Why I love the teachers at Capital City

There are many, many reasons why I love the people I work with here at Cap City.

They are kind and decent. They are loving and goodhearted souls to work with. They are always looking for a reason to bet on kids that many others do not. A fact I know, now, from experience.

These teachers take these kids, who often, but not always, have either terribly clueless parents or terribly irresponsible parents, and they love the shit out them. They love these kids like they were their own. And they put up with a lot of shit, in the meantime. Far too much shit, is the truth.

They are a little bit naive, this bunch, too often. That's for sure. They have had a tendency, that is beginning to give way, to look to often for an excuse rather than a reason for them to succeed beyond their current behavior. They do, too often, want to protect a kid when what they should do is let them learn from the knocks and flow of life. They do tend, too often, to want to control kids than to let them figure out lessons for themselves so that they might actually learn something rather than make it seem so in their presence.

My colleagues are far from perfect, that's for sure.

But, the truth is, they are also some of best people I've ever worked with in my life. They are decent. And good-hearted. They love kids and they love people like no other group of people I've ever seen. They live it. They don't just visit on Sundays or mouth it around election time. When they say they give a shit about you, they really mean it, generally. Even folks who I wish would give a little more of a shit, sometimes.

The truth is, that for all of the serious disadvantages and bullshit features of this job, the quality of the people I get to work with has always been the best part about this job. I love these people. They are decent, through and through. If this job doesn't work out, I'm taking my act to the investment world and I'm not looking back, because I just don't know if it's possible to meet a group of people who seem to care about other people, for real, in quite the same way these folks do. That's hyperbole, in some ways, of course. In a million different ways I wish my colleagues, like all people, cared more. But they do a damned better job of it than just about any group of folks I've ever encountered. And my circles are wide.

And the truth is that, when push comes to shove, when all their critics point out their many honest flaws, there is one fact about these folks that I will always be reminded of that their critics could never match.

They come every day and do the job.

This is a hard fuckin' job. Working with kids who could often give two shits about anyone, nevertheless anyone associated with school or authority. These teachers get treated like shit, everyday, and they come back, everyday, with their hearts more open today than they did yesterday.

That's fuckin' impressive, in my book. That is what real strength looks like, as far as I'm concerned.

Most of the world is a bunch of whining, snivelling pussies. They can't have a trust broken. They can't get hurt. They can't have someone do them wrong without crying their poor little eyes out about how they just can't find it in themselves to forgive.

And these folks, my friends and colleagues, come every day to a job where not forgiving is just not an option. Because if you couldn't, you could not possibly do the job. You'd go crazy and then you'd lose your minds on some kid and then you'd lose your job and then you'd go crying like the little bitch you are about how noone protected you from all the frustration and pain. And then you'd go along your merry way.

And these people would still come back to the job the next day.

Because that's what strength looks like, you fuckin' pussy.

I can hardly believe all the shit these people take - from kids, from parents, from politicians, from journalists, from random folks with a million different random opinions - and yet they still come back to the fuckin' job, every day.

Pretty fuckin' impressive, really.

Colbert King, eat your fuckin' heart out, you fuckin' pussy. This is what real strength looks like, you fuckin' whiner. Real strength is not crowing about how imperfect the world is from the fuckin' sidelines behind your cush little Washington Post desk cryin' about how the world is just not fair and full of crime and bad things happening, to and by kids, whining about how the people who show up to do the fuckin' job that you don't have the fuckin' balls to go do just aren't living up to your standards.

Pardon my french, Colbert, but fuck you. And fuck every pussy just like you who can't find it in their hearts to imagine what remarkably overwhelming and difficult job this is and what remarkable fuckin' people have to be willing to show up every day to do it.

Fuck you and your fuckin' opinions, you overpaid fat-ass, making a living having opinions rather than doing any real fuckin' work.

You want to be taken seriously, Colbert, you come do the fuckin' job.

In the meantime, the only people I trust, after doing this job, to know, day-in and day-out, what this job is like is the people who do it.

And for every fuckin' pussy who thinks that they're opinions on juvenile justice, youth education and such matters mean more than they do without having done the job, talking with those who have, or some kind of genuine understanding of the difficulties that lie within it, I say a hearty fuck you to you too.

Yes, I understand that you don't really understand much for not having done the job. And I could give two shits, at this point, having listened to these people get scapegoated for the failures of too many kids and parents and a society too dishonest and fucked up to own up to its role in their failures, as well.

That's why I love these people. Because most people are much more full of shit than these teachers. And they're assholes to top it off. And my friends and colleagues have big hearts for big people. Because, for them, being an asshole when someone needs some help, just isn't enough. And fuck you and anyone else who thinks that it is and that your opinion on such matters should really be taken more seriously than it should, and anyone who thinks that your ego is some kind of compensation for their strength, and decency, and honest concern.

I do this job because I love the fact that I get to wake up everyday and come work with these people. I've never had a job where I could say that. And most people in politics and political circles and those who make far too many decisions about the work of my colleagues are not people I would want to work with. Because they're pricks, is the bottom line. And I don't care how many times you try to talk your way around that one. A prick is a prick, no matter what your excuse. And I just couldn't do any job where I had to spend time with a bunch of fuckin' pricks constantly making one long excuse for what fuckin' pricks they were. There is no excuse, prick. And I have colleagues who know that better.

And that's why I love these teachers. And fuck every prick who confuses their being an asshole with these teachers' compassion and wisdom. Because if they won't beat your ass, I will.

I love these people.

Lying, pretending, and power

It's such a clusterfuck. Life.

We get so used to lying. We get so used to pretending. We get so used to trying to be something that we know we are not, down deep, for real.

We get so used to the dishonesty, that we start to believe our own bullshit. We start to believe that we are something we are not, just so we can maintain the pretense. And the hope that it will keep us from being found out.

Power plays an enormous role in this dance of dishonesty that we engage in.

It is the reason that Lord Acton said that power corrupts and absolute power corrupts absolutely. Because those who covet it get so wrapped up in their lies and their pretenses, that they become almost inexorably confused about who they really are. We get so wrapped up in the bullshit and the lying and the pretending that we lose track of who we really are.

It is worse among adults than among young people. Because young people see the lies and hypocrisy of adults and know better than to pretend they are being more honest than they are.

It is the most persistent and most difficult to unravel of the legacies of power.

All the lying. And the pretending. And the bullshit. And the ways that it corrupts us and our outlooks on life.

And, in the end, it is what keeps it all in place.

Until it doesn't.

Because people decide that they would rather face the hard truths than keep up the lying.

Hubris

I just saw another video of partisans in action.



Maybe I'll sit home, this election. I don't like any of these people. They're all shitheads. Why in the world would I want any such people running anything in my life, nevertheless my government?

It makes me sick to my stomach that this is the best that partisans in America think we have to offer.

This is the height of liberal democracy, huh? Wonder why illiberal, undemocratic parts of the world don't trust us?

How couldn't they when we are so clearly worthy of their trust.

Hubris, say the Greeks. Hubris.

Why do we settle for so little?

How is it possible that this would be the best that we can expect?

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Because we expect so little. Because we have gotten so used to turning our brains off, to closing our hearts and minds when people who disagree with us open their mouths, that we can't even imagine that there might be something more honest and open-minded that might offer a more genuine picture of the world that our sanctimony could just never offer.

Because we have learned, out of habit, to confuse our sanctimony with something more honest. And this is the result.

Congratulations, America.

This, apparently, is all we have to offer.

Choose wisely

Can I say, after reading news coverage all fuckin' day, this Presidential race is unspeakably fucked up.

