"Maybe CNN doesn't do it, but good journalists do it all the time."

Books: The Financial Crisis

I'll review three different books on financial crisis.

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Bailout Nation, by Barry Ritholtz, 5 stars out of 5

Ritholtz, a lawyer and writer of the popular blog The Big Picture, penned an excellent history of government bailouts since the 1970's through 2009. He shows that we have history of socializing risk while privatizing profits, beginning with Lockheed and Chrysler and most recently with the large banks receiving corporate welfare for their highly margined gambles. The powerful corporations skillfully navigate the political waters, while the average Joe is often left footing the bill. Ritholtz has been voicing his opinion about taxpayer-funded bailouts, bubble economics and the overbought housing market on his blog for years. Bailout Nation represents a book-length argument for his thesis, as he makes the case for creative destruction and regulation to save our world economic system. Well written, from an informed market player, Ritholtz' analysis is worthwhile as a history and an outline of what needs to be done in the future.

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Griftopia, by Matt Taibbi, 4 stars out of 5

The skilled Rolling Stone writer attacks Wall Street with his usual acerbic wit and populist lefty rage. He explains the crisis well-enough, although the other books in this review are better, but Taibbi shines with his portrayal of Goldman Sachs as the evil Vampire Squid whose tentacle suck blood from everyone. He's laugh out loud funny when he takes down the Tea Party who vote against their own best economic interests because of the skilled sales job by Wall Street manipulators and their minions like Rick Santelli. Taibbi is juiced with appropriate anger when he calls former Fed Chief Alan Greenspan the "biggest asshole in the world" for his status as acolyte of Ayn Rand, the architect Selfishness, in his younger years, only to blow up the world economy with bubbliciously low interest rates and bank deregulation in adulthood. Taibbi is a guilty pleasure with his gratuitous bitch-slapping, but a pleasure nonetheless.

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The Big Short, by Michael Lewis, 5 stars out of 5

My favorite of the trio. Lewis spent time in his youth as a bond trader for Salomon Brothers, before he continued his career as a writer. He calls this present tome a sequel to his 1989 bestseller Liar's Poker , confessing that he never thought that the orgy of capitalism that he described 20 years ago would have lasted this long. Lewis' style is to present mini-biographies of the principal players, focusing on personality traits and motivations, weaving their tales into a coherent narrative. Lewis explains, with just the correct amount of detail, the arcane instruments of destruction: collateral debt obligation, credit default swap, etc. Obfuscation is the modus operandi of the Wall Street product machine, and Lewis points out that while such gambling should be a zero sum game, even the biggest losers in the bet walked away with millions of dollars in bonuses.

Lewis' vignettes are heart-wrenching, especially his exchange with his former boss at Salomon near the end of the book. Lewis got a bit of grief for being too sympathetic to the short-sellers in his drama, but I would disagree. The short-sellers, while fueling the generation of new product, were right in the end; they never asked for or got a bailout; many tried to alert the SEC and other authorities about malfeasance by ratings agencies, mortgage lenders and investment banks. Short-sellers didn't create the mess, they took considerable risks and won. Ironically, despite their astounding riches, the short-sellers remained tortured after the huge unwind; some troubled by the corrupt system, others emotionally destroyed, and yet others paranoid and broken.

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Summary

All these books add certain details to the current economic destruction. The lesson I take home is that we haven't learned the lesson (yet).

The Beatles

How can we prevent abortion?

I've been having a discussion on another blog about abortion and reproductive rights. While we disagree on most aspects of these loaded topics, we agreed to try to find consensus. We agreed that reducing the number of abortions was a beneficial goal, and to wit Leila has been gracious enough to present her 3 (really 4) suggestions. My discussion follows. At some later date, I'll present my 2 or 3 suggestions as well. She says:

How can we prevent abortions?

1) Make it illegal. We are a civilized society, and barbarism should not ever be enshrined in law, especially when it targets the most vulnerable and voiceless among us.

2) Teach virtue. Sex is sacred. It has purpose. Sex leads to babies and teens (and adults) must be retaught this. We have bought the lie that only "unprotected sex" leads to babies, which is a whole other post. So, virtue. Chastity. Do not have sex till you can accept the baby that will come with it.

3) Promote intact, two-parent families. The single mothers, the fewer men who take responsibility, the more poverty, the more abortions. Two parent, intact families.

Teach those three things and mean it, and you will have DRASTICALLY reduced the abortion rate.

