our comedian-in-chief

CBS captures a couple great quotes in this article.

"[T]here is no* country on earth that would tolerate missiles raining down on its citizens from outside its borders..."

"So if we're serious about wanting to resolve this situation and create a genuine peace process, it starts with no* more missiles being fired..."

* whereby "no" excludes places that the Obama Administration and partnering governments like to bomb.

stone savages

We checked out Oliver Stone's new movie. It reminds me how raw the drug war is for me. For some people, it's child abuse, others clean water, others the rainforest. My thing is the drug war. Who knows what makes us drawn to our particular pet causes. A form of specialization of labor, so to speak.

That powerful men can so mercilessly implement such terrible policy is nothing short of sociopathy. That we have so aggressively prosecuted this war will confuse future generations just as much as we are confused about how racial and gender equality could be anything other than obvious.

microsoft's challenge

Well, Microsoft finally released it. The WinPen, no, Pocket PC, nope, XP Tablet, huh-uh, Smart Display, ha, Project Origami, oops, Courier, nada.

I refer, obviously, to the Surface, Microsoft’s vision of the future that was released yesterday. No, wait, in 2008. And it’s not so much released as it’s teased.

Microsoft deserves all of the sarcastic comments that can be thrown at it. They’ve been working on the basic current tablet form for over a decade, and in the meantime, Apple’s angle from the old Newton line not only came to market first, but the iPhone reconfigured the entire cell phone industry, and the iPad actually exists, now, in the present. For sale. By the time the Mac had been out for five years in the 1980s, Microsoft was already out with version 2 of Windows.

I’ve been working on a long piece ever since I started chewing on the whole Windows RT is called Windows but doesn’t-run-Windows-software-except-when-it-does strategy announcement. The reason is that for all the poking-fun to be had here, I think Microsoft really is moving forward with an innovative approach trying to transition to the next stage of computing, in stark contrast to most other companies (and most other industries, for that matter).

The short of the story is that the initial personal computing paradigm that developed in the late 1970s and early 1980s was a time of vibrant innovation and competition. What’s so remarkable about the business of the computer industry is that virtually every company died. Apple and Microsoft are basically the only two major companies that survived with any meaningful level of influence, and one way of understanding that survival is that they both were able to transition from an initial successful product to a second, improved product.

Same end result, but they got there in very different ways. Apple reinvested earnings from the Apple line of computers into the Macintosh line of computers. Microsoft leveraged its market power in MS-DOS to transfer market power to Windows.

Apple’s strategy is repeatable: a company can continually improve the customer experience over a very long period of time, if that is the focus of the company from the top down. Indeed, that’s what a market-based system of political economy is supposed to provide.

However, Microsoft was dependent upon a unique set of circumstances, a perfect alignment of the stars. Odds are that the legal, business, and technological environment of the 1980s will never appear again. Microsoft, unique among all of the tech companies, didn’t make ‘computers’ – they only made the operating system. It was IBM’s brand in corporate America, not anything technological in MS-DOS, that gave Microsoft market power. It’s also important not to forget Intel in the story, since the 1990s were really a Wintel duopoly more than a Windows monopoly. For three decades, Microsoft has sold MS-DOS and then Windows not to consumers, but to manufacturers, because being compatible with the IBM standard was paramount.

Today, IBM no longer even makes personal computers, and corporate buying represents a smaller overall share of computing purchases. Accessing networks (such as the internet, wi-fi, and cellular communications) and providing mobile form factors are the primary tasks assigned to an increasing number of devices. There are also a much greater number of users who have made their mobile computing choices today than had made their personal computing choices a quarter century ago. Microsoft’s challenge is how to make the next transition, how to be relevant in the mobile computing paradigm and beyond (assuming, of course, it wants to do that).

Does it try to leverage the market power of Windows to sell manufacturers on the next product, or does it try to make a device itself that will appeal directly to consumers? Both strategies are interesting, and personally, I think Microsoft could execute either one reasonably well. What I think is critically important to understand is that these strategies are completely incompatible with one another, and there are tradeoffs between them. I wonder if Microsoft’s senior executives understand that, or if they have actually drunk the Kool-Aid and think they can simply muscle into mobile touch-based devices the same way they transitioned to the mouse and desktop. In other words, would Microsoft accept being a top five manufacturer of mobile computing devices? Or would they rather bet the company trying to reclaim the glory years of the 1990s?