We are such fuckin' hatemongers around election time. It is disgusting. And pathetic.

Must we be such shitheads to one another, all in the name of getting power and keeping someone else away from it?

Is it not possible for us to be decent to one another and earn one another's vote, we are so enamoured of our own use of power and so disgusted by those who we disagree with?

Is it not possible for us to even imagine that we might be wrong and those who disagree with us might be right that we would not feel so driven to slander, attack, villify, and otherwise demean those we disagree with and those who represent them among our political leaders?

Is it not possible for us to grow up and stop being such little children, all in the name of protecting our own and ourselves?

Are we not capable of just being the kind of person that we are so afraid that we cannot find the strength within ourselves to just be?

It is not within the realm of possibility to just live out our highest values, to pluck the beam from our own eyes before we pluck the splinter from those of our neighbor, and to trust and appeal to our better angels rather than persistently obsess over our inner demons, our propensity to do bad in a world we want to imagine that we could or should only do good?

Is it not within us to be human, for our political leaders to be human, for those we disagree with to be human, for those we agree with to be human, and to not be so human that our vindictive and destructive tendencies constantly overwhelm our better natures and our more decent concerns?

Is it not possible for us to better?

Of course it is. Obviously. When we're not obsessing with what shitheads we and everyone is. When we're not so afraid of our darker natures, when we are not afraid of ourselves and one another that we are not always acting out that fear on one another, pretending, all the while, that we are, in fact, better than what those darker impulses might betray us to be.

Because the truth is pretty clear.

When we love ourselves and one another, when we embrace our more self-centered natures and those of people around us, we are less likely to act like the kind of children that we have been behaving as, this election season.

The more we embrace ourselves and others, the less we are likely to act like the very sociopaths that we are so afraid of being.

If we want to be better people, we must love ourselves and one another more. It is the same fact of life we have faced since the dawn of humanity. We have just proved more ingenious at deceiving ourselves and one another of what is needed to be better.

It is not being forced to do so by some God, some parent, some government, some teacher, some boss, some lover, someone else outside of ourselves.

If we want to be better, we must choose to do so. And in so choosing, we will do today as we have done since time immemorial. We will choose badly. And then we will choose better. And we will only do so with experience that tells us the difference as much as knowledge of the two.

This election has become a circus of humanity and its most foolish and cowardly instincts. That can only change with some embrace for our folly. And some willingness to become wiser.

That is our challenge this election season. Our vote is completely incidental to that much more fundamental fact of existence.

Choose to be better. Or don't. Those are the options.

Choose wisely.

And if you don't, don't despair. Just make a better choice the next time. Until you do.

Data-driven health reform

Billy Bean, Newt Gingrich, and John Kerry - quite the unlikely trio - have an excellent article on how to reform health care with data-driven for-profit and non-profit market methods that deserves the eye of anyone concerned about health care.

How to Take American Health Care from Worst to First

From that article:

"In the past decade, baseball has experienced a data-driven information revolution. Numbers-crunchers now routinely use statistics to put better teams on the field for less money. Our overpriced, underperforming health care system needs a similar revolution.

Data-driven baseball has produced surprising results. Michael Lewis writes in “Moneyball” that the Oakland A’s have won games and division titles at one-sixth the cost of the most profligate teams. This season, the New York Yankees, Detroit Tigers and New York Mets — the three teams with the highest payrolls, a combined $486 million — are watching the playoffs on television, while the Tampa Bay Rays, a franchise that uses a data-driven approach and has the second-lowest payroll in baseball at $44 million, are in the World Series (a sad reality for one of us).

Remarkably, a doctor today can get more data on the starting third baseman on his fantasy baseball team than on the effectiveness of life-and-death medical procedures. Studies have shown that most health care is not based on clinical studies of what works best and what does not — be it a test, treatment, drug or technology. Instead, most care is based on informed opinion, personal observation or tradition.

It is no surprise then that the United States spends more than twice as much per capita on health care compared to almost every other country in the world — and with worse health quality than most industrialized nations. Health premiums for a family of four have nearly doubled since 2001. Starbucks pays more for health care than it does for coffee. Nearly 100,000 Americans are killed every year by preventable medical errors. We can do better if doctors have better access to concise, evidence-based medical information.

Look at what’s happened in baseball. For decades, executives, managers and scouts built their teams and managed games based on their personal experiences and a handful of dubious statistics. This romantic approach has been replaced with a statistics-based creed called sabermetrics.

These are not the stats we studied as children on the backs of baseball cards. Sabermetrics relies on obscure statistics like WHIP (walks and hits per inning pitched), VORP (value over replacement player) or runs created — a number derived from the formula [(hits + walks) x total bases]/(at bats + walks). Franchises have used this data to answer some of the key questions in baseball: When is an attempted steal worth the risk? Whom should we draft, and in what order? Should we re-sign an aging star player and run the risk of paying for past performance rather than future results?

Similarly, a health care system that is driven by robust comparative clinical evidence will save lives and money. One success story is Cochrane Collaboration, a nonprofit group that evaluates medical research. Cochrane performs systematic, evidence-based reviews of medical literature. In 1992, a Cochrane review found that many women at risk of premature delivery were not getting corticosteroids, which improve the lung function of premature babies.

Based on this evidence, the use of corticosteroids tripled. The result? A nearly 10 percentage point drop in the deaths of low-birth-weight babies and millions of dollars in savings by avoiding the costs of treating complications.

Another example is Intermountain Healthcare, a nonprofit health-care system in Utah, where 80 percent of the care is based on evidence. Treatment data is collected by electronic medical records. The data is analyzed by researchers, and the best practices are then incorporated into the clinical process, resulting in far better quality care at a cost that is one-third less than the national average. (Disclosure: Intermountain Healthcare is a member of Mr. Gingrich’s organization.)

Evidence-based health care would not strip doctors of their decision-making authority nor replace their expertise. Instead, data and evidence should complement a lifetime of experience, so that doctors can deliver the best quality care at the lowest possible cost."

It's an excellent conceptualization of the challenges we face and health care and more sensible, market-driven approaches to tackling those challenges.

And it's nice to see some honest, substantive bipartisan thinking leading this conversation rather than mindless blather and empty promises that liberal and conservative partisans more regularly offer in contemporary politics.

News item: U.S. government offering lessons in how to handle money

U.S. trying to teach Iraqis how to spend billion-dollar surplus

Now, really. With everything you know about the U.S. government, would you trust it to teach you how to spend your own money?

If so, I've got a bridge to sell you. Paul Krugman built it. You're gonna love it.

For those who love power more than they love people

For those who love their power over people more than people, themselves, this is dedicated to you.



It's not just the sinners of lust, greed, and vanity who God cuts down, as it turns out. It's all of us. And pride is the sin that is and always has been most destructive of humanity. That's why it's the deadliest sin.

It's time to end this obsession with power. Soon or later, it will end. Sooner or later, it'll cut us all down.

Loving freedom

I care about people doing good. In a lot of ways, it is the central purpose of my life. Figuring out how I can do more good, how others can do more good, and what to do about when I and everyone else doesn't do good.

I've also come to terms with the fact that it is useless to compel people to do things they are not going to do, anyway, or will half-ass it, at best, except in very limited and generally negative situations when we don't want them to do something and when the dangers are real and the stakes are too high not to use force or aggression. But those times are few. And people perpetually use that exception for license to use force and aggression whenever they want, and often for self-centered purpose and often when they don't really give a shit about those they are compelling or even others they aren't compelling, for that matter.

