The Bail Out and Rate Cuts

For a bit of a change of pace, but still with a focus on science - the science of economics. OK, that isn't science any more than astrology is, but they do get a semi-Nobel in economic science. A bunch of Swedish bankers would never make a mistake. Here is my reaction to the rate cut.  :-)

The Federal Reserve cuts interest rates by only half a percent to 1.0% - WIMPS!

One of the really cool things about the bail out, is that rate cuts do not have to stop at ZERO. We can use the government to subsidize borrowing. If the interest rate is minus 5 percent, the government will reimburse the bank for the amount of money they are paying you to borrow money. 

If the original bail out plan did not appeal to the Huey Longs of the world, this one will. Of course, they will have to come up with some sort of needs testing so that it does not benefit the really rich, but it can put money in the hands of the poor. 

If you structure the loan just right, the interest rate you receive for borrowing the money could cover your payment on the principal and you would never have to pay anything out of pocket.

Sign me up for a few million in loans. I don't want to overdo it, so I will not ask for more. I will then quit my job, so that the unemployment numbers improve. This is clearly a Win-Win-Win situation. The more money the government gives away, the better for everyone.

Instant Recovery! FDR would be proud.

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Smaller Banks Resist Federal Cash Infusions

An article in the Washington Post points out some of what is wrong with the Great Bank Bailout of 2008. Smaller Banks Resist Federal Cash Infusions.

A few quotes -

At Evergreen Federal Bank in Grants Pass, Ore., chief executive Brady Adams said he has more than 2,000 loans outstanding and only three borrowers behind on payments. "We don't need a bailout, and if other banks had run their banks like we ran our bank, they wouldn't have needed a bailout, either," Adams said.

The first $125 billion will be divided among nine of the largest U.S. banks, which were forced to accept the investment to help destigmatize the program in the eyes of other institutions.

Officials said they expected thousands of banks to participate.

But both the American Bankers Association and the Independent Community Bankers of America said that they knew of few banks that planned to participate.

Participating banks cannot increase the dividends they pay to shareholders without federal permission, they must accept some limitations on compensation for their executives, and Paulson said the government would press companies to limit mortgage foreclosures.

Not to defend the limitation of the compensation for executives, but that is not the role of government. We should not be paying out trillions of dollars, just so some redistribution of the wealth types can say, "We kept those dirty rich from making too much." They will always be making too much. The government even set up businesses that do this - Fannie Mae and Freddie Mac.

The sensible way to do this is to educate the stock holders, since they are the ones who pay the money to the executives. Let the stock holders take responsibility for their responsibilities. It is not the responsibility of the government.

As far as encouraging risky investments, this is a spectacular incentive to the irresponsible members of the banking community. Go forth and make bad loans, but do not worry. We will be there to bail you out. Then we will use that as an excuse to put more regulations on those, who behave responsibly.

Fannie Mae and Freddie Mac, corporate/government chimeras were part of the problem. Completely private financial institutions were just as bad. The ordinary solution to these excesses would be bankruptcy, firings, lay offs, foreclosures, and other misery. Fortunately, much of this would fall on those responsible. Many executives will have made fortunes out of this. The bailout will not change that. Regulations might have minimized that, or delayed it, but the regulations seem to have been encouraging sub-prime loans.

Free markets are more of a concept than a reality, since there are regulations on almost everything. The value of free markets is that they allow people to take risks. Many of these will fail, but some will prosper. This is what gets economies going. The government incentives and punishments have nothing to do with a free market and only pander to those with power.

The only guidance the government seems to have is the stock market. If the stock market goes up, they must be doing the right thing. If the stock market goes down, they just need to do more.

I was wrong about the market being near the bottom. Maybe it will bottom here (DJIA at 8578). Maybe.

They have already decided it is the right thing. There is no possibility they will consider that they are already doing too much. I was not expecting that I would be missing Mr. Greenspan, ever. He would probably keep everyone too confused to go along with such a plan.

I heard someone (Alex Blumberg) on NPR talking about a paradox of the bond market. With most countries, when there are bad financial times, the interest rate goes up. This is because the currency is considered to be more risky. With the US, as the demand for treasury bonds goes up, the interest rate goes down. The conclusion was that the worse the economy gets, the lower the interest rates. This is true, but only up to a point. There will be a bubble in bonds. At some point the US will owe enough money, that it will be seen as wiser to default on the debt, than to pay it back. This was considered back in the inflationary times of the recent past.

Why is a US bond default unthinkable?

Is the US so responsible with its money, that they have surpluses of cash and bullion to back up the currency?

Will the US be again, faced, with high interest rates to borrow money?

This guy seems to think so.



Picture from NPR (the web site, not the radio) that provides a giggle.

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Something that should amuse the short term panic people

Some people pointed to the record drop of 777 (and change) points on the DJIA (Dow Jones Industrial Average) on the day the House of Representatives rejected the original Encouraging Reckless Activity Bill as evidence of the decision being a bad decision. If you use their logic, the market should be up today. Up a lot. The market should be up this week. Up a lot. Here is a chart of .DJIA for the week. This is what a lot of people refer to when they discuss the market.

View the full .DJIA chart at Wikinvest

Today, Friday 10/03/08, is not showing up on the chart, but I expect that will change later on. Today's close of 10,325.38 is 40 points lower than the close for Monday of 10,365.45 - the lowest point for the day. If that was a justification for listening to the market and passing the bill, what does this mean?

Maybe it all means that paying attention to the short term fluctuations, even when alarming, is a bad idea. Not that a bad idea would stop Pelosi and The Bush.

Pelosi: "Gee Bush, what do you want to do tonight?"

The Bush: "The same thing we do every night, Pelosi—try to take over the world."

I still am continually amazed at the ability of the Speaker of the House to refrain from saying Narf on TV.


Addendum 17:26 10/03/08 -

The market will probably bottom out about here, but not because of this action by Congress.

