively steady over the last several years. But that means that as the unemployment rate has risen, so too has the portion of the population suffering from other types of work deficits. Three years ago, when the unemployment rate was 5.1 percent, an additional 3.9 percent of the labor force fell into one of those other underutilized categories. Last month, with the unemployment rate at 6.1 percent, an additional 4.9 percent of the labor force was underutilized. (See charts comparing the unemployment rate and the U6 rate.) Add it up, and more than 10 percent of American workers are essentially not contributing full-time to their families’ well-being and to that of the economy at large. The unemployment rate may still be historically low, but the underutilization is historically high

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2. THE IDEA OF THE CLASSICAL. Students are familiar enough with European classical music to extrapolite an idea of the global "classical." Whether in 17th c. Mughal India, T’ang China, or 18th c. Europe, "classical" traditions largely share three characteristics: 1) Audience connoisseurship. Courts cultivated a layman understanding of musical theory, so that the audience had the critical faculties to measure performance. 2) Performer virtuosity. Performers in most "classical" traditions were trained as musicians from a young age, their training subs
idized by courts themselves. 3) Repertoire and Improvisation. Performers were expected to perform certain "standards" but to improvise as well. 4) Centrality of Performance. Since no recording existed, the performance itself counted more than the printed score (if, indeed, any existed).


big 4 issues are


decline of journalism

power of design

justice system

I would tie those four to vital issues of energy, jobs, climate change, governability, quality of life. Then they come alive. We might also need to start from the conclusion that we are really off track. Then there would be a sense of urgency.



Ben, let me explain to you what deleveraging is. When you borrow at a low rate to lend at a higher rate, you’re leveraged. Traditionally, banks do that by borrowing short (through taking in deposits) and lending long, making their money from a positively-sloping yield curve. More recently, they tried other ways of doing much the same thing, setting up off-balance-sheet investment vehicles which had triple-A ratings and could therefore borrow at very low rates while lending to riskier credits in sectors such as subprime mortgages. In a deleveraging, those trades are unwound. The riskier, higher-yielding assets are sold, and your own excessive borrowings are paid down. If the assets have fallen substantially in value, the deleveraging can be associated with large losses. As a result, the one asset class which is absolutely safe from global deleveraging is the Treasury market. No one ever borrowed at low rates to invest in Treasuries, because Treasuries are always the lowest-yielding bonds in the world. No one can borrow cheaper than the US government.

Now it’s possible that foreigners will sell their Treasury bonds for dollars, convert those dollars back into their domestic currency, and start spending at home. That would help to stimulate the global economy, and it might weaken the dollar. A weaker dollar, right now, would be a good thing: it would help US exporters, and no one’s worried about inflation, which often accompanies currency weakness…

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The firs task will be to save the financial industry, the folks who take 22 % of the entire gdp and 40% of the profits (of S&P). Everyone on the economics team is a Rubin player. Perhaps like a pro sport, these will be team players on the team that hires them, free of ideology or personal interest, but I doubt it. Finance first, all else is tactics. 

Let see how the week goes.


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The U.S. has pledged more than $7.4 trillion dollars to rescue the financial system, $2.8T of which has already been tapped, Bloombergreports. The number includes massive Fed programs to buy commercial paper and guarantee bank-to-bank loans that dwarf the $700B bailout approved by Congress.

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WASHINGTON — Many of the Republicans emerging as potential members of the Obama administration have professional and ideological ties to Brent Scowcroft, a former national-security adviser turned public critic of the Bush White House.

Mr. Scowcroft spoke by phone with President-elect Barack Obama last week, the latest in a months-long series of conversations between the two men about defense and foreign-policy issues, according to people familiar with the discussions.



The relationship between the president-elect and the Republican heavyweight suggests that Mr. Scowcroft’s views, which place a premium on an Israeli-Palestinian peace accord, might hold sway in the Obama White House.

Defense Secretary Robert Gates, who was deputy national-security adviser under Mr. Scowcroft in the George H.W. Bush administration, is almost certain to be retained by Mr. Obama, according to aides to the president-elect. Richard Haass, a Scowcroft protégé and former State Department official, could be tapped for a senior National Security Council, State Department or intelligence position. Mr. Haass currently runs the Council on Foreign Relations.

Other prominent Republicans with close ties to Mr. Obama — including former Secretary of State Colin Powell, who endorsed the Democrat in the final days of the campaign, and Indiana Sen. Richard Lugar, a senior member of the Senate Foreign Relations Committee — share Mr. Scowcroft’s philosophy.

"I think most of my close associates have a generally similar view," Mr. Scowcroft said in an interview. "What’s the old story about birds of a feather?"

Mr. Scowcroft said his biggest piece of advice for the new administration was that it should make a renewed push to help broker an Israeli-Palestinian peace deal. He also endorsed Mr. Obama’s call for diplomatic engagement with Iran.

"Compared to the other alternatives we face with Iran, we ought to give it a really good, sincere try," Mr. Scowcroft said. "I have a hunch that we’ll be more successful than a lot of detractors think."

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I will present this coveted prize to the next reporter / pundit / columnist who gets through a discussion of the pros and cons of Hillary Clinton as Sec of State without using the now-unbearably hackneyed term "team of rivals."