I've learned what a waste of time it is to force peoples' hand to do good that they are either going to do or not going to do, and which, when compelled, not only limits the freedom of those who actually care to do a better job, but which always results in half-ass efforts from those who don't.

As people live life, as they care about one another, more, and get smarter, over time, often by learning the lessons of their own foolish mistakes, they generally do want to do good. Though noone can do all the good in the world that needs doing. So that's why it's best to let people do the things they do best and stay out of their way when the truth is that we, generally, do not know how to do the good they have to offer as well as they do. It was one of the most important lessons that Adam Smith had to offer. And it is more relevant today than it was over 200 years ago, when he wrote it.

Many people just have to fuck up the big lessons in order to learn them. The world in the process of doing just that, right now. You could say that the world is always in that process, actually. But the current political moment and its romanticism of force, aggression, rules, laws, regulation, etc., is a moment when we are going to have to fuck up a big question to get to a better answer.

The better answer is more freedom. We probably won't get that figured out until we've fucked it up, enough. It's kind of a frustrating and often sad fact of life, really. But it is a fact that cannot be avoided, no matter how smart or good or whatever we think we are or are not.

And the hubris that life can be lived without fucking up and with power circumventing the very human propensity to fuck things up is the source of humanity's most serious and persistent tragedies over the course of human history.

This is a moment where we can begin to end that much more fundamental mistake of human history. We have spent several hundred years working to do just that with the founding of liberal democratic values and societies.

It is time we recognized the brilliance, bounty, beauty, and greatness they have to offer. It is time we learned confidence in the lessons and learning and fruits that freedom has to offer.

It is time we learned to love freedom for real.

Time

There is so much to know about the world. And so limited time to know it all.

The question for all of us is how are we going to spend that time? And are we going to do it honestly and for good purpose?

And, most important to me, do we really give a shit about the people that our time and efforts serve?

Those are the 3 most important questions for life that I can think of, at this moment.

Might be worth us taking some time to answer.

China's "strong state"

China is upset for good reason with the West, right now. The West says that the highest priority in the world, right now, is the enforcement of the rule of law. China does exactly that. And the West honors those who violate its rule of law.

For good reason.

China says EU human rights award winner a criminal

It is the Hu Jia's of the world, right now, who are the only leadership in the world worthy of any real trust, it seems.

Leadership without courage is bankrupt. And there is an awful lot of cowardice masquerading as leadership, right now.

Thank goodness people like Hu Jia keep us honest.

Francis Fukuyama likes China's strong state antics.

I'll take Hu Jia and people of real courage any day of the week.

Alan Greenspan and the cowardice of the current political moment

I think I just lost a little respect for Alan Greenspan. Where is Milton Friedman when we need him?

Greenspan: 'Crisis Broader Than Anything I Could Have Imagined'

Here is where the downfall occurs for this prevailing and wrongheaded logic going around these days that regulation will prevent future financial meltdowns like the current situation:

It won't.

Do you really think that there will be no more financial meltdowns after this one? Really? And when it occurs, are we really going to have another lame Democratic verdict that it was the free market and not people making bad choices responsible for it?

When a downturn happens again - which it will because freedom and a free market does not guarantee that we will always make good or even better choices, necessarily, absent understanding of our mistakes - will we get honest, at that point, that regulation cannot stop us from screwing up? You really think regulation will prevent all future problems like this one? Really?

I'm sure I'll have to listen to a lot of lame "It if wouldn't have been for our efforts, things would have been really bad," rationalizations of the failures of regulation and regulators. It's my favorite excuse for why bad ideas don't deliver.

Good people screwing up. It happens in governments. Happens in the market. And no hubris about finding just the right laws or rules or regulation or force to prevent that fact of life will ever make it go away.

We do seem to be enamoured with regulation, in the political moment, to resolve some of these fundamental questions, once and for all. But it won't. And the proof will be in the pudding when it doesn't. And , like all things, this political moment too shall pass.

More Drunk History

This is, without a doubt, the most entertaining way to learn history.

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If Derek Waters keeps this up, I am never going to be able to study history sober, again.

Coconut rum and 19th century liberal political philosophy sounds fucking brilliant, right now.

Right after I get some sleep.

I Am the Nation

In a time of deep political cynicism and mistrust of politics and political leaders, I thought a little Johnny Cash might cheer us all up.

Andrew Bacevich and the limits of power

H.D.S. Greeway writes an excellent column in the Boston Globe, today, covering the ideas of a writer that looks to be very much up my alley, soldier-scholar and Boston University professor Andrew Bacevich, and his new book, The Limits of Power, the End of American Exceptionalism

The grand illusion of American power

Bacevich and I look to be very much eye to eye on quite a bit and I'm looking forward to reading his new book.

Here's a teaser from Greeway's column:

"Niebuhr warned against 'dreams of managing history,' a combination of arrogance and narcissism that posed a moral threat. That's why Niebuhr is often held in contempt by neo-conservatives for whom power is everything. Bacevich's concern is that the dream has become a physical threat that could lead to America's inevitable decline.

There is a mythical American narrative, according to Bacevich, that the United States is a nation "providentially set apart in the New World and wanting nothing more than to tend to its own affairs," only grudgingly responding to calls for global leadership "in order to preserve the possibility of freedom." In reality, the United States has sought expansion, first by pushing west until it reached the sea, then through a brief period of direct colonialism, and more recently through a ruthless if indirect imperial policy of control. It worked spectacularly. The United States became a great power replete with material abundance.

Right around the time of the Vietnam War, Bacevich argues, this began to unravel. Trade imbalances, federal deficits, "mushrooming entitlements, plummeting savings rates, and energy dependence" led us to become a debtor nation, counting on others to foot the bill. "The positive correlation between expansion, power, abundance, and freedom began to become undone . . . Further efforts at expansionism have led to the squandering of American power," according to Bacevich.

The actions of the Bush administration after 9/11 may have been designed to make the United States safe from another attack. But the chosen method was nothing less than to "assert American power throughout the Greater Middle East . . . to transform this region, to employ American power, both hard and soft, to impose order while ensuring stability, order, access, and adherence to American norms - in essence to establish unambiguous US hegemony so that the Islamic world will no longer serve as a breeding ground for terrorists who wish to kill us."

The grand illusion of American power as a transformative agent is evident in what Bush's lieutenants had to say. "We have a choice," said Donald Rumsfeld in September, 2001. Either we change the way we live, "which is unacceptable," or we "change the way they live, and we chose the latter. " Or as Douglas Feith would later put it: America's purpose was to "transform the Middle East and the broader world of Islam generally."

This grand imperial overreach never had a chance. Transforming Islam can only be done by Muslims themselves, in their own due time. The new "liberated" Iraq has not changed the Middle East. The passions of the Middle East have transformed Iraq, perhaps more stable now than a year ago but in no way destined to achieve what Bush, Rumsfeld, Condoleezza Rice, et al wanted and expected.

The net result is that much of the world now looks on the Bush administration's resurrection of Woodrow Wilson's ideals and the expansion of democracy as a cover for coercion and bare-knuckle dominance. As Bacevich says, Bush always confused strategy with ideology.

Militarily, we threw containment and deterrence out the window, banking on the "shock and awe" of preventive war. It hasn't worked. We are bogged down in two wars with an end to neither in sight.

Bacevich doesn't see the November election as necessarily producing a beneficial change. John McCain touts the stalemated Iraq war as a success, while Barack Obama calls for more effort in Afghanistan. In Bacevich's view, it is the entire doctrine of preventive war that has proved a failure. There has to be a better way than occupying Muslim countries."