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The Encouraging Reckless Activity Bill

If you want proof that Congress does not understand finance/economics/money management, watch C-SPAN. While there are some good things in this bill, they overestimate their ability to make a positive difference.

The road to hell is paved with good intentions.

I have only listened to a part of the discussion. It continues as I type. I was out of the room and did not catch the name of the representative speaking. This comment was not something unique to this speaker. I am not fond of redundancy and I am paraphrasing -

We need to do this to guarantee that average Americans will be guaranteed a return on their investment in the stock market.

Well, that average American should buy bonds. They are guaranteed by the American government. The more people buy, the lower the interest rates go, but the interest rate will always be positive.^[1] Of course, the government may default on these. US government default was seriously considered a few decades ago. The funny thing is The Encouraging Reckless Activity Bill increases the chances of a government default.

The argument from many of the speakers seems to be for the ability to guarantee investment return. This is a bad idea. This is already available with bonds, but if interest rates climb, the bonds may lose value .

A note on the screen listing some of the features of this bill listed Mental Health Benefits. I love irony.

Representative Jeb Hensarling made an amusing comment. Again I am only paraphrasing -

How can we have Capitalism on the way up, but Socialism on the way down?

This does capture a significant part of the problem. The idea that government can protect us from risk is Socialism. While many companies do a poor job of money management, the ability to take risk is the important part of having free markets (Capitalism is not the right term).

Too many people think that free markets will provide for survival of the fittest. This is usually a misunderstanding of how survival of the fittest works. Survival of the fittest depends on the circumstances of the environment - in the short term. Sometimes this includes criminal activity. Enron is one example of a company that was the darling of the market. Enron started out as a good company, but began to lie and cheat, in order to satisfy the expectations of the market analysts for ever increasing profits and projections. Should the government have bought Enron to keep people from losing money? No. If the government does that, it is subsidizing this criminal behavior. Were people hurt by this? Absolutely. A lot of innocent people.

What about the internet bubble? Should the government have bailed out the investors/speculators in the stocks that lost, in many cases over 90% of their value. Hey! I lost some money in that. I am not a great trader. I want my government bailout. On the other hand, I don't want the government to control how I can invest/speculate.

Representative Christopher Shays gave an excellent example of the misunderstanding of how markets work. He stated that the market dropped by a trillion plus dollars on Monday. He blames the lack of passage of the bill for this. That may be what many investors/speculators were thinking. He is using the open market behavior, which is usually wrong in the short term, to justify a removal of market forces and the introduction of greater political control of the markets. I guess he has never read Catch-22.^[2] Maybe he read it and never understood it. When I write that the market is usually wrong in the short term, I don't mean that the reaction of the market is exactly opposite of the correct response. I mean that the extremes of the markets are usually wrong. The time of greatest panic is the time to buy. The time of greatest optimism is the time to sell.

If we want the government to guarantee that people do not experience financial hardship, where do we stop?

Should the government guarantee that you will not lose your job, when your employer is going to go out of business, regardless of the reason?

Should the government step in and take over these businesses?

Should the government establish more regulations to control that business, even if the regulations were a significant contribution to the failure?

Read this article, Fannie Mae Eases Credit To Aid Mortgage Lending,^[3] from the New York times. It was written 9 years ago and points out the problems that were coming. Problems that have arrived. Problems that were encouraged by the government. The government that is now the solution to the problem.

And the example of Representative Chaka Fattah -

I request unanimous permission to revise and extend my remarks.

This is the way those in Congress make it seem as if they gave a literate speech, while not actually giving any speech. They add something, maybe ghost written, to the official record of the debate. Imagine if a presidential candidate were able to go back to revise and extend my remarks from a presidential debate. Just another example of how Congress isolates itself from reality. these are the saviors of the market.

I am waiting for the bill that will prevent injuries, because it is unfair for people to be injured. They try to legislate safety, and claim success, but when will they actually make rules that forbid activity that might put an individual at risk? We need to limit everyone to prevent the lowest common denominators. Read Harrison Bergeron.^[4] A very short story by Kurt Vonnegut.

Then, the Speaker of the House, Representative Nancy Pelosi finishes up with -

(This is) only the beginning of our work to protect the American people

But is being saved by Nancy Pelosi a fate worse than death?

Even Paul Krugman is for it in his article Edge of the Abyss.^[5] Could there be more convincing evidence that this is a mistake? Should we let him push us off of the edge of the abyss? He fancies himself standing on the abyss, pushing us away from the abyss. This is a good metaphor for the kind of footing he is accustomed to.

This mistake has now passed both the House (263 to 171) and Senate (74 to 25).


Footnotes:

^ ¹ If you have more demand for an item, in a market with open bidding, the price will go up. Buying a bond means that you are paying X dollars today for a fixed amount of dollars in the future. I use one year and round dollars for ease of explanation. If there are not many people bidding for the product, the price might be $96 now, for $100 in a year. A profit of $4 on a $96 investment. The interest rate would be 4/96 - just over 4% per year, since this is only for one year. If there are more people bidding for the product, the price might be $97 now, for $100 in a year. A profit of $3 on a $97 investment. The interest rate would be 3/97 - just over 3% per year, since this is only for one year. If there are a lot of people bidding for the product, the price might be $98 now, for $100 in a year. A profit of $2 on a $98 investment. The interest rate would be 2/98 - just over 2% per year, since this is only for one year. You are paying different amounts now, for a fixed amount in the future. The more you pay, the lower the interest rate.

At the end of that year, the interest rate could be higher, lower, or even the same. Even with bonds there is a risk of the interest rate being lower than inflation. Back in the 1970's this was common, since the interest rates rose very quickly. If you owned a long term bond before the interest rates started going up, you probably would not be able to sell that bond for as much as you paid for it, because the value of the money you paid has been eroded by inflation. At the end of the loan, the money you are paid is in current dollars. Dollars which have been devalued by inflation. You paid for it in earlier, pre-inflation dollars. Dollars that had more value than the current value of the loan. We do not currently have high inflation. Few predict it. This bill encourages it, because it decreases the confidence in the ability of the American government to manage its money competently. America becomes a greater credit risk. I do not base this on the current reaction of the of the bond market, because the market is usually wrong in the short term. The long term will tell us where interest rates will go. In the short term, the government sets some interest rates. In the long term, the impotence of the government to control interest rates is demonstrated by the markets.