Oh, and one more thing: Teach science and biology. Make sure we all see lots and lots of ultrasound photos of the unborn, and make sure we all understand that (as you know), science has long ago determined that human life begins when the sperm meets the egg to form a new individual human being.

Yep, that ought to do it! Agreed?

The short answer is yes. We agree! (on some issues). The long answer is, alas, more complicated.

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Defining the issues

Like many movements, the abortion rights movement was based on compassion. Women were being injured by illegal abortions, and organizers wanted to make it safe by taking it out of the alleys. I know this is nothing new and I know that the anti-choice community thinks this is misguided compassion. The only reason I bring this up is to point out the positive intention of the pro-choice movement, which is important.

Ok, so chastity, virtue and two-parent families. Yes, yes and yes (most of the time, assuming no spousal abuse.) Nothing in the abortion rights movement prevents the promotion of these beneficial attributes to personal and social hygiene. I think the case has been made, and continues to be made. To live a virtuous life is uncomplicated and affirming regardless of your belief system.

I suppose we can draw a correlation to Roe v Wade as the beginning of the breakdown of these virtues: If not for Roe, many assume we'd have no abortion, or surely less abortion. But is that what the empiric evidence shows? Was Roe the cause of the breakdown of virtue/chastity? Or was it an effect?

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Making Abortion Legal

Roe was a response to unwanted pregnancy which has always been present, and increasing; women were attempting abortion at a greater rate which was leading to morbidity, pain and cost when those abortions were done wrong. Accurate demographics of botched abortions at the time are nonexistent, but anecdotal accounts are gruesome:

Desperate women used a number of dangerous means to terminate pregnancies. Some sought abortions from back-alley abortionists, with usually humiliating and sometimes deadly results.

Other women tried to induce abortions with homemade means--such as a bleach douche, or inserting sharp instruments into her cervix. This is why the now almost forgotten image of the wire coat hanger became the symbol of the abortion rights movement.

"In Chicago, at Cook Country Hospital, there were about 5,000 women a year coming in with injuries bleeding resulting to illegal abortions, mostly self-induced abortions," Leslie Reagan, the author of When Abortion Was a Crime, said in an interview. "They had an entire ward dedicated to taking care of people in that situation. Those wards pretty much closed up around the country once abortion was legalized."

The goal of the abortion rights movement in the 60's and 70's was to reduce the preventable morbidity associated with abortion. But preventing such morbidity certainly has increased the number of fetuses being aborted, right? We are merely exchanging one pathology for another, no? Well, that's a good question that may not have a clear intuitive answer. Statistics about abortion pre-Roe are difficult to decipher since we cannot know exactly how many abortions were being done surreptitiously, but we can try.

From Guttmacher:

Estimates of the number of illegal abortions in the 1950s and 1960s ranged from 200,000 to 1.2 million per year. One analysis, extrapolating from data from North Carolina, concluded that an estimated 829,000 illegal or self-induced abortions occurred in 1967.

One stark indication of the prevalence of illegal abortion was the death toll. In 1930, abortion was listed as the official cause of death for almost 2,700 women—nearly one-fifth (18%) of maternal deaths recorded in that year. The death toll had declined to just under 1,700 by 1940, and to just over 300 by 1950 (most likely because of the introduction of antibiotics in the 1940s, which permitted more effective treatment of the infections that frequently developed after illegal abortion). By 1965, the number of deaths due to illegal abortion had fallen to just under 200, but illegal abortion still accounted for 17% of all deaths attributed to pregnancy and childbirth that year. And these are just the number that were officially reported; the actual number was likely much higher.

Simple arithmetic: The 829,000 illegal abortions in 1967 before Roe, added to the 2061 legal abortions performed in 1967, would give an abortion ratio (abortions per 1000 live births) of 23.6, compared to an abortion ratio of 23.3 in 1977, four years after Roe. This is in the ballpark of the current rate of abortion, assuming the population growth of the United States. So did Roe cause an increase in abortions? My conclusion, based on this admittedly incomplete data set, is no.

Legalizing abortion has reduced morbidity and mortality in women with unwanted pregnancy, but apparently has not increased the abortion ratio. Cook County Hospital no longer has a ward dedicated to managing complications from abortions gone awry. The abortion ratio peaked at 30 in 1980 and fluctuated in the teens an twenties over the subsequent decades. In the 2000's the ratio has been consistently in the teens; that low rate may be due to incomplete reporting, such as with the increasing use of medical terminations, or better and more available birth control, or social, religious and cultural factors (see below) .