Looks like great stuff. Highly recommend checking this book out. I know I will.

The limits of power

Apparently Indians have found a way to deal with foolish regulations they don't like. Ignore them.

Shrugging off Smoking Ban

Not a bad idea, frankly. If I didn't value my honesty and integrity with my colleagues and folks I have to work with, I'd chip in. As it is, I'll be working on honestly persuading them of the foolishness of this route of everyone pretending like regulation solves more than it does when people are not genuinely on board and when their consciences are not in line with whatever rules are enforced.

In the meantime, India does reflect the very serious limits of enforcement. People do have to cooperate. If they don't, you are fucked. I don't care how much power you have.

If you doubt that, I hear there's an Asian subcontinent who could use some help getting people to give up the tobacci.

What liberal elitism?

I love how Paul Krugman always thinks he knows my interests or Joe the Plumber's interests better than me or Joe, for ourselves.

The real plumbers of Ohio

Joe and I both earn less than $50,000 a year. So a millionaire economist like Paul Krugman must know what is best for us even if we don't, right? Don't liberal Nobel-prize winning economists always know my interests better than me?

It's good to know that liberal elitism is really just a myth, in'it?

Glad that Paul has alerted me that it is "Republican plutocrats", and not Paul Krugman, who are condescending the average Joe.

For their own good, of course.

Say hi to your mother for me, ok?

I don't care how much Mark Wahlberg wets his little cotton panties, this is fuckin' funny.



Mark Wahlberg needs to stop being such a little girl and quit his fuckin' whining.

And on the off chance that he says anything to Andy in my vicinity, I will talk to you nice, Mark, about the benefits of having a sense of humor. And I then and Andy Samberg will beat your cryin' bitch ass if you try anything funny, Funky Bunch.

Say hi to your mother for me, alright?

Wise up

One of my favorite songs from one of my favorite artists.



Sing it, Aimee.

Wisdom

When I was 18 years old, my two most important aspirations in the world were to find wisdom and to be a great dad. I'm working on both.

And my experience in the world has taught me that wisdom is not something we seek out for ourselves only.

Wisdom is often a consequence of people looking out for others and ourselves despite ourselves.

It is a function of our mistakes and our lessons learned as it is of knowledge in advance of our failings. Wisdom grows out of failures as much as our success. Wisdom is not always so wise. Often we find it tripping over ourselves. Our failure to acknowledge that has cost us much over the course of human history. And our honest acknowledgment of that fact has much good to offer to the world.

We most assuredly need the serenity to accept the things we cannot change. And it takes much courage to change the things we can.

God grant us to wisdom to know the difference.

Nobody's fault but mine

Sing it, Nina.



And the song, for good reason, that I know her for.



True dat, Nina. True dat.

The truth will set you free

The real test of strong ideas is how they fare when nobody likes them.

What Would Milton Friedman Say?

I think Uncle Milt would find it kind of funny that people would think that the most important idea of the enlightenment and in human history - the marketplace and the ideas that it produces - could possibly ever be defeated or brought to an end.

The era of markets is the era of the most serious, consistent, and dramatic progress in human history. The idea that it would be at an end is as irrational as it is wrong.

I think Professor Friedman would have found it kind of amusing that anyone would be rooting for or predicting its demise any more than they would promote or predict the end of democracy, education, scientific development, a reliable food supply, or clean water. As if we would give up any of these contributions to our lives and more genuine measures of progress because someone in power says so.

Gotta wish Democrats good luck with that. I can't imagine anything more futile or foolish. How ironic that those who promote a progressive ideology would so clearly undermine, and in doing so, so clearly signal the more honest direction for real progress.

Truth is often stranger than fiction, it's true.

But the thing about truth is that it's the only thing that's true.

And what is that old saying about truth?

It most certainly wasn't that it will force you to do a goddamn thing.

But it sure as hell will set your free.

And it is freedom that is the only honest consequence of truth.

Warren Buffet's advice

The Sage of Omaha offers some rare financial advice in today's New York Times:

My Money and Mouth Say Equities

From that article (my italics):

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: 'I skate to where the puck is going to be, not to where it has been.'

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: 'Put your mouth where your money was.' Today my money and my mouth both say equities."

I sincerely doubt that either fear or greed figure as much as a sound intellectual framework in Warren Buffet's active investing. If you read Benjamin Graham's Intelligent Investor you will get a better idea of why it is wise to look for bargains in a bear market and to be cautious in a bull market. Warren Buffet gleened much wisdom from Ben Graham. And he's got the dollars to prove it.

What Warren Buffet is really saying in this article is: Chill. Look for bargains in the market when things are sour. Have some confidence in the market, long run. Don't get so scared or so excited about any short run, even when everyone around you is scared or excited. Don't believe the hype. The market's going to be fine. Find some good quality stocks at good prices and have some confidence that they will perform well, generally, over time.

But most of all: Chill. The market is going to be fine. The country is going to be fine. And with a sounder understanding of the market and the world, life looks much better than you think.

Now go get 'em. Me too.

Why Paul Krugman is a moron

Paul Krugman demonstrates in his first column post-Nobel why I think he was such a remarkably poor choice for that award.

We Need to Increase Government Spending

America is now more than $10 trillion dollars in debt. With Medicare, Social Security and other unfunded obligations added to that mix, our debt stands at $59.1trillion dollars. We spend about a third of that money, around $3 trillion dollars, estimated conservatively, for interest on that debt.

We have a banking crisis as a function of banks engaging in similar behavior, spending and investing money beyond what they could generate in revenue. And the Federal government just added almost $700 billion dollars to that budget deficit to pick up the pieces from that unsustainable spending and investment on the part of banks.

And instead of making choices that might responsibly ensure financial health for the Federal government in the same way that Mr. Krugman would, presumably, want major banks to make to for the sake of their own financial health, focussing on an honest accounting of revenues that the government will take in, making cuts in spending and tradeoffs America needs to make to spend within that budget and to be able to afford whatever government may spend that money on, instead of spending more than $3 trillion of that money on servicing a budget deficit, Paul Krugman's response is to ignore that much more unsustainable and serious financial situation for the U.S. government and to ask the Federal government to spend more, amidst a record-breaking period of financial mismanagement on the part of the U.S. government.

And this is the asshole who just got the Nobel prize for economics.

This world has been turned upside-down by politics.

And Paul Krugman is case-in-point numero uno of just how mad people all over the world have gone to rationalize power.

This is not fiscal sanity that Paul Krugman is proposing. It is politics, as usual. And it is the kind of politics that has made of mess of liberal democracies. And we will continue to deal with that mess and all of the lying that makes it so until we face how foolish we have become.

Sooner rather than later, I hope.

The Democrats' downfall

Ron Brownstein asks the question that many ideological stalwarts in the Democratic party are asking themselves, right now.

The End of the Reagan Era?

It is the strongest source of Democratic hubris. And it will be their downfall, regardless of how much power they secure this election.

I am concerned about Democratic control of the Presidency and the Congress. But, regardless, this election is likely to be a moment of Democratic overreach and arrogance of power that demonstrates the poverty of ideas among Democrats, right now. It will also be their downfall, in a very similar way that the Bush Administration's abuses of power undermined the Republican party.

You can already see it in that interview of Joe the Plumber. What most people in power don't see, yet, is that most people want government out of their lives. No matter how much partisans romanticize otherwise. And that desire will not reverse itself to satisfy either Republican or Democratic victories. Republicans and Democrats will adapt themselves to what Americans want their government to do.