As a long-time Apple user, I do enjoy the delicious irony that Microsoft management has appeared increasingly trapped over the past few years by the very success of that silly toy of a user interface.

back to where it started

(P) One of the reasons I did not support then Senator Obama in the Democratic primaries was his embrace of the Establishment way of thinking with regard to using American power to force sovereign nations to obey edicts from Washington. This kind of power projection not only makes us less safe as it incentivizes the very foes we are supposedly fighting to oppose us more directly, but moreover, it undermines our position of leadership by wounding the most important levers of our credibility. The true greatness of the American century was in our persuasion of nations to voluntarily join us, aligning economic, legal, environment, and human rights policies with our own, sometimes literally rebuilding countries in our own image.

In particular, the Senator spelled out his obeisance in a Foreign Affairs article in the summer of 2007. [Unfortunately, it is behind a paywall - funny that you have to pay for the privilege of accessing Conventional Wisdom. It's like they don't really want you to know what the DC crowd are thinking. But you can go to your local Elite University and find publications like Foreign Affairs easily enough, assuming the University Police don't taze you out of the library first.]

While broadly embracing that fun phrase The American Way of War (such as, for example, never actually using that little three letter word), Obama's article singled out one country in particular for action - Iran.

Five years later, we basically have confirmation that President Obama personally authorized war against Iran. Specifically, he instructed the development and release of a malicious computer program that targeted uranium enrichment equipment in the country. This worm, Stuxnet*, accidentally became public a few years ago - apparently the Obama Administration originally thought they could do this and keep it secret forever - and so the guess was that the Israelis and/or Americans were involved. This weekend, the Corporate Media paid homage to what Glenn Greenwald brilliantly calls Obama the Warrior as that guess became more like a sure thing.

So here we are. We can have legitimate policy disputes about the drug war or financial bailouts or warrantless spying or Race to the Top or many of the other Administration policies that I adamantly oppose. But we now have The Paper of Record openly explaining that the President of the United States committed an act of war against a sovereign country. How can anyone who opposed the major policies of the Bush Administration support the reelection of President Obama? How about anyone who believes in basic principles like the Constitution or national sovereignty?

That's going to be a sticky line of thought the next few months.

* Incidentally, Stuxnet in particular demonstrates the law of unintended consequences and how this type of behavior is a direct threat to our national security. Of course there are going to be computer programming errors in a project that complex. That's how this stuff works. Furthermore, Stuxnet is an extremely dangerous worm because it actually destroys the hardware it operates. That hardware isn't some Iranian bomb - it's equipment manufactured by Siemens that is used all over the world for producing nuclear power. We have now proven to every foreign government, organized crime operation, and terrorist group the possibility and effectiveness of damaging control equipment. It's a good thing our own country doesn't depend on any computer systems to keep our infrastructure running!

this is pretty funny

This was probably the most entertaining part of the evening.

tech punditry and investment advice

I am obviously not a daily reader of MG Siegler's ParisLemon as I am commenting on something that was posted last week, which in mobile years might as well be last century. Anyway, the particular post is nerdspasm worthy - if you just so happen to be into both tech and finance.

Conveniently, I am.

Siegler links to Chris Dixon posting Warren Buffett's annual shareholder letter as CEO of Berkshire Hathaway (more specifically, the parts that are purposefully released PR-style for public consumption; the full letter is more detailed). Siegler's commentary reads (mostly)

Ask anyone why gold is so valuable and they’ll immediately tell you that it’s a rare commodity. And that’s true. But beyond its decorative value, which is minimal at best, what value does it actually produce? Very little.

Well, very little beyond selling it to the next fool who will pay more for it.

I don't know whether Siegler is casually interested or follows this more closely, but Buffett's letters are always fun fodder for the investment world and in particular the 2011 letter is quite remarkable. Indeed, this letter is darn near infamous.

First, Buffett yet again exemplifies that being a billionaire does not cause stupidity; it really is possible to be rich and maintain some touch with reality. Specifically, he acknowledges in the letter that he was wrong on housing finding a bottom. Contrast that kind of directness with how Manhattan financial firms operate, like Goldman Sachs Chief Financial Officer David Viniar giving his incoherent explanation of 25 standard deviation moves. Actually, don't contrast them. It will just make you cry (whether over math or the failing of our institutions, is in your hands). It's not that Buffett is always right, but that he puts his thoughts out there.

Second, Buffett has thrown himself in the midst of what has to be one of the greatest not-really-that-important controversies in the history of the internet. Except that if it's not important, why mention it?

And therein lies the rub. Warren Buffett is in the business of profiting off of information asymmetries. He wants to buy undervalued shares and sell overvalued shares. Warren Buffett, in other words, practices the art of the greater fool theory. He believes that fools exist at both ends, in fact! People dumb enough to sell him shares at below real value and people dumb enough to buy shares at higher than real value.