Of course, we can argue that while physical morbidity may have decreased, we have done nothing for the emotional anguish of women aborting fetuses. Even the most strident pro-choice advocate would admit that abortion is not an optimal intervention. Even when done as safely as possible, medical complications can occur. Even when medical complications do not occur, emotional and psychological sequelae, often unquantifiable and unpredictable, may ensue.

At some later date, I can walk through the consequences of making abortion illegal again. Unsurprisingly, mMy conclusion is that most prohibitions probably would not have a material effect on abortion rates, but could increase morbidity in the pregnant woman.

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The Chastity Argument

The concept of chastity has been around for a long time and, as Leila says, it has merit. But if that were the universal understanding, if it's such a great idea, then why doesn't everyone remain chaste? Yeah, this usually brings up the argument about Hollywood, television, the media, absent parents, and the loss of faith in God. If only we could correct these horrors, the First Amendment be damned, we'd have a Renaissance of virginal children growing up into monogamous spouses who stay married forever and have sex only for procreation, and the desire for abortion would be eliminated... just like it was in the good ol' days. I doubt that the good ol' days ever existed, at least for any sustained period of time, and it certainly is not what we see today. Or, alternatively, maybe today is as close we get to the good ol' days?

My grandfather would say to me, "Be good, and if you can't be good, be careful; and if you can't be careful, then name it after me." Then he'd smile, draw on his fat cigar and go back to his crossword puzzle. Message received: our actions have consequences, and as much as I loved my grandfather I did not want to change diapers on his namesake.

With such compelling reasons to avoid unwanted pregnancy, the emotional issues of promiscuity, the potential for disease, why hasn't the whole chastity thing caught on? I don't have one answer, but it likely has to do with a combination of our limbic system, or maybe the lack of fear of the negative consequences, or the endemic disbelief that some omniscient supernatural being is judging our bad behaviors. Even my sainted grandfather, who never missed Sunday Mass, did not appeal to the alleged omniscient Father in heaven to affect my behavior. Or, maybe it has caught on and this is about as chaste as our society will ever be.

No discussion of chastity would be complete without discussing abstinence-only education. Studies (1, 2, 3) have disputed the efficacy of such an approach. And while one recent study has indicated a marginal benefit, the study was flawed since it did expose the participants to non-comprehensive information about contraception, and the benefit was short-lived with 1/3 of abstinence-only participants engaging in sexual activity at the 2-year mark. Abstinence-only is a quantum event: either you do it all the time, or it fails.

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Other issues

I'm blogged out for now,and have other things to do, but certainly Leila's desires for the "promoting two-parent households" (however we could do it?) and science education (including comprehensive sex education?) are valid. Those discussions will need to wait for now. Certainly there are ways to decrease the numbers of abortions, and we should continue to look for consensus on effective ways to reduce the numbers of abortion. What do we do right? What do other nations do right? What works and what doesn't?

SPX overbought; AAII bullish

This usually not good for bulls, short term. Gentlemen, start your hedges!

"Joseph, we need to talk."

The modern nativity.

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"No, we're between lawyers right now"

My Comment in the Atheist Forums...

After an afternoon wading through my twitter feed filled with #catholic hashtags, I had to cleanse my palate over at the Atheist Forum. I came across a newbie who had some questions.

Micah asks,

Anyway, if thought is merely a chemical reaction, how can two people sit and discuss thought? Is their discussion just random? Also, how can someone think about making plans for something a month away, and when the time comes they fulfill those plans. Is that also just random? To a Materialist, nothing can exist outside the material, right? If so, there could be no "mind." ...

If morality to an Atheist is simply treating our fellow humans kindly, how do we come to that conclusion? Why should we not steal from the supermarket? It is beneficial to me; I gain something without having to suffer the loss of money. If morality is subjective to the person, why would Hitler killing the Jews be bad? To Nazi Germany it was perfectly fine under their own subjective morality.

My response:

All good questions that may or may not have answers. How can we discuss thought? Well, we are right now! That's how. Biologists talk about "emergent" phenomena that are greater than the chemical reactions at the foundation. Atheism does not have to equal Materialism, there is room for phenomena that are inexplicable and we shouldn't feel that we need to explain everything. When a theist friend asks "why this", it's okay to say "I don't know"... but quickly add "And neither do you.".