^ ² Catch-22
From The Straight Dope.


^ ³ Fannie Mae Eases Credit To Aid Mortgage Lending
New York Times Business section
September 30, 1999


^ ⁴ Harrison Bergeron
From Welcome to the Monkey House
By Kurt Vonnegut (1961)


^ ⁵ Edge of the Abyss
New York Times Op-Ed
October 2, 2008

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Why IBM?

In the government's glorious attempt to do the impossible, they have banned short sales of many financial stocks. Today they added a bunch more. But first, why ban short sales?

A previously permissible short sale of stock was to borrow enough money to borrow the stock at the current price, and sell the stock. The reason to do this is the belief that the stock price will decrease.

Many people claim that this is somehow unAmerican. We should only want companies to increase in value. This is like saying that we should try to prevent rain, because people do not like getting wet. Or because Hurricane Katrina was such a disaster.

This clearly ignores the problems of not enough rain, just as the ban on short sales ignores the positives of short sellers.

Positives?

To eliminate the shorts eliminates the critics. Yes, there would still be the mindless talking heads with none of their own money at risk commentators. You know, like George Will telling Robert Shiller that . . . . Actually Nassim Nicholas Taleb tells it much better.

One illustration of a dangerous refusal to consider alternative histories is provided by the interview that media person George Will, a "commentator" of the extensively commenting variety, conducted with Professor Robert Shiller, a man known to the public for his best-selling book Irrational Exuberance, but known to the connoisseur for his remarkable insights about the structure of market randomness and volatility.

The interview is illustrative of the destructive aspect of the media, in catering to our heavily warped common sense and biases. I was told that George Will was very famous and extremely respected (that is, for a journalist). He might even be someone of utmost intellectual integrity; his profession, however, is merely to sound smart and intelligent to the hordes. Shiller, on the other hand, understands the ins and outs of randomness; he is trained to deal with rigorous argumentation, but does sound less smart in public because his subject matter is highly counterintuitive. Shiller had been pronouncing the stock market to be overpriced for a long time. George Will indicated to Shiller that had people listened to him in the past they would have lost money, as the market has more than doubled since he started pronouncing it overvalued. To such a journalistic and well sounding (but senseless) argument, Shiller was unable to respond expect to explain that the fact that he was wrong in one single market call should not carry undue significance. Shiller, as a scientist, did not claim being a prophet or one of the entertainers who comment on the markets on the evening news. Yogi Berra would have had a better time with his confident comment on the fat lady not having sung yet.

I could not understand what Shiller, untrained to compress his ideas into vapid sound-bites, was doing on such a TV show. Clearly, it is foolish to think that an irrational market cannot become even more irrational; Shiller's views on the rationality of the market are not invalidated by the argument that he was wrong in the past. Here I could not help seeing in the person of George Will the representative of so many nightmares in my career; my attempting to prevent someone from playing Russian roulette for $10 million and seeing journalist George Will humiliating me in public by saying that had the person listened to me it would have cost him a considerable fortune. In addition, Will's comment was not an off-the-cuff remark; he wrote an article on the matter discussing Shiller's bad "prophecy". Such tendency to make and unmake prophets based on the fate of the roulette wheel is symptomatic of our genetic inability to cope with the complex structure of randomness prevailing in the modern world. Mixing forecast and prophecy symptomatic of randomness foolishness.^[1]

Some of this is more clear if you read his book, but you get an idea of just how useless commentators are in making informed decisions about risk. If nothing else - they have nothing at stake. Short sellers put their money on the line. Those who buy stocks (longs) also put their money on the line. Both have opinions, but unlike the commentators, buyers and short sellers back up their opinions with money. Making money is what investment/speculation is all about.

Why would anyone listen to some fool who doesn't put his own money on the line, but wants to tell them what to do with their money? I guess there is always a bigger fool.

When it comes to finance, everyone thinks they know what is going on. Ignoring the short sellers has been a part of the problem with market bubbles. Silencing those who actually put their money on the line - that is poor risk management.

View the full WM chart at Wikinvest

WM was -1.526 (-90.30% from $1.690 to $0.164) just today (Friday, September 26, 2008). Almost as if the government coming in and bailing out the company is not a good thing. Those darned short sellers are the problem. This is a 6 month chart. You can see that Everything looks kind of stable. Right up until the beginning of May. Clearly, this is where the problems began. In after hours trading WM was up +1.526 (930.49% from $0.164 to $1.690) - right back to where it closed the day before

View the full WM chart at Wikinvest

If you go back 5 years, instead of the 6 month period of the first chart, you can see that WM has had some serious problems for a much longer period of time. At least according to the one measurement that matters to investors/speculators. Price.

Some have suggested that the problem is the short sellers forcing the price down. Short sellers did not create the problem of giving money to people with no ability to pay the money back - unless the buyers were able to turn around and sell the house for more money. And the adjustable interest rates remained low enough that the buyers might be able to keep making payments. As long as everything went perfectly in their lives, and they had not borrowed more than the value of the home, and they were smart enough to sell early enough in the housing downturn to not have lost to much of the value of their ill considered rush to grab some of the money growing on trees investment. As long as they could find a bigger fool to sell to.

View the full GS chart at Wikinvest

Back in March, GS was just under $180. I was commenting that it was odd that GS was not outperforming the rest of the similar financial companies. They were reporting record earnings. They were claiming that they were not affected by subprime. Why would the market not recognize that they were doing better than the rest? The obvious reason, to me, was that somebody knew something and was selling a lot of GS. Not all shorts will broadcast their intentions. Or it might have been someone selling a huge amount of GS they bought when they had more confidence in the company.