Nothing against Doris Kearns Goodwin, who in prehistoric times was my professor in a college course on the American presidency. And nothing against her application of the concept to the composition of Lincoln’s wartime cabinet and the political challenge of holding Union factions together before and during war. (For somebody who does challenge that application, gohere.)

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First, his Asia background.  Geithner’s father, Peter Geithner, was a development specialist who opened the Ford Foundation’s China office – the first foreign NGO here, under a special agreement that continues to this day.  That was just before Tiananmen Square, and the father was part of the Foundation’s difficult but, ultimately, undoubtedly correct decision to remain engaged.  Tim apparently also studied Chinese, was posted in Tokyo for Treasury, and focused on Asia studies as undergraduate and graduate student.  This is all great background for Treasury’s international dealings in the coming years.

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Second, he was head of the IMF’s Policy and Development Review Department (PDR) for two years.  PDR are the people there who provide the intellectual framework for, and monitor and sign off on the work that the country missions do.   Some of the best people I ever dealt with at the Fund.  I like this because I’ve thought more than once in recent years that what the US needs to do is take a step back and look at itself just as the IMF looked at, say, Argentina, during those years, and develop a tough IMF program; get your fiscal act in order, get serious about risks in the financial sector, establish external sustainability.

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I highly recommend this new report from the American Physical Society, the professional organization for physicists in the United States, about the very specific hows, whats, wheres, and how-much’s of practical ways to increase energy efficiency. A cover letter says (emphasis added by me):

Can lower energy consumption come about in the United States? It already has. Per-capita energy use in California, about half the national average, has stayed flat for the past 30 years, largely through an ambitious program of appliance standards and other innovations in building design….

The report points out that the enhanced funding need only match federal energy research levels in place in 1980. Research around that time led to a major improvement in efficiency standards. For instance, compact fluorescent lights and refrigerators now use about one-fourth the energy needed for comparable models of 30 years ago. Air conditioners are twice as efficient as those in 1980. Such dramatic improvements in energy use could be sustained, many experts argue, but only if a concerted energy research program is put in place.

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The deal would likely make the government the largest Citi shareholder. The U.S. will end up with a 7.8% stake in Citigroup, Chief Financial Officer Gary Crittenden told CNBC.

That would surpass the roughly 4.9% stake that the government of Abu Dhabi took in the company last year, and it also tops the 5% stake unveiled last week by Saudi Prince Alwaleed bin Talal.

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t’s TARP III," said Ed Yardeni, President of Yardeni Research.

"Buying toxic assets didn’t work, direct capital investment didn’t work, so now they are guaranteeing these assets, they’re just spinning their wheels, their plans just aren’t working" he said

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From Paul Krugman: Citigroup

Mark Thoma has the rundown of informed reactions. A bailout was necessary — but this bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more.

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So why would GMAC want to become a bank holding company if General Motors is headed for the chopping block? Could it be that the government is working out a secret deal with management to put the company through Chapter 11 (reorganization) just so it can crush the union and eliminate their pension and health care benefits in one fell swoop?

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He needs to appoint somebody with enough audacity and hope in his administration to transform redistributive justice from political suicide into a debatable agenda. Even with his centrist agenda, this will be good for his administration.

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he topic sentence of this book is "We see human civilization as having risen to eminence among other species through political, scientific, and technological innnovation." This sets the tone for a humanistic course the the forms of creativity through history. For someone who comes from a technology background (read: geek), this book was an unexpected suprise. It gave a social context to the value system that the technologist depends on, and the legacy that supports the innovator of today.

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The Grace of Great Things is the second book in Robert Grudin’s

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Turkey’s Liberals Criticize a Leader’s Shift


Liberals have protested Prime Minister Recep Tayyip Erdogan for what they call a move away from his reformist ways and toward the military.

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Economic Slump May Limit Moves on Clean Energy


A poor global economy and plunging prices for coal and oil are upending plans to curb the use of fossil fuels.

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Sync, and Swim Together


Simultaneous bankruptcy filings by Chrysler, Ford and G.M. would substantially reduce both the uncertainty and the stigma for each one.

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Sync Windows Live Writer Drafts with Live Mesh


I didn’t think of this until I saw it posted by Sarah Perez on Channel 10, but it just makes sense for those who use Windows Live Writer as a blogging tool and have multiple computers. You can save your drafts in Windows Live Writer to a Live Mesh enabled folder and then have the accessible across all of your Mesh devices.

If you already sync your documents folder you’ll have your My Weblogs Folder included. If not, it is simple enough to add the folder by right-clicking on it to add the folder to your mesh.

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One of the earliest uses of the term was by Manfred E. Clynes and Nathan S. Kline in 1960 to refer to their conception of an enhanced human being who could survive in extraterrestrial environments:

For the exogenously extended organizational complex functioning as an integrated homeostatic system unconsciously, we propose the term ‘Cyborg’. Manfred E. Clynes and Nathan S. Kline[7]

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what we have let grow up over time is a class of monied that is insupportable. Will the imevitble coming apart of that class  lead to deep disruption? How deep, involving who?


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You are currently reading notes nov 25 2008 at Reflections on GardenWorld Politics Douglass Carmichael.


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