Can emergence be understood by everyone at all times, or by anyone at all for that matter? Maybe not. Even the Buddha said that Enlightenment is fleeting, one might only attain it for a brief moment in an entire lifetime. or maybe never at all after a lifetime of striving. None of this inability to explain and understand is a "proof" of an anthropomorphic god. You can call the answer "god" if you want, but it certainly does not resemble the God of the Bible or Koran, so it depends on what your definition of god is. For centuries we could not explain all manner of things: planetary movement, weather, animal behavior, ocean currents, human medicine and physiology, germ theory, etc, etc, etc and we gave "God" credit for intelligently designing the universe and controlling it. Ha! We know now through empiric scientific reductionist study that supernatural gods do NOT controls these things. The British science journal New Scientist listed "Consciousness" and "Mind" as phenomena that scientists will strive to explain in the next century, quite an undertaking-- but remember that only 160 years ago we didn't even know that bacteria caused disease or how vaccines worked or even that hand-washing could protect our health. Take that, Howie Mandell!

Morality. Thich Nacht Hahn, the Vietnamese Buddhist monk, says "Kindness is my only religion." Evolutionary biologists will say that morality is an adaptation encoded in our genes since those ancestors that were amoral were selected out when their social structures broke down, thus only the moral genes survived. Robert Wright*, in his book The Moral Animal, explains this concept very eloquently. No man is an island and we rely on our strong social structure to survive, grow crops and hunt and protect each other. This is not to say that every single person acts morally all the time. Hardly. We all decide who is in our moral community and deserves our "kindness." Most would agree that supermarket owners fall within that category and thus we would conclude that we should not steal from the supermarket. Al Qaeda? Maybe not. Each of us may have different views about whether animals belong within our moral community as well. We are kind to dogs and even protect them with laws, but yet we slaughter cows and pigs for food, for example.

One other item off topic. I hear many fellow atheists bemoan the failings of "religion" and equate "religion" with theism. Firstly, a large plurality of religious people in the world count themselves as atheist, Buddhists for example. One can be religious, even devout, but not believe in god. Secondly, are religions perfect? No, but that does not mean that they are worthless... all religions have the potential to be beneficial.

*Currently, I've just started Wright's latest, The Evolution of God, and I may review it at some point.

We Are All Tom Buffenbarger Now

The night of the Wisconsin primary, which Obama won, Buffenbarger helped kick off Hillary's campaign in Ohio with a volcanic 12-minute speech all about the weakness he'd seen in Obama in Illinois, on pivotal labor fights.

(From Tim Weigel at Slate)

And the wind-down:

Hope? Change? Yes We Can? Give me a break! I've got news for all the latte-drinking, Prius- driving, Birkenstock-wearing, trust fund babies crowding in to hear him speak! This guy won't last a round against the Republican attack machine. He's a poet, not a fighter.

Exactly my sentiment at the time, when my Hillary vote in Michigan was not counted. This barnburner rhetoric by labor leaders brings back my memories as a United Steel Worker on Chicago's Southside during summers in college. But it's not just rhetoric, it's an ironclad promise. The brotherhood was always there for you, pleading the case for more benefits and better work conditions, there was never a misunderstanding about where they stood. Organize. Do you think the banksters weren't organized when they walked into the White House in 2008 and got an $800 billion bailout?

The crushing recession of 1980 closed the mill and white collar types would try to point to the generous pay afforded steelworkers as the cause. Bullshit. That plant would have closed whether workers made $12 dollar/hour or $2/hour. Just like now-- we have a demand depletion recession and jobs are going away in every sector and at every pay-level.

The way to create jobs is to improve workers' conditions worldwide by organizing all labor. The Tea Party has produced commendable anti-establishment rhetoric, empty misguided rhetoric; but what we really need is workers' rights around the world, and John Boehner, Mitch McConnell, Sarah Palin, Mittens and the Huckster ain't fighting for that. As long as any industry leaders are allowed to exploit Asian electronics and textile workers and pay them nothing, there will be no jobs here, ever. There is no justice that is not universal justice.

I have no country to fight for; my country is the earth, and I am a citizen of the world. --Eugene V. Debs

We aren't learning this lesson... we have more pain to endure.

Paltrow: Forget You

Did George W. Bush finally kill liberalism?

In a phenomenal article in the Wall Street Journal, R. Emmett Tyrell, Jr. outlines the supposed history of the demise of the liberal movement in America. Starting with Kennedy's departure from Ike's foreign policy and following with Lyndon Johnson's Great Society, Tyrell states that liberalism has collapsed under it's own weigh of overreach. Finally, he draws a straight line to Obama's tenure and the massive current budget deficits as we have found ourselves mired in an entitlement tsunami that is causing much consternation in the electorate.