Remember Enron? The short sellers were telling everyone that Enron was a bad company, but people did not want to believe the evil short sellers. Enron was not the only company to feel pressure from short sellers. It is typical for the short sellers to spot problems long before any of the other analysts following the companies to notice problems.

One of the best ways to insure against bad market performance is diversification, but when the general market is going down, diversification may not accomplish much. To protect against that, people buy puts. These are options that protect against large losses. Without the ability to sell short when selling puts, the price of the puts has to go up to account for the increased risk of selling this kind of insurance.

The goal of investment/speculation is to increase the possibility of gain, while minimizing the possibility of loss. The insurance allows you to be more aggressive in buying stock, because you have protection against catastrophic loss. When that protection becomes much more expensive, the buying will decrease. This is not the goal of the ban on shorting financial stocks.

So. Back to the title of this post - Why IBM? Today there were a few companies added to the list of those which may not be shorted. Their financial circumstances are so fragile, that they need all of the market manipulation possible to keep them a break from giving up the ghost being driven down by evil short sellers.

The original 799 stocks^[2] that could not be shorted was not enough, so today they added 21 stocks to the list.^[3] All the unshortable companies seem to be financial - banks, credit, realty, investment, trading. So, why IBM?

The Company’s major operations include a Global Technology Services (GTS) segment, a Global Business Services (GBS) segment, a Systems and Technology segment, a Software segment and a Global Financing segment.^[4]

Finally, below there are contributions from Cato@Liberty on why liberals are thrilled at this government take over of large parts of the financial markets. The hubris described by Dr. Taleb, in the passage about George Will's underestimation of the predictability of the markets, is just a hint at the damage that would be done by those on the left - those devoted to the ridiculous belief that the government can control markets. By attempting to control the markets they believe they can protect the poor pathetic common man from himself. This is far more dangerous than any private corruption could ever be.

When the Mafia sells protection from the own behavior, we recognize it as a crime. Why is this not so with the government?

One reason is that the Mafia has more control over effects of their actions than The Wizard of Oz - pulling levers behind a curtain to create the impression of potency. This is Enzyte for the financial markets. As should be obvious -

In our opinion the primary effect Enzyte had on its users was to shrink the size of their wallets.^[5]

Deal or No Deal?

Fannie and Freddie


Footnotes:

^ ¹ Fooled by Randomness: The Hidden Role of Chance in the Markets and Life, 2nd Edition Amazon(US), Barnes and Noble (US), Amazon (UK). Paperback: Random House, 2005, Penguin (UK) 2007. Hardcover: New York, and London: Thomson Texere, April 2004 (1st Ed. November 2001). Published in 20+ languages. “One of the Smartest Books of all Time” (Fortune).

History has been extremely kind to the book: Of all the books published in 2001, it seems to be currently among the 2 or 3 highest selling ones, if not the highest (across all categories, fiction, nonfiction, etc.).


^ ² SEC List: The 799 No-Short Stocks
From CNBC.com
Page 1, Page 2, Page 3, Page 4, and Page 5.


^ ³ More than 20 Firms Added to Short-Sell List
From CNBC.com


^ ⁴ Google Finance
IBM Summary
My italics.


^ ⁵ Enzyte Marketers Sued
Press Release, Hagens Berman
March 17, 2004
From Quackwatch

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National Security Roulette Follow Up (Rant)

I decided to post this on both blogs, because there may be some who only reads my rants blog. It says a lot of what I think needs to be said about the Constitution.

Here is a response to my post National Security Roulette, which was an expanded comment to a post by Too Old To Work, Too Young To Retire called Airport Security Again. The TSA (Transportation Security Administration) has a lot of problems and I chose to address some of the other problems, aside from profiling, or the lack of it. Hmm, not the lack of it, but the clumsy attempts to be doing everything possible to avoid the appearance of it - profiling, that is.

TOTWTYTR said...

A friend of mine recently returned from a week long trip to Israel. The short story is that airline security, by necessity, is much more serious a matter in Israel than it is in the US.

Not only is the questioning more intense and appropriate, but they actually *gasp* profile. Quite successfully to as it happens.

Profiling is another tool that can be used. As with any tool it can be misused. If we alienate Muslims, or Arabs, or any other group of which a small number are a threat, by using just that identity as our profile, we lose resources and gain nothing significant. The resources we lose are those in the community who are opposed to what the terrorists are doing. Even if they agree with the political aims of the terrorists, they may be completely opposed to the methods. What we gain is the appearance of safety, but not the substance.

We need counter-terrorist people from the communities that threaten us. One problem with indiscriminate profiling, other than the inherent oxymoron, is that it is just a stereotype that leads us to make mistakes that are easy to manipulate. Back in the days when drug smuggling on airlines was more common, one tactic was to have a very normal looking person carry on the drugs, with a very suspicious looking person a couple of people behind in line, the security person becomes so eager to get to the person who is the profile poster boy that he performs a more cursory than usual examination of all those between the him and the suspect.

We need to be thinking about the ways that we make security worse by profiling, but there is nothing inherently wrong with using a profile that is more specific than just Arab-looking or Muslim-looking. The FBI uses profiles to track down all sorts of criminals. The idea that this should be abandoned, just because of one of the parts of the profile is not politically correct, is a bad idea.

With the attacks on abortion clinics, the profile would have included all Christians. Christians oppose abortion and would support the aim of someone trying to limit abortions. Few Christians have supported the use of terrorism to achieve that goal. Muslims have expressed displeasure with the secular excesses of our society. The terrorists claim that this tolerance, which is essential to our Constitution, is what they seek to destroy with violence. Few Muslims have supported the use of terrorism to achieve that goal.

To limit the profile, of those attacking abortion clinics, to Christians would have been a mistake and probably would have alienated those most likely to be able to help in identifying the criminals. Christians have a similar history of killing people because of religion and they also have the history of being extremely peaceful. The same arguments of "religion of peace" and "look at this passage that demonstrates the inherent violent nature of the religion" could be used for Christians as well as Muslims.