And that more fundamental reality - that those who aspire to govern in a liberal democracy must either lead with better ideas or follow the lead of citizens who want to determine their own lives - will determine the fate of liberal democratic politics over the next century and beyond, not the other way around.

And no Administration, Democratic or Republican, is immune to that more fundamental reality.

Americans love freedom

I think a lot of liberals are underestimating, right now, just how intuitively this argument makes sense to Americans.



Should make more sense to everyone, I think. It's the logic that has made so much of the opportunity we take for granted in America possible.

I hope, one day, my kids can grow up in a world where we take that freedom and its opportunities less for granted. It'd be nice for America to live up to its name as a land of freedom and opportunity.

I can't think of a better future to offer my children.

Progress

The Economist has a very nice sum up of the last Presidential debate of the 2008 season.

The last word

"Mr McCain drew sharp contrasts with his opponent. He insisted that Mr Obama believes that the government has the answers to America's problems whereas Mr McCain puts his trust in ordinary people (in one amusing slip of the tongue he seemed to address Mr Obama as “Senator Government”). He dwelt at length on an offhand comment that Mr Obama made to a small-businessman called Joe the Plumber about “spreading the wealth around”, instantly turning Joe into the most famous plumber since the operatives who broke into the Watergate complex.

Mr McCain managed to land some good jabs on his rival. He pointed out that he had broken his promise to take public financing for his campaign (and thus limit campaign spending). He noted that Mr Obama's solution to every problem is to spend more money. He attacked Mr Obama for (unfairly) pretending that there is no difference between him and the present incumbent. “I am not President Bush”, he said at one point. “If you wanted to run against President Bush you should have run four years ago.”

All good stuff. But Mr McCain also made two big mistakes. Bringing up Mr Obama's association with Bill Ayers, a former terrorist, made him look petty on a day on which the Dow Jones had lost 8% of its value and people have much bleaker issues on their minds. The second—and more serious—lay in his body language. Mr McCain let his contempt for the younger man shine through, harrumphing, grimacing, smirking and goggling his eyes whenever Mr Obama got a chance to speak. The whole performance was reminiscent of Al Gore's sighing in his debate with George Bush in 2000, which many people think contributed to his defeat.

Mr Obama's performance during all this was remarkable. He remained calm and unflustered. He listened respectfully to his opponent. He took every opportunity to change the subject to economics and the woes of the average American. He even turned Mr McCain's assertion that he associated with Mr Ayers to his advantage, claiming that the people he associates with, on economic issues, are Paul Volcker and Warren Buffett. If many of his arguments were weak—he gave no sense of how he would reconcile his spending plans with America's giant deficits—his body language was impeccable.

The instant polls all gave a big victory to Mr Obama. Mr McCain made the debate exciting, but Mr Obama got the better of the evening, surely increasing his already high chances of victory in November."

It does look like I will be voting for Barack Obama, at this point. Last night's debate, and the comparison of temperament and intellect that it offered, I think sealed the deal for me.

But I was very glad that John McCain was there, last night, to offer some important contrasts in policy options, especially on matters of markets, health care, and education, all areas where I think McCain has generally stronger policy positions.

One of the values of debate is to expose our weaknesses as well as highlight our strengths. Most of us who debate policy probably do not appreciate that purpose as well as we might and should. I know I didn't as a debater in high school and college. And I'm sure I don't appreciate it enough, at this point in my life, either. All of us want to have all the answers. I am no exception. I'm probably more guilty of it than most, in all likelihood. And even good men and women need the contrast, the clash, the comparison, and the healthy sense of competition to improve our thought processes and our more fully developed ideas and arguments about how we think the world is.

The beauty of debates like the one last night is that it reminds us that our thinking about how the world is is just that: it is our all too limited thinking. Our minds are not and never will be complete maps of the world and all of its complex realities. Our minds are, at best, incomplete, and always developing maps of the territory of existence. There is no one person, no one candidate, no one party, no one ideology or religion, no one group or government. There is no one who has all of the final answers about anything. Nothing. No matter how genius and no matter how important those answers and the challenges they address might be.

Humility, more than final answers, is one of our most important assets when approaching our most serious problems, especially those problems that affect all of us or large numbers of us, those we call political.

Debate and discussion, shared reflection, open-minded liberal democratic engagement is our most valuable tradition, I believe, especially in liberal democratic discussions, for addressing and sorting out our most serious challenges.

Our ability to substantively address challenges based on reasoned reflection and communication is what distinguishes modern liberal democracies from the barbarism of the largest bulk of human history. It is our ability to reason and to engage one another that allowed modern liberal democratic societies to thrive while others struggled more to address similar problems. It is our free exchange of ideas that makes us stronger and better individuals and societies, over time. There are no guarantees that we will have all the answers we need. But free exchange makes it more likely.

And last night's debate, more than the rest of the election, illustrates the strength of liberal democracies: our capacity for engaged and substantial thought on the most serious matters we face, in lieu of aggression and violence to solve problems it cannot possibly solve.

It is a value that we clearly take for granted. And we are clearly foolish to do so.

And progress is what occurs when we take this much more fundamental liberal democratic value more seriously.

Faith

I think I've lost all faith in anyone to make decisions for my life other than me.

That's what progress looks like: me taking responsibility for my life and with no presumption that anyone can take better responsibility for me other than me.

I don't have any more faith in Congress, bosses, my professors, my colleagues, friends, family, anyone to know how to live my life better than me.

I will work with all of these people. But as long as they compel my cooperation, it will always be half-hearted. That is the consequence of depending on force rather than more honest liberal democratic values for relating to one another.

I will now, forever, and only give my whole heart to that which I choose freely. I can only love that which allows me to be free to love. Everything else is bullshit. And if anyone is wondering why they are not happy with their jobs, their relationships, and their lives, this is likely the source.

And I could give two shits about anyone's excuses for why they will not end this bullshit, anymore.

I have lost faith in the excuses and in those who cannot find the courage to face the failures that power has wrought.

"Progress"

The Economist has a nice feature on the man whose psychological work is foundational to my own thinking, Abraham Maslow, in their October 10th, 2008 edition.

Abraham Maslow

This line from the article struck me:

"Maslow was described by Peter Drucker as “the father of humanist psychology”. But Drucker took issue with Maslow’s hierarchy, complaining that he had not seen that “a want changes in the act of being satisfied”. Hence “as a want approaches satiety its capacity to reward, and with it its power as an incentive, diminishes fast”. And so (as we now know well) top executives can never be paid enough for them to be satisfied."

Maslow actually does account for Drucker's criticism. He just regarded such people as insecure or D-value motivated people. Meaning, Maslow argued, correctly, I believe, that such people are trying to satisfy higher needs with lower need motivators. They are trying to be important and have more money and stuff when really what they want and need is more respect and appreciation of their efforts. They keep trying to use money to feel more important or appreciated than they really are or feel. And, sadly, all it serves to do is increase the level of envy and frustration that others have with them.

More than that, the current situation seriously undermines my confidence in either those executives or our political leaders to be responsible in situations like these financial hard times and the capacity for money to motivate real responsibility.

All those banking executives make all that money and they can't even manage their own businesses when they are failing, as much as when they are succeeding?

Pathetic.

And a sign of how little power or money really correlates with real responsibility or the courage to take it.