Once you see that Buffett is talking his book, in fact specifically referencing holdings like Coke and See's, the particular commentary on gold becomes even more fascinating. He needs people to put their money in financial assets because that's where he has leverage - political access, business contacts, legal resources, etc. Precious metals are a huge threat to that power base, not because they realize a return, but because they're not in the business of generating returns. Investing is incredibly risky. Saving is an entirely different endeavor - the whole point is to transport today's capital in a form accepted tomorrow, not to generate additional capital tomorrow. There are basically three types of precious metals investors: 1) conspiracy theorists/doomsday preppers, 2) savers, and 3) speculators. Note that while we colloquially use the word investing to describe this, none of these three types of activities are actually investing in the financial sense of the word. What's really dangerous is when people end up investing when they think that they are saving*.

(I of course do not give official financial advice, legal advice, tax advice, marriage advice, cooking advice...but personally, I am a big believer in investing in stocks. That is in no way inconsistent in also believing in saving in much safer vehicles that have nothing to do with equities, nor is it inconsistent with also believing in the value of diversity over concentration.)

It's the relationship between value and price that determines whether 'something' is a good investment or not. The utility of that something for some other purpose is irrelevant*. After all, if Buffett was simply a buy and hold forever investor, how come he sold all that Exxon Mobil stock he's so interested in talking about? If he is so focused on productive assets, why does he invest in companies that are so unproductive that they require government bailouts just to stay afloat?

So Siegler, if you really think gold has minimal decorative value, why is it so valued in jewelry? It rivals diamonds in popularity and global ubiquity even though the gold market lacks the monopoly equivalent of De Beers backing it.

And I would love to know where I can get a list of the companies that are going to be productive over the next decade. If this was known, if there were no risk, it wouldn't be investing. But perhaps most plainly, the greater fools theory simply doesn't make sense. If you bought something, that means you're the fool. The natural conclusion of this advice is to steer clear of the entire (secondary) equities markets.

Michael Dell went into the investment advice business in such a famous way that he singlehandedly demonstrated the importance of knowing when people are talking their books. If someone had shorted Apple and gone long Dell a decade and a half ago, they'd be bankrupt today. In fact, they would have gone bankrupt years ago.

*Note, there are huge incentives to confuse people about this, and not just in stocks and precious metals. The housing bubble was encouraged in no small part by the National Association of Realtors and the Federal Reserve pushing people to think of housing - something of value due to its utility as shelter - as somehow synonymous with the returns of investing and the safety of saving.

small potatoes

This post attempts to organize some thoughts regarding where we are headed. It's fun when there is a clear vision, but perhaps the most important times for reflection are when things are muddier. Basically, if we can identify unsustainable trends, we can identify sources of change. While the catch is anticipating what exactly that change will be, having some semblance of the terrain is useful.

One of the analytical approaches that interests me is where the tendency toward optimism/pessimism intersects awareness of reality vs. fiction. There is a lot of emphasis in our culture on the first dimension, almost as if being optimistic is more important than being right. Visually, it puts the emphasis like this, on the vertical columns.


However, an attempt to rationally understand the world around us needs to compensate for that natural cognitive fallibility by emphasizing the horizontal.


Truth requires an ability to interpret events both optimistically and pessimistically, to have a vision of what could be yet also a sense of what might go wrong.

With a couple decades of general wage stagnation providing the context for several years of very specific economic hardship and dislocation, the strategy of the governing coalition of interests in the US appears both clear and consistent. Outside of the national security nexus (GWOT, drug war, deportation, etc.) neither the Bush nor Obama Administrations are particularly hostile toward or directly targeting 'average' Americans. The 'not Hitler' meme was one of the better ones that Jon Stewart and Stephen Colbert encouraged at the Rally to Restore Sanity and/or Fear. Metal Chris captured this one:



In other words, it is not so much that individual political leaders act maliciously toward the citizenry so much as they don't care about us. Apathy is the key descriptor; we are simply irrelevant. All of the energy in government is devoted to marshaling whatever resources are necessary to save the Big Fish. What we are left with is the crumbs; small potatoes, so to speak. You can almost see the political class psyching themselves up to sell the latest batch of small potatoes for the masses as something of remotely similar importance to the efforts to save the Masters of the Universe. The transparency that Vice President Biden accidentally showed at the health care press conference, for example, revealed so much.