The important point in profiling is to have people with both the capability to use critical judgment and the the permission to use critical judgment. This is not really any different from my approach to paramedics. The people who work for the TSA do not seem to have either. I'm sure there are screeners, who could be taught to use critical judgment and some who understand, but just are not permitted to use critical judgment. The approach of the TSA administration seems to be to discourage all possible critical judgment. This is not the way to security, no matter how prominently the word Security is placed in the organization's name.

Paramedics have the same problem. Protocols written to prevent critical judgment, end up discouraging all judgment. A wise medical director will know what his/her medics are capable of, will educate them to use critical judgment, and will write protocols to encourage them to use critical judgment.

While I have been posting on less medical topics lately, the reason is to discuss problems with judgment. Bad science, bad oversight, and bad judgment in general. These are problems that have significant ramifications for all medical topics.

One of the things opposed by the terrorists is the open nature of our society. This is something protected by our Constitution. They have been somewhat successful in getting us to remodel our society in a way to limit freedom. The powers given to the government, in reaction to the terrorism, have made us less protected by our Constitution, in exchange for the appearance of safety. How much of that appearance is real? I don't know, but too much of the method is in ways that strip America of the things that this country was created to exemplify.

One of my favorite quotes is from A Man for All Seasons. I hate to give a recommendation for a movie over a book, but I have not read the play. The acting is so good, that it probably only adds to the quality of the material. I think these quotes stand on their own, but I can provide more information if you disagree. This is from hundreds of years before our revolution, in the country America fought against for independence, a country not protected with something like America's Bill of Rights.

William Roper: So, now you give the Devil the benefit of law!

Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?

William Roper: Yes, I'd cut down every law in England to do that!

Sir Thomas More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law, for my own safety's sake!

And in another part, when he is having the law used against him:

Sir Thomas More: You threaten like a dockside bully.

Cromwell: How should I threaten?

Sir Thomas More: Like a minister of state. With justice.

Cromwell: Oh, justice is what you're threatened with.

Sir Thomas More: Then I am not threatened.

We have to be careful what we give up to protect ourselves. We end up mocking those who fought and died for the freedoms we give up. Mocking those who continue to fight and die to protect and defend that Constitution. In order to protect us, it sometimes needs to protect those who would harm us.

To put this in the EMS perspective, we need to be looking to do what we can to protect and defend the well being of the patient. This is our entire reason for having EMS. Rules that defeat that purpose need to be opposed. Whether they come from doctors, lawyers, politicians, or medics. We need to stop putting the patient last, or so far down the list of priorities, that the patient might as well be last. Both directions lead to harm, but continually working to improve the care of patients is one that learns from its mistakes and improves.

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Happy Independence Day.

Tomorrow is the anniversary of the stated intent to become free of a ruler who did not respect those living on this continent.

We ended up with laws that were very much flawed. For example, slavery was legal and women could not vote.

Today is the anniversary of the end of the battle at Gettysburg, the end of reasonable expectation that the rebellious states might succeed. For many, this defeat is something they mourn. It was a battle of federal rights versus states' rights. Neither side was fighting for individual rights. The side that lost was fighting, in part, to protect the right of one human being to own another. In other words, fighting to keep individuals from having rights. We should rejoice at the defeat of such a barbaric idea. The side that won did not do anything to put an end to the same practice until after the war was over. So maybe not so much to rejoice over, either.

But what about the Emancipation Proclamation?

This only freed slaves in states that were not under the control of the Union. It was a bribe. Come back and you may keep your slaves. A not so pretty speech, full of sound and fury and signifying nothing. It came before Gettysburg, so the outcome was much more dubious. The need to weaken to opposition was still great. This was "Come back and all is forgiven."

One of the most dramatic moments at Gettysburg is described at William The Coroner’s Forensic Files in the post Joshua Chamberlain. Not your typical American, but the kind of person who did make this country possible, a truly impressive leader. This is not meant to ignore the bravery of all of those who fought with him or against him, but his action was pivotal.

As weak and pathetic as the Emancipation Proclamation was, the follow up to the battle was not. The Gettysburg Address was a momentous speech - brief, motivating, memorable.

Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.

Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate—we can not consecrate—we can not hallow—this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government of the people, by the people, for the people, shall not perish from the earth.

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The Kritocracy of Justice Stevens

SCOTUSblog has the full decision of the court available at Heller Opinion.

Let's start with a quote from the dissent of Justice Stevens to District of Columbia v. Heller.

I do not know whether today’s decision will increase the labor of federal judges to the “breaking point” envisioned by Justice Cardozo, but it will surely give rise to a far more active judicial role in making vitally important national policy decisions than was envisioned at any time in the 18th, 19th, or 20th centuries.

The Court properly disclaims any interest in evaluating the wisdom of the specific policy choice challenged in this case, but it fails to pay heed to a far more important policy choice—the choice made by the Framers themselves. The Court would have us believe that over 200 years ago, the Framers made a choice to limit the tools available to elected officials wishing to regulate civilian uses of weapons, and to authorize this Court to use the common-law process of case-by-case judicial lawmaking to define the contours of acceptable gun control policy. Absent compelling evidence that is nowhere to be found in the Court’s opinion, I could not possibly conclude that the Framers made such a choice.

For these reasons, I respectfully dissent.

His statement, "The Court would have us believe that over 200 years ago, the Framers made a choice to limit the tools available to elected officials wishing to regulate civilian uses of weapons," demonstrates a profound ignorance of the origins of the Bill of Rights.

The Bill of Rights was not something proposed by the Framers. The Bill of Rights was forced on the Framers, because of the distrust of the power of government. The citizens of this country decided that they would only accept a government with these limitations on the government.

His bias blinds him.

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A Bit of History And Then I Rant About the Bill of Rights

From Wikipedia's June 22 page. I found the following interesting.

June 22:
1812 - Napoleon declares war on Russia and invades.

June 22:
1815 - Second abdication of Napoleon.

Apparently the invasion of Russia was not one of his better ideas, but it does have a great soundtrack.