I work for a local school district and have to follow fairly prescriptive mandates from my state and Federal governments, and those assholes can't find the money to contribute money they've already promised and has already been legislated for special education? Those assholes can't find the 40% of special education expenses they've promised versus the 9% they've delivered (the last I saw numbers), but they can find fucking $700 billion for bankers who made shitty investments? I work much more directly for the Feds, and they can't find the money to pay for contributions or for those of us in my field, but they can find fucking $700 billion dollars to make sure that these banking executives get to take home their golden parachutes all in one piece and noone has to eat the fucking costs of mistakes that, to be fair, do lay at the feet of many of those in the Federal government, but, ultimately, lay at the feet of those who made the bad investments?

It's one of the biggest loads of shit I have ever had to watch in national politics in my entire fucking life.

I wish someone would pay me all that money to watch my business fail, not take any responsibility, and have the government step in keep me afloat.

I won't hold my breath.

But, apparently, according to folks in Washington, this is how the world is supposed to work.

Because they're all fucking lame is why. Scared little children looking around for Papa Government to come in and save them. No matter how much power folks in Washington have, they can never take responsibility. And no matter how much money folks on Wall Street have, they can never do the same.

Much of that has to do with how we treat people when they try to take honest responsibility for their mistakes. But, to be fair, many of these same people who are not willing to take responsibility are the same folks who advocate the kind of punitive treatment that makes people less willing to take responsibility more publicly and openly.

What Papa Government needs to do is to stop trying to nail people for their mistakes, except when a clear and present danger presents itself to the physical well-being of others - to avoid using force unless force is involved and there are no alternatives to stop it - and to get the hell out of the way and let his children fail and learn their lessons. And to stay out of their way, as much as possible, in the future.

But we're too scared to be that kind of grown-up.

So we let all those executives make off with millions while their businesses fail and let taxpayers pick up the tab. Government takes on a substantial proportion of the economy, Congress bets with our money that businesses will turn around, and if they don't, we eat the costs and those executives still get paid.

Congress and the President makes taxpayers take "ownership" (I say that in quotes, since it is pretty clear that Americans do not want to take on this venture), executives take none, they still get paid, whether the company fails or succeeds, and they do so in the name of steering their ship to higher tides.

No wonder kids would look out into this world and say to themselves, "This place is fucked up. And everyone looks prepared to keep it that way."

It backasswards, is what it is.

It is all kinds of good intentions with noone taking responsibility. It is the opposite of what a liberal democracy is supposed to be. But as long as peoples' pockets are being lined and politicians get to rationalize their power, it is all good, apparently.

Except it's not. It's a big fat lie, is what it is.

And I, for one, am tired of watching this poor excuse for a liberal democracy pretend like it is moving in the direction of "progress."

Progress is when we call out this bullshit for what it is. And stop making excuses for what self-centered lameasses the world has resigned itself to being. Progress is when we stop being self-centered shitheads and lameasses and start taking responsibility for ourselves and our actions and their consequences in a spirit of more genuine and collaborative community.

Progress is when we treat one anther better. All of us.

That is the standard for progress. And no amount of bullshit will ever compensate for that reality.

Demetri Martin offers a little clearification

Funny stuff.

See more Demetri Martin videos at Funny or Die

And somewhat relevant to my overachieving as of, late.

See more Demetri Martin videos at Funny or Die

You'll have to check out his website, Clearification.com to see more episodes. Somewhat clarifying for me, right now. Funny stuff, in the meantime.

Makes me want to skip teaching and make up some pie charts. Nothing like laughing your ass off while someone is fucking with you with graphs.

Letting the market do its job

Princeton law professor Jonathan Macey writes an excellent account of responsibility and correction for the problems in the current market in an October 11, 2008 Wall Street Journal piece.

The Goverment is Contributing to the Panic

Macey argues (with my italics):

"Despite all the hard work and good intentions on the part of our public officials, when economists and historians look back on the current financial crisis they are likely to conclude that government intervention prolonged and deepened it. In particular, officials at the Federal Reserve, the Securities and Exchange Commission and the Treasury Department are to blame for publicly losing confidence in the very economic system they are supposed to protect.

The Fed, the Treasury and the SEC appear to be in a state of panic. A crisis mentality led the custodians of the U.S. capital markets publicly to jettison their lifelong commitments to the capital markets in favor of a series of short-term regulatory quick fixes. Even more troubling, for the past several months the doyens of U.S. fiscal and monetary policy have ignored the most fundamental principle of central banking, which is that the primary responsibility of central bankers is to promote stability and to maintain confidence in the capital markets. Our central bankers appear to have suddenly lost confidence both in their own abilities and in the standard tools of fiscal and monetary policy.

The original Treasury plan -- which called for the transfer of virtually unlimited taxpayer dollars and unlimited spending discretion to Treasury with no judicial or congressional oversight -- sent a very bad signal to the markets. Instead of restoring confidence, this approach to the crisis instilled more fear and panic in the markets...

...On Feb. 14, just one month prior to the Bear Stearns bailout, Mr. Bernanke and Treasury Secretary Henry Paulson testified before the Senate Banking Committee. Both officials told the senators that the Fed's interest-rate cuts and the $170 billion economic-stimulus package signed into law the previous week would prevent a recession. They also testified in February that they were not concerned about bank failures because the banks were both adequately capitalized and had ready access to additional outside capital. In just over a month these regulators had completely reversed course about the state of the economy and about their own capacity to deal with the problems facing the capital markets. The regulators also changed course by losing their confidence in the strength of the free-market system and in the ability of the nation's capital markets to self-correct if provided with sufficient liquidity by the central bankers in traditional ways.

The government also wrongly abandoned market solutions when it temporarily banned short-selling. Asserting that "unbridled short selling is contributing to the recent, sudden price declines in the securities of financial institutions unrelated to true price valuation," the SEC temporarily forbade short-selling in financial institutions. The ban lasted from Sept. 17, until 11:59 p.m. Oct. 8, and was lifted only when the Treasury bailout was passed.

By the time the bailout package was passed, market sentiment had darkened to mirror the government's own pessimism about the ability of markets to play a salutary role in repairing the fractured capital market. The notion that the government rather than the private sector can create a market for distressed bank assets seems particularly misguided.

The solutions being implemented also send the message that resources devoted to risk management are wasted. All of these plans reward the financial institutions that acted like lemmings by chasing the mortgage-related debt bubble rather than rewarding the financial institutions that exercised restraint and risk avoidance and independent thought and action. This unfortunate "heads Wall Street Wins, tails America loses" economic policy is wholly inconsistent with the principles of personal and corporate responsibility that are essential to a functional free market.

Firms like Merrill Lynch that took decisive steps to deal with their problems now look like suckers, as do banks that watched their leverage ratios and paid diligently into a deposit insurance program that offers protection on a far smaller scale than their investment banking rivals are getting for nothing.

If the SEC had done half the job in ferreting out fraud and funny accounting that short-sellers have done, our capital markets would not be imploding. Now short-sellers, like other market participants, are threatened with new restrictions on their activities as Congress begins to hold hearings on the crisis in the capital markets and politicians and regulators turn their focus to the shibboleth of market manipulation.

Of course, market manipulation does exist, but federal regulators deserve much of the blame for this form of market abuse. For years the SEC has hampered companies' ability to protect themselves from manipulation by short-sellers. The most effective way for a company to respond to an attempt to manipulate its share prices is simply to repurchase its own shares, simultaneously "squeezing" the short positions and sending a clear signal of financial health to the capital market.

However, companies have long felt vulnerable to being charged by the SEC with manipulation whenever they go into the market to make share repurchases. The SEC finally acknowledged this problem after the collapse of Bear Stearns and Lehman when it stated publicly that "historically, issuers generally have been reluctant to undertake repurchases" when faced with manipulative short-sellers because of the massive amount of uncertainty about whether the SEC would sue them for trying to manipulate the market.