It's not that Bush's Medicare 'Modernization' or Obama's HCR 'most important reform since FDR nevermind that Medicare thingy in the 60s' are Terrible Legislation that will Destroy America. It's not that Bush was an Idiot or Obama is a Kenyan Muslim Fascist. It's not that abortion and gay rights renders America ungovernable and/or on a path of moral decay and damnation.

Rather, that's not where the action is. Two successive presidents, from two different parties, pushed massively complicated bills that purported to make the healthcare system significantly better. Yet they didn't actually solve the problem of expensive healthcare that causes preventable deaths.

I learned to hone in on that tactic of over-selling and under-delivering as a teenager, and it has proven to be one of the most insightful observations in comparing words and deeds. It's the 'let your yes be yes and no be no' philosophy: either government should do something (such as guarantee quality healthcare for all citizens) or it shouldn't. Both are legitimate beliefs. So is I don't know/let me think about it/it's not important to me. But to pick bits and pieces from both is to give away that neither belief is sincerely held; rather, they are merely justifications for acting upon an unrelated set of beliefs (like the belief that government should protect the economic interests of the wealthy).

Clarity has been particularly revealed with the financial crisis because we now have so much data upon which to draw. It's a simple statement of fact to observe that the Obama Administration supports the use of law enforcement resources to arrest hundreds of thousands of people every year, from illegal drug users to illegal residents to illegal assemblers. Yet one specific group of criminals stand in stark contrast to this massive deployment of police and prisons: politically connected financial crooks. There are literally more baseball players in legal trouble for testimony given before Congress related to steroid usage than there are top corporate executives and board members in legal trouble for all financial crimes combined. The current Secretary of the Treasury was literally head of the New York Federal Reserve when the proverbial bile was impacting the proverbial turbine. The ongoing effort to enter into a mortgage settlement is designed to give the Too Big To Fail financial firms immunity from liability in court - that's the point, that's what a settlement is - a settling of claims of unlawful behavior outside of court.

The preceding paragraph is neither pessimistic nor partisan. It's simply recognizing where we are at. The past and current Presidents of the United States think cocaine users, whistleblowers, protesters, and immigrants should be treated like murderers while financial fraudsters should be treated like people who don't pay a parking meter.

This is beyond specific policy debates or even broad ideological contests. We are now in the realm of questioning, of bringing to light, the core foundations of the American experiment, in all of its grandiose, exciting, and dangerous forms.

Is the Constitution the foundational pillar of secular governance, or do we now look to something else? Is there a rule of law, or a rule by men? Do we want to participate in a peaceful world order, or do we want to instill an American world order? Our basic systems of property and finance and law are quite literally crumbling around us. It's not pessimistic to point this out, to consider the implications. It's responsible.

We know housing prices got out of control. We know higher education costs got out of control. We know healthcare costs got out of control. If actual solutions to these kinds of problems are not going to be forthcoming, that is important to know, to understand what it really means. If you're a Big Fish, you play things very differently, but for areas of American life that depend upon the broad 'middle class', there are only two outcomes. Either public policy ultimately changes and we start encouraging wage growth again (either directly through employment policies or indirectly through additional transfer payments like universal unemployment insurance), or the asset classes dependent upon wages will simply wither away.

This has to happen*.

Either $20,000 - $30,000 a year has to become what it is elsewhere in the world - a comfortable living - or millennials in aggregate looking for jobs have to have a way to earn much more than that in entry level positions. Xers have to have broadly accessible means of earning promotions and switching careers. Baby boomers need to be able to easily replace lost jobs and find part-time income in retirement.

We have utilized credit to bring forward as much consumption as possible. The distant future is finite, too. And the near-future was spent in the past.

Household formation has slowed. New home sales are at record low levels. Record numbers of Americans do not participate in the healthcare system. The percentage of Americans employed has dropped precipitously. Millennials are even ditching things like cable and phones. Student loans - financial commitments undertaken by minors deemed incompetent to buy a Bud Light - can't be discharged in bankruptcy, ever.

Any asset that depends upon middle class wages, any industry that sells to those last marginal dollars of disposable income, will simply shrivel up to a much smaller core.

That's what I don't follow about some of the more intense hyperinflation perspectives. Massive increases in broad pricing measures ultimately requires the government to get money into the pockets of 'normal' people somehow. But that's not the bailout mechanism this time around. The most well connected players are seeing such socialism, but the general citizenry confronts a dearth of capital. I wonder if our 'capitalist' system can handle such misallocation of resources on such a grand scale.

But what I don't wonder is that it is a misallocation. Undermining the rule of law causes many more problems than it solves.