June 22:
1941 - Germany invades the Soviet Union in Operation Barbarossa, one of the most dramatic turning points of World War II.

Has Hitler never seen The Princess Bride?

"You fell victim to one of the classic blunders! The most famous is never get involved in a land war in Asia."

On the anniversary of Napoleon's invasion!

Yes, Hitler died in 1945 and the movie came out in 1987, 14 years after the book, but Hitler was into all of that predestination, divination, Nostradamus stupidity. Therefore, he should have known. :-)

June 22:
1942 - Erwin Rommel is promoted to Field Marshal after the capture of Tobruk.

So, even the blind nut occasionally makes a good move. Fortunately, he did not do this too often. Rommel was the one guy who might have stopped, or slowed Patton, but Hitler prevented this last real chance he had at survival because of his superior intellect. And people still worship this poster child for destruction - his self destruction not coming soon enough.

June 22:
1969 - The Cuyahoga River catches fire, which triggered a crack-down on pollution in the river.

It looks like William Goldman is going to be supplying my quotes today. "Think ya used enough dynamite there, Butch? "

When you are dumping your garbage just outside your door you don't notice it, maybe because the air is too thick with smoke, you might have a problem. When your garbage catches fire and it is not in an incinerator, you might have a problem. It's this kind of idiotic management of waste that gives global warming acolytes ammunition.

But the earliest event is probably the most significant.

June 22:
1633 - The Holy Office in Rome forces Galileo Galilei to recant his scientific view that the Sun, not the Earth, is the center of the Universe.

Galileo is supposed to have said, under his breath, "Eppur si muove!"

"When the legend becomes fact, print the legend."

This has been translated as, "And yet it does move!" Not a translation that works for me. The translation that has so much more going for it is:

"Still, it moves."

A physics pun from one of the giants of physics. Something that provides a visual concept, rather than just a statement. If there is any truth to the legend of his statement, then "Still, it moves," is what I would expect from Galileo. Not even an exclamation mark needed on the end.

Still - The earth/church is still, stationary, unmoving, calm, free from discord, unchanging, silence.

It moves - The earth does move, tradition cannot halt progress, minds continue to explore new ideas, the attempts to cover up knowledge will fail.

This is not isolated to Catholicism, or religion, or science. This is about what makes the US Constitution such a great document. The respect for ideas. You may disagree with me, but you may not silence me. I may disagree with you, but I may not silence you. Truth does not come about with censorship.

Still, we give up this right, little by little - fighting words (as if we are animals and incapable of restraint), hate speech (as if someone's feelings should be more protected than speech), the expansion of copyright limitation (something to appease the Disney corporation, one founded on the production of modified public domain material), and the inevitable return of attempts to prevent flag burning (often by the very religious creating a modern golden calf in the flag).

Preventing flag burning is not the answer. Preventing the continual erosion of protected speech is far more important. Silencing Galileo did nothing to prevent his ideas from getting out. Cover ups do not work. Stifling flag burners does nothing to stop their access to other forms of expression, but does give them something to speak about.

Secrecy is another area of concern. When it is exaggerated, the attempts to make everything secret end up decreasing the protection of legitimate secrets. More is better sounds good to a lot of people, just not to a lot of smart people.

Why are we surprised at the continual narrowing of the scope of other rights protected by the Bill of Rights?

Protecting my speech means I need to protect the right of someone else to do the same, as unpleasant as I may find that expression. When we place limitations on this right, just to make ourselves feel better, to be less offended, we give up too much of our own right. The Bill of Rights is not a feel good document. It is an uncomfortable compromise that helps all of us in the long run. It helps protect us from those who would lie to us to lead us to further restrictions on our rights.

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Another School Massacre Anniversary

June 11 is the anniversary of Walter Seifert going to a school, killing 11 people, and wounding 21. The Cologne school massacre was not prevented by gun laws. Actually, he never even used a gun. He used a flame thrower and a lance. Then he killed himself with insecticide, perhaps this was his way of making a statement. He also used a wedge to block the door, so that students were trapped. Would pesticide or wedge laws have prevented these killings?

He was a veteran of World War II and probably learned how to use the flame thrower, then. The lance, well the last battle that lances had a major part on the winning side was the Battle of Isandlwana in 1879. My familiarity with lances has more to do with when the ambulance gets a new door and the ambu part is missing. All that is on the other door is lance.

I do not mean to make light of this. It was a tragedy and being burned to death by a flame thrower is not up there on my list of acceptable ways to go. The man was crazy, so deterrence by logical means probably would not have much effect.

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Fred Fisk thinks America is "barbaric."

NPR has a show called Metro Connection. A "senior commentator" named Fred Fisk was spouting off some idiocy Friday about the Kimbo Slice mixed martial arts fight.

Mr. Fisk states,"Individuals with multiple personalities are said to be schizophrenic." Actually, the term for a multiple personality disorder is Multiple Personality Disorder (MPD). Imagine that. Schizophrenia is more of an inability to deal with reality. How appropriate.

The pontificating pundit pretends that there is no difference between cock fighting, where they have no capacity to consent to the activity and the loser stands a good chance of ending up dead, and mixed martial arts. People competing in mixed martial arts are protected by rules, and are seriously hurt less often than in many other sports.

Mr. Fisk states that, "In which, two men, often in cages, engage in combat, with very few rules, which results in beatings so severe, that people who used to inflict them were arrested."

Wow! Where to begin?

The "often in cages" appears to be a way to suggest that these are not adults with free choice. Cages = lack of choice.

The "with very few rules" suggests a bias toward a lot of rules. This says nothing about the quality of the rules, only the number. When it comes to rules, for Mr. Fisk, more appears to be better. No fan of the Founding Fathers. He would probably be thrilled with fewer rules, if there were a complete ban on the things he disapproves of other adults participating in.

The "beatings so severe" is meant to suggest that there are serious injuries. As with any contact sport, there occasionally are. He does not provide anything other than his opinion of the severity of the "beatings."