He claims that only the failings of Nixon and Watergate allowed the liberals to "hide from the American electorate their fantastic delusions", with Clinton's moderate policies counted as a necessary departure for liberals after the roaring success of "12 years of conservatism' under Reagan and George H.W. Bush." But what other tack would we expect from Tyrell who is an acolyte of Richard Mellon Scaife?

Classical liberalism stated that the welfare of the individual was paramount. Society benefited when every individual had access to education, health care and livelihood regardless of their means. We believed in the individual to make important decisions. Yes, this brand of liberalism is dead and the new concept of liberalism is that of liberal welfare for industries and corporations.

Tyrell's piece is phenomenal in it's revisionist quirkiness, careful omissions and outright ballsiness--but such is the conservative movement of the new century. The utter failure of corporatism must look for a scapegoat, and that scapegoat is-- as always-- the miasmatic notion of liberalism, but by liberalism they mean social programs that help individuals. Those programs and policies that transfer wealth to corporations are just fine thank you.

I suppose we can travel in time back to the 1950's and 1960's when these same forces of classic liberalism saw the iniquities of Jim Crow, crushing poverty and lack of health care for the elderly, and forget the benefits enjoyed by individuals by liberal programs such as the Great Society and civil rights. Where would be today if old folks relied on the generosity of strangers for their health care and living expenses?

No doubt the voters today are enraged-- correctly or not-- with the profligate government spending and seeming lack of accountability. Deficits are now soaring and commissions are being set up to determine who will bear the burden of budget cuts. The irony is that such rage was not present until very recently, yet the most egregious spending occurred previous to the current administration.

Tyrell's most glaring omissions are the corporatist policies passed under George W. Bush and the Republican controlled Congress. These are not new topics, and ones that I have mentioned and will keep mentioning because of their sheer audacity and the utter silence from all involved. The first significant omission is the Medicare Part D prescription drug plan, passed in 2003 with predominantly Republican support, which is the poster child for a bill that transfers wealth from public coffers to private industry with little no benefit to taxpayers. How else would you describe a bill that allows any and all prescriptions to be filled with no test of efficacy and fully paid for without the usual volume discounts? Pharmaceutical executives have retired to their own private islands on the proceeds from this legislation.

The second glaring omission in Tyrell's article is the Iraq war, fought with public funding for the benefit of private contractors who have been enlisted to first destroy, then re-build a nation. Literally, truckloads of US dollars have gone missing to operatives , governmental officials and private industry. But these dollars are invisible to the American voter, invisible even when Ahmed Chalabi sits with the President's wife at the SOTU address.

The third omission in Tyrell's screed is the corporate bailouts of 2008. How can this not be part of the equation when discerning which liberal policies led to the budget deficits? Not only are we harmed by the initial outlay of $700 billion, but also by the damage to the economic system by removing moral hazard. Why should any corpoarate task master feel compelled to act responsibly now? Without question, this was the largest extortion committed upon the US taxpayers in history, the US President and Treasury Secretary pleading in 2008 that unless the we hand over nearly a trillion dollars by Monday, "this sucker could go down." Lost on everyone is that this astounding quote was the final installment of the Bush legacy, the maraschino cherry on top of an entitlement sundae for corporate America during a tenure of conservatism.

Sure, I left out some other highlights, such as Reagan signing the Emergency Medical Transfer and Active Labor Statutes (EMTALA) in 1986 that made health care a de facto right in America. A fine policy as policies go, but certainly one that would need to be paid for eventually, and would certainly transform our entitlement state as 42 million uninsured are now legally entitled to health care, although not legally responsible to pay. Another topic not broached by me would be the two waves of federal tax cuts given to high earners under Bush. Another reasonable policy if not for the fact that the GOP were increasing spending at the same time that they were reducing revenue. I also failed to include the record subsidies for corporate farms under Bush, but I only have so much space.

On the surface, none of these entitlement and spending programs seem outrageous, except when we consider the sheer size and nature of the transfer of wealth, and the complete lack of utility gained, and in the case of the Iraq war a negative utility, from this mis-allocation. Medicare Part D not only gave a handout to the corporate overlords, but also gave discounted medications to a large electoral voting block, so in political parlance, this was a twofer, a win/win. Added to that figure is the additional 10% paid by individuals into Medicare Advantage accounts in order to participate. And the cost to taxpayers: nearly a trillion dollars over ten years, and projected to 2030 the program (just Part D, not Medicare in general) will account for 1% of our GDP.

Grover Norquist, a Republican advocate of small government, once famously said "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

The opposite has come about. Liberalism is alive and well-- welfare for the corporations.

Dog confused by escalator

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