The Bear Stearns bailout, the restrictions on short-selling and the government's new $700 billion commitment to buy toxic mortgage-based assets all share the same fundamental flaw: They prevent the market from imposing discipline on banks guilty of massive over-leveraging and excessive risk-taking. Moreover, they punish prudent managers who invested conservatively, kept their companies' debt at reasonable levels and worked hard to raise new capital when necessary. The SEC's attack on short-selling punishes savvy traders who invested resources and effort in identifying companies with too much debt and unrealistically valued assets.

Letting markets work is messy and costly. Nevertheless, the only sensible way to deal with the current crisis is to force the companies who created the mess to bear at least some of the costs of their mistakes. Most of all, if the markets are to get back on track our regulators must put an immediate stop to their current practice of publicly demonizing the markets and work to restore confidence in the system."

There has been and is too much condifence in regulators to anticipate events that Professor Macey makes clear that they did not and, generally, cannot anticipate and correct for.

Bad things happen. It is not ideal. Neither is government always or even generally the most informed or better positioned player to resolve problems. We assume they are because we are afraid, not because they generally do a better job. There are important jobs for government to perform. But public confidence in the government to perform its essential jobs is undermined when we crow for and government responds with efforts that it is ill-equipped to tackle. We are better, generally, to allow government to do the jobs that it is best-suited to.

Correcting the market is not one of those jobs.

And Professor Macey makes a very good argument for why, in this case, that is likely true.

What created the financial meltdown?

I'm still researching the financial meltdown and all the original causes of this mess.

Lending discrimination suits by the Clinton Administration and community activists to force banks to offer loans to people who could not otherwise qualify. Securitization of mortgages my Freddie Mac and Fanny Mae with a false AAA credit rating. Credit default swaps, what may have been paper insurance not backed by real assets, for these bundled securities. Perhaps greed and confusion, given these very complicated realities, on the part of bankers.

Many people are likely responsible. Bankers must take responsibility for the debt because it was debt they assumed. I will not hold my breath for community activists and government officials who may have been responsibile for this situation to take responsibility. They just don't do responsibility. It's not their thing. That's the beauty of politics. There's always someone else to blame.

And though they don't take responsibility readily, this video and article by Ed Morrisey of Hotair does seem to make a pretty good case that discrimination lawsuits and Freddie Mac and Fanny Mae securitization may have been one of the original problems that caused this mess.

The quotes that explain the entire financial meltdown

And here's the video of Andrew Cuomo unknowlingly giving us all a peek into the beginnings of the country's financial problems.

Andrew Cuomo: Subprime Loans "Affirmative Action"



I'm still researching, so I'm not ready to point fingers, yet. But this does look like the most convincing theory to me, at this point, given what I've seen.

Unintended consequences. They are abundant in political and economic life. And we are often so quick to defend our intentions that we very often will not take responsibility for these consequences we did not anticipate.

The beauty of the market is that someone has to take responsibility. And there is a better opportunity for people to learn the lessons. The downfall of political solutions is that people are constantly shifting blame and noone wants to take it because it is so easy to escape it, given how irrationally we function in the political world.

This was exactly Terry Moe and John Chubb's point in their book Politics, Markets, and America's Schools and why they and I favor school choice and creating a non-profit and for-profit market for schools instead of the increasingly multi-layered government driven public education that you see today. People will always make mistakes. That cannot be escaped. What we must be concerned with is in what situation are they more likely to take responsibility for their mistakes and make corrections for their failures.

Markets are a better environment for people taking responsibility for those mistakes, long-term, I am convinced. And politics creates every incentive for people to avoid their mistakes and enforce them on others.

I'll keep researching this mess. In the meantime, I am deeply concerned about those who may have played a serious hand in creating this mess making economic policy for the next 4 years.

Thank goodness there are enough more thoroughly thoughtful and informed people in the market to not confuse politics with substantial knowledge about the market and the economy. We are going to need them.

No sadder fate

You know why money and fame, power and lust, and all the rest don't have any serious hold over me?

Because of this.

Hugh Hefner: Holly Left But New Girls Are Lined Up

Because I cannot possibly imagine a life any more sad and useless than one where someone would confuse any and all of those things with real love.

How incredibly sad and foolish.

Hugh Hefner needs to listen to the Magnetic Fields. And to more love songs, in general.

How sad that anyone would confuse love with any of those other options. How sad that anyone would pretend that the fact that everyone takes love for granted somehow means that love really doesn't matter.

How sad that all of us act as if love is weakness.

Instead of, as Hugh Hefner's sad life demonstrates, our greatest strength.

Understanding in lieu of fear in matters of the market and life at large

Jason Zweig, the Money magazine editor who updates and comments in the newest editions of Benjamin Graham's Intelligent Investor - the book that Warren Buffet, the richest man in the world, worth nearly $62 billion dollars, the last time I saw reports on his wealth, credits for his wealth - has the best article on current market conditions and our likely future stock market fate I have read this entire period.

What History Tells Us About the Market

I hope Jason and the Wall Street Journal do not mind me reprinting that article, here, in toto, with no financial advantage to myself and with a single concern of getting out the word on a much more thoughtful and sound assessment of the current market.

"July 9, 1932 was a day Wall Street would never wish to relive. The Dow Jones Industrial Average closed at 41.63, down 91% from its level exactly three years earlier. Total trading volume that day was a meager 235,000 shares. "Brother, Can You Spare a Dime," was one of the top songs of the year. Investors everywhere winced with the pain of recognition at the patter of comedian Eddie Cantor, who sneered that his broker had told him "to buy this stock for my old age. It worked wonderfully. Within a week I was an old man!"

The nation was in the grip of what U.S. Treasury Secretary Ogden Mills called "the psychology of fear." Industrial production was down 52% in three years; corporate profits had fallen 49%. "Many businesses are better off than ever," Mr. Cantor wisecracked. "Take red ink, for instance: Who doesn't use it?"

Banks had become so illiquid, and depositors so terrified of losing their money, that check-writing ground to a halt. Most transactions that did occur were carried out in cash. Alexander Dana Noyes, financial columnist at the New York Times, had invested in a pool of residential mortgages. He was repeatedly accosted by the ringing of his doorbell; those homeowners who could still keep their mortgages current came to Mr. Noyes to service their debts with payments of cold hard cash.

A view of the New York Stock Exchange, taken by Berenice Abbott in 1933
Just eight days before the Dow hit rock-bottom, the brilliant investor Benjamin Graham -- who many years later would become Warren Buffett's personal mentor -- published "Should Rich but Losing Corporations Be Liquidated?" It was the last of a series of three incendiary articles in Forbes magazine in which Graham documented in stark detail the fact that many of America's great corporations were now worth more dead than alive.

More than one out of every 12 companies on the New York Stock Exchange, Graham calculated, were selling for less than the value of the cash and marketable securities on their balance sheets. "Banks no longer lend directly to big corporations," he reported, but operating companies were still flush with cash -- many of them so flush that a wealthy investor could theoretically take over, empty out the cash registers and the bank accounts, and own the remaining business for free.

Graham summarized it this way: "...stocks always sell at unduly low prices after a boom collapses. As the president of the New York Stock Exchange testified, 'in times like these frightened people give the United States of ours away.' Or stated differently, it happens because those with enterprise haven't the money, and those with money haven't the enterprise, to buy stocks when they are cheap."

After the epic bashing that stocks have taken in the past few weeks, investors can be forgiven for wondering whether they fell asleep only to emerge in the waking nightmare of July 1932 all over again. The only question worth asking seems to be: How low can it go?