This idolater of regulations describes the "beatings" as ones "that people who used to inflict them were arrested." Mr. Fisk is apparently not one to believe in innocent unless proven guilty. He does not consider that the same could be said of skateboarding. It is so bad that people, who used to do this were arrested. And skateboarding doesn't even involve beatings, so that must be unbelievably "barbaric." Try playing golf in a public area, where golf is not permitted. Will that result in an arrest? No reason why it shouldn't.

Sports are activities that involve competition and generally need to be practiced in a controlled environment, so that they do not interfere with the daily activities of others. This does not work out so well, when you are trying to drive a vehicle anywhere near a stadium around game time.

He apparently has no concept of anything good coming from mixed martial arts. He thinks that it is shocking that the military is using this in their training. His opinion of the benefits of this training, "What nonsense. How much hand to hand combat is involved in present day warfare?"

In present day warfare, there is the need to enter homes and clear them room by room. It appears that Mr. Fisk does not wish to have American soldiers get close enough for the possibility of hand to hand combat. The distance, between yourself and a potential opponent, that firearms instructors tell you is unsafe is about 21 feet. This means that if you have a gun and are presented with someone not armed with a gun, the unarmed person may be able to close the distance between you and them before you are able to draw, aim, and shoot effectively to stop that person, if the person is closer than 21 feet.

While the military weapons would be expected to be aimed and used more quickly, do we lower the distance to 15 feet? How many homes have that much room for soldiers to enter, remain clear of each other, not engage in any physical contact with anyone in the room, and remain safe?

Should the military just lob some grenades into the homes that are not certain to be unoccupied? Napalm? Cluster bombs? Tactical nuclear weapons? Certainly, no hand to hand combat. That would be "barbaric."

How do you take someone into custody if you do not engage in different levels of hand to hand combat? Mixed martial arts does a great job of preparing people to restrain others without hitting them.

Fred Fisk would probably be one of the first ones to complain if an American soldier were to kill a civilian, but he does not see that there is a need for options to killing.

Mixed martial arts can give the appearance of out of control violence, but that is only appearance. This, as with other martial arts, can be an excellent form of physical conditioning, which is just one way to instill discipline in otherwise difficult to discipline people.

This may help to keep the idle hands of restless young adults busy and engaged in productive activities, rather than engaging in illegal fights, sometimes with weapons.

I had been looking for the proper music to play while writing this. I like Albinioni's adagios when writing, but this screamed for something more lively. Welcome to the Jungle by GNR? No.

Highway to Hell by AC/DC. After all, this is one of those paternalistic fools, who is willing to give up all of our rights to protect us from ourselves. This road to hell is being paved with what he claims are good intentions, not that he would care.

If only we were as civilized as Mr. Fisk, we could get on the radio and whine about how "barbaric" the peons are.



Added 6-11-08:

The 1955 Le Mans disaster is the kind of tragedy that should not be a concern at any type of martial arts competition. 83 dead and over a hundred injured due to a crash. The hierarchy of ethical worth to Mr. Fisk probably ranks motor sports as more acceptable than fighting, because he sees fighting as an immoral form of sport. Mr. Fisk probably wishes to ban auto racing, too - a waste of fuel, redneck entertainment, no speed limits, . . ., although it is big in Europe.

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Escape From Washington, DC

Somebody in DC is putting a little too much faith in government. Certainly, not anything surprising about that. The problem is in the method. Considering DC, still no surprise.

A bunch of bloggers have written about this and I probably have little to add, but I see this as one way to help explain the excesses of government power. I have links to the other bloggers below.

1. The all knowing benevolent overseers have decided that what one does in the privacy of one's veins, or lungs, or stomach is not up to us and should be regulated - For our own good.

2. The all knowing benevolent overseers have decided that the second amendment to the Constitution, in the part known as the Bill of Rights, is not to be honored in many places, especially those where one might wish to have some sort of protection against criminals. Again, this is done - For our own good.

3. The all knowing benevolent overseers have decided that the resulting crime, even they will refer to it as drug crime, is so bad that we need to institute a form of police state - temporarily, at least until we get used to the idea and accept it as just the way things are in the post 9/11 world. One more time, this is done - For our own good.

Government is not necessarily bad, but the government that creates a crime that does not harm others, unless engaging in another crime at the same time, is out of hand. This crime leads to significant violence, so much so, that the government feels a need to create a temporary police state. This same government has the possibility of assistance from the citizenry entirely eliminated, because the government has completely disarmed the citizens. Because, as TOTWTYTR is fond of saying "When seconds count, the police are only minutes away!"

The only recourse the people have is not self reliance, but calling 911 and hoping that someone shows up in time, hoping that when someone shows up, they will do something to stop the crime, and hoping that there will not be retaliation from the cronies of the criminal(s) who was the reason for the 911 call.

Better to put up roadblocks, stop all vehicles (because real criminals don't walk), then ask why the occupants of the vehicle are entering the area, and if the answer is considered unsatisfactory, deny entrance to the vehicle. If the vehicle does not leave immediately the occupants may be arrested.

Unsatisfactory could include a whole bunch of things, such as "I want to score some crack, but I forgot my wallet and thought I would just cap some MoFo and take his drugs." This is not the kind of person you want to let in. BUT are we doing anything to discourage violent crime? What is this person likely to do? "I can't get into the usual places to get drugs, I don't have money, but I do have an illegal gun (even though no law would allow a violent criminal like me to obtain a gun), so I might as well use it in this nicer neighborhood. I just love the way unintended consequences make my life more interesting."

Since the traffic stop would allow the police to check for warrants and other reasons to detain people, it will probably discourage those wanted by the police from using this means of entrance.

"Just let me off at the corner, here. I'll meet you on the other side of the checkpoint."

"The police can't be that stupid. They will stop you and you're busted."

"The police aren't that stupid. Those are the rules the politicians came up with to sell this to people who are that stupid. The police have to follow the rules."