*It is becoming increasingly difficult to get simple, accurate information. The Consumer Price Index, for example, is so watered down and altered that it's not even clear why it's a good measure. A KC strip steak from grass fed open range cattle simply is not substitutable with a breast from a tightly caged, anti-biotically stuffed, corn-fed melange of chickens. Our political process helpfully focuses attention on the relatively small amount of trinkets from places like China and India when the bulk of American household expenses go to much more mundane domestic sources like housing, healthcare, higher education, food, transportation, and so forth. I keep anal financial records, so I thought it interesting to look at a few specific items of my own. By my various calculations, I had a stretch of rental increases that amount to an annualized rate of 4.8%, tuition and fees at Wash U increased by 5%, the cost of an entry level car increased 6%, health insurance increased 12.6%, and food increased 14.7%. The drawback of course is that by being specific, it's unique to me and just anecdotal. But comparing that against the average annual increase in household income over the past decade - 1.6% - it's obvious to see something has to give.

small frauds and big ones

It's always fascinating which little ripple ends up making the big wave. Well, at least to weirdoes like me who are into organizational strategy.

At any rate, Susan G. Komen for the Cure is offering a front row seat to PR disaster this week. You see, they have the perfect niche. They make hundreds of millions of dollars a year, and there is very little probing of what exactly they do with all this money. Now some people who had no idea that the head of Komen is associated with the Bush Administration* will know that, will think of the organization in a political light. Now, some people who had no idea that an organization with 'for the Cure' in its very name doesn't actually do that much to find a cure will run across discussions of the budget and finances of the organization. Now, the bland, corporatey, nonpartisan branding niche Komen has so carefully crafted for itself over the years has been shattered. Now, a wide variety of people will be exposed to the difference between the talk of groups like Komen and the action of groups like Planned Parenthood. Now, corporate partners of Komen will hear negative feedback as well as positive regarding their financial involvement.

Personally, I'm on the Barbara Ehrenreich end of the pink spectrum, so, I don't particularly care what happens to the national fundraising ability of Komen. And there is some good commentary out there about the marketing angle in particular. I would highlight Dan York and Kivi Levroux Miller for Internet Posterity on this one. Perhaps the best illustration of how the story is out of Komen's control is when I googled Komen. The organization's website didn't even show up in the first page of the search results!

The particular perspective I would add to this commentary is to place this in the context of our collapsing paradigm of vanishing trust in all types of institutions. Know whether you're a big fish or a small fish. The Really Big Frauds are Too Big To Fail. They steal billions and no one says a peep because the government itself is guaranteeing their business model. But if you're a smaller niche, an organization that depends at some level on legitimacy among the general public, don't push your luck. Komen had it all - liberal women and corporate women (maybe corporate personhood debates can shed new light on gender identity?) Donating in Harmony. Did they really think adding a third party - rightwing prolifers - wouldn't upset the apple cart?

Who planned that strategy? Or perhaps more damaging, who didn't plan a strategy to deal with this?

*P.S. Wow, I didn't know Brinker (Komen's CEO) was actually a Pioneer for Bush. Check it out, she even has a profile page with Texans for Public Justice.

P.P.S. Is Komen really inflicting a double booboo on itself, in strict business jargon? Everybody knows coverups tend to cause worse problems than the underlying issue. If Jeffrey Goldberg is remotely close to any semblance of truth in his Atlantic article, then Komen is directly and plainly lying to people about its decision-making process. That can't end well; that's what makes these things drag on far longer.

shorter sotu 2012

War is Bipartisan. Yippeee! Look, I used an exclamation point, so it's optimistic!

I was looking at a USA Today questionnaire about the presidential race, and it does a great job of (unwittingly) capturing the impending irrelevance of the presidential election. My first-place match gave my answer in 3 out of 11 categories.

Oh, and my number 2 guy has already quit the race. I know virtually nothing about him. My number 3, well, she also is a quitter, and perhaps personally responsible for the great northern migration south. Obama didn't even rank in the top three.

This is like the opposite of 2000. It's shaping up to be the least important election of our time*. But the match game is fun, go check it out.


*Not that it's worth anything, but I remain unchanged in my opinion that this is still Obama's election to lose. Have you seen the GOP clowns? It's a bizarre world when Ron Paul can have so much fun annoying the establishments of both political parties. How is it that he, not the Democratic candidates, is the one inspiring productions like this?



By the way, check out the screen shot. OFA has money to buy airtime on obscure Ron Paul You Tube videos. That says about everything you need to know about our electoral system.



P.S. - Check out the You Tube video now. It's been taken down for copyright infringement!