I wrote discourage for a reason. It will not stop much of anything. It will transfer illegal activity to other areas, as crackdowns are known to do.

There was another post about the way Beijing is being made not to resemble London, with cameras everywhere, but to surpass London. Washington, DC is planning the same kind of thing.

China is doing this to bring about the end of dissent - You know the stuff protected by the first amendment to the US Constitution. Can the politicians in America be too far behind? We don't really need those Bill of Rights things, after all we have a benevolent government. The people who wrote the Bill of Rights were a bunch of treasonous radicals.

Trust us. We're from the government and we're here to help.

The title of the post is a reference to the movie about isolating Manhattan as a penal colony - Escape From New York. It was the first thought I had. Well, I have covered the things that I felt needed adding.

Here are the links to other blogs commenting on this:

LawDog - Papieren, bitte!

No Looking Backwards - This Just In!

Too Old To Work, Too Young To Retire - In the Pantheon of Stupid Ideas.

Bayou Renaissance Man - China's all-seeing eye - coming to America?

The Volokh Conspiracy - Is the DC Checkpoint Plan Unconstitutional?

And a news story about the DC camera plan:

Examiner.com - Privacy advocates, lawmakers criticize citywide camera plan.

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Price Controls Rant

From Better and Better, through View from the Porch comes this story of "Price Gouging."

Apparently, Americans have become so dependent on the government that we no longer need to shop for the best price. The government will order those nasty price gougers to pay us back if we pay too much.

There used to be a TV ad that showed an office full of everyday things, one at a time all of the items made from petroleum disappeared, until almost nothing was left. The purpose of the commercial was to demonstrate how important oil is to us, since petroleum is in almost everything. The message I got from the ad was that rising oil prices will drive inflation, since petroleum is in almost everything.

The government inflation people still exclude food and energy (oil mostly) from inflation numbers, since the food and energy prices are much more volatile than most other prices. It is as if food and energy prices are not important to consumers. They could include a yearly average of the food and oil inflation numbers as a way of eliminating the majority of the fluctuation, but it is better to ignore the problem if you don't want to deal with the actual inflation. Especially if you profit from the deception.

We need to admit that there is an inflation problem and the government is only going to make it worse.

The government tells us there is no inflation and lowers interest rates. This tells us that money is cheap and everyone is happy as long as we keep spending. Recently the banks started to realize that lending out money at low interest rates is not the best thing for their business.

Money is becoming less available as the interest rates decline. Those in the marketplace do not see the benefit in lending money out at a a couple of interest rate points higher than they borrow the money. They may not get their money back and the collateral (if any) may not be worth much. Even if they do get the money back, how much is it worth when they do get it back? The American Peso (you can call it the dollar, but if it falls like a Peso . . . ) makes it so that everything that we import is much more expensive, while everything we make to sell overseas is falling in price. The dollar is demonstrating the confidence people have in the US government to deal with America's problems. The free market has much more confidence in Europe (a lot of socialist economies there) and China (communist?).

Since 2002 the major currencies that are traded have almost all gone up. Swiss Franc from less than $.60 to almost a dollar; Australian Dollar just over $.50 to almost a dollar; Canadian Dollar from about $.65 to over a dollar; Euro from less than $.90 to over a dollar and a half; only the Mexican Peso is down, but even that Peso seems to be rising, now.

What does this matter to us?

We don't use those currencies. So what?

Commodities are rising faster than the currencies. Gold from less than $300 to $970; Heating Oil from less than $.60 to over $2.80; and the big one - Oil from about $20 to over $100.

Oil we all seem to be able to relate to, but this is only a part of the picture. Remember oil is in almost everything, so even stuff made in China and sold at Walmart is more expensive.

As far as the currencies, we all use them - even if we never touch them physically or convert dollars to another currency.

All of those currencies are traded in US Dollars, so when they become more valuable it means that the US Dollar is worth less than it was before. There still is a space between worth and less, but we seem to be getting closer to worthless.

Everything we buy that has parts from overseas becomes more expensive. Even the overseas jobs that have been created in an attempt to avoid high labor costs in the US are becoming less attractive to US companies.

This is what the free markets think of the worth of the US. This is not an optimistic view.

Yet we pretend that we have free markets - this is America, the home of free markets.

The government is trying to keep us spending money by making it easier to get, but the banks are not singing along with the government karaoke of "Hakuna Matata."

The banks are now (not so much over the last five years) acting as if it is a game of musical chairs and they do not want to be the one left standing. And there seems to be a need to quickly get up and remove another chair. Oops, there goes Countrywide Financial. Bye-bye Bear Sterns.

The interesting one is Goldman Sachs. They reported record earnings and bragged that they made money off of the sub-prime problems, but their stock price has been falling at the same rate as all of the financial companies that lost a lot of money on sub-primeloans. What haven't they told us? Somebody knows something, because people just are not buying this very profitable company. They are treating it as if those reported profits are a lie.

While we pretend that we have free markets, we try to limit what things cost us by the "there ought to be a rule" method of whining to the government to protect us from big bad reality. This destroys free markets.

Price controls lead to greater scarcities. Why would a gas station sell gasoline at a loss? The station owner only makes a few cents per gallon before expenses.

Many won't sell at a loss, or will do whatever is necessary to minimize their losses. Maybe then we go back to those wonderful gas lines we had in the 1970s.

Should we have price controls on other things I cannot afford?

I want a nice big house, but the price of houses has gone up a lot.

Wait, the market seems to be correcting that problem and the government did not even step in to say that you cannot sell your house for too much profit.

Why should the government decide what is too much profit?

The government has rarely demonstrated any self control, whether limiting spending or any other excess. Government is not about self control.

Ex-governor Spitzer might encourage someone in government to start price controls on hookers (escorts). Late night comedians have said that they are charging ridiculous amounts for their services. Maybe late night comedians are the experts.

We do not need to have the government come in and tell us what a product or service is worth.

They already overcharge us with taxes. Where are our price controls when the government has a bottomless checkbook backed by their servants - us?