Make no mistake about it; the worst-case scenario could indeed take us back to 1932 territory. But the likelihood of that scenario is very much in doubt.

Robert Shiller, professor of finance at Yale University and chief economist for MacroMarkets LLC, tracks what he calls the "Graham P/E," a measure of market valuation he adapted from an observation Graham made many years ago. The Graham P/E divides the price of major U.S. stocks by their net earnings averaged over the past 10 years, adjusted for inflation. After this week's bloodbath, the Standard & Poor's 500-stock index is priced at 15 times earnings by the Graham-Shiller measure. That is a 25% decline since Sept. 30 alone.

The Graham P/E has not been this low since January 1989; the long-term average in Prof. Shiller's database, which goes back to 1881, is 16.3 times earnings.

But when the stock market moves away from historical norms, it tends to overshoot. The modern low on the Graham P/E was 6.6 in July and August of 1982, and it has sunk below 10 for several long stretches since World War II -- most recently, from 1977 through 1984. It would take a bottom of about 600 on the S&P 500 to take the current Graham P/E down to 10. That's roughly a 30% drop from last week's levels; an equivalent drop would take the Dow below 6000.

Could the market really overshoot that far on the downside? "That's a serious possibility, because it's done it before," says Prof. Shiller. "It strikes me that it might go down a lot more" from current levels.

In order to trade at a Graham P/E as bad as the 1982 low, the S&P 500 would have to fall to roughly 400, more than a 50% slide from where it is today. A similar drop in the Dow would hit bottom somewhere around 4000.

Prof. Shiller is not actually predicting any such thing, of course. "We're dealing with fundamental and profound uncertainties," he says. "We can't quantify anything. I really don't want to make predictions, so this is nothing but an intuition." But Prof. Shiller is hardly a crank. In his book "Irrational Exuberance," published at the very crest of the Internet bubble in early 2000, he forecast the crash of Nasdaq. The second edition of the book, in 2005, insisted (at a time when few other pundits took such a view) that residential real estate was wildly overvalued.

The professor's reluctance to make a formal forecast should steer us all away from what we cannot possibly know for certain -- the future -- and toward the few things investors can be confident about at this very moment.

Strikingly, today's conditions bear quite a close resemblance to what Graham described in the abyss of the Great Depression. Regardless of how much further it might (or might not) drop, the stock market now abounds with so many bargains it's hard to avoid stepping on them. Out of 9,194 stocks tracked by Standard & Poor's Compustat research service, 3,518 are now trading at less than eight times their earnings over the past year -- or at levels less than half the long-term average valuation of the stock market as a whole. Nearly one in 10, or 876 stocks, trade below the value of their per-share holdings of cash -- an even greater proportion than Graham found in 1932. Charles Schwab Corp., to name one example, holds $27.8 billion in cash and has a total stock-market value of $21 billion.

Those numbers testify to the wholesale destruction of the stock market's faith in the future. And, as Graham wrote in 1932, "In all probability [the stock market] is wrong, as it always has been wrong in its major judgments of the future."

In fact, the market is probably wrong again in its obsession over whether this decline will turn into a cataclysmic collapse. Eugene White, an economics professor at Rutgers University who is an expert on the crash of 1929 and its aftermath, thinks that the only real similarity between today's climate and the Great Depression is that, once again, "the market is moving on fear, not facts." As bumbling as its response so far may seem, the government's actions in 2008 are "way different" from the hands-off mentality of the Hoover administration and the rigid detachment of the Federal Reserve in 1929 through 1932. "Policymakers are making much wiser decisions," says Prof. White, "and we are moving in the right direction."

Investors seem, above all, to be in a state of shock, bludgeoned into paralysis by the market's astonishing volatility. How is Theodore Aronson, partner at Aronson + Johnson + Ortiz LP, a Philadelphia money manager overseeing some $15 billion, holding up in the bear market? "We have 101 clients and almost as many consultants representing them," he says, "and we've had virtually no calls, only a handful." Most of the financial planners I have spoken with around the country have told me much the same thing: Their phones are not ringing, and very few of their clients have even asked for reassurance. The entire nation, it seems, is in the grip of what psychologists call "the disposition effect," or an inability to confront financial losses. The natural way to palliate the pain of losing money is by refusing to recognize exactly how badly your portfolio has been damaged. A few weeks ago, investors were gasping; now, en masse, they seem to have gone numb.

The market's latest frame of mind seems reminiscent of a passage from Emily Dickinson's poem "After Great Pain a Formal Feeling Comes":

This is the Hour of Lead --
Remembered, if outlived,
As Freezing persons recollect the Snow --
First -- Chill -- then Stupor -- then the letting go.

This collective stupor may very likely be the last stage before many investors finally let go -- the phase of market psychology that veteran traders call "capitulation." Stupor prevents rash action, keeping many long-term investors from bailing out near the bottom. When, however, it breaks and many investors finally do let go, the market will finally be ready to rise again. No one can spot capitulation before it sets in. But it may not be far off now. Investors who have, as Graham put it, either the enterprise or the money to invest now, somewhere near the bottom, are likely to prevail over those who wait for the bottom and miss it."

You'll have to go to the Wall Street Journal link to get the numbers, graphics and other goodies that they offer with this article.

But it is nice to see a sober and thoughtful assessment of the current financial situation without the shrill cries of those who might substitute panic for understanding.

We owe much more to people like Jason Zweig, Benjamin Graham, and his most famous student, Warren Buffet, than to any of the well-intentioned but ultimately poorly conceived efforts by Henry Paulson, President Bush, John McCain, Barack Obama or any of our political leaders making good faith but failing and poorly considered efforts to fix the credit crisis at this point.

If you want a better understanding of why the market is likely to correct itself and how that process operates, I would highly recommend reading any of Jason's commentaries in any of the most recent editions of Benjamin Graham's Intelligent Investor, and to benefit your own understanding of the market and your own ability to be profitable even in these very uncertain times.

Much thanks to Benjamin Graham, Jason Zweig and all of those who would offer us understanding rather than fear in this time of market uncertainty.

It is such understanding that serves all of us better, in all matters. And thank goodness that people like Benjamin Graham dedicated their lives to making that stronger understanding available to us. We would be, literally and figuratively, much poorer without their contributions.

What Americans need to hear

Rod Dreher has an excellent article in Thurday's Dallas Morning News that captures well what Americans and the world most needs to hear this election season that has been so desperately missing in our national and international democratic conversation.

The speech John McCain should give

From that speech:

"My friends, I am neither young nor eloquent, handsome nor smooth. But I have lived a long life, much of it in service to America in war and in peace. And I have always stood for straight talk. There has been no time in our nation’s recent history when the American people more needed to hear the plain truth from their leaders. A fundamental reason our country faces economic catastrophe is that we have built our lives around running from truths about the American way of life.

Washington has run from the truth. Wall Street has run from the truth. And if we’re honest with ourselves, all of us have, in one way or another, run from the truth.

We have accepted the lie that we can live exactly as we want to live, with no concern for the consequences. We have taken the blessings of liberty and prosperity and turned them into a curse of debt slavery - bondage that will be visited on our children, and our children’s children, if we don’t change.

Everybody has a theory about how we got into this mess, and it’s usually one that absolves them and their party from blame. My friends, I’m here to tell you that this crisis is the Republicans’ fault. It’s the Democrats’ fault. It’s the fault of every one of us who believed in the fairy tale of a free lunch.

It’s time for all Americans to take responsibility for what we’ve done. It’s time for all Americans to pull together to help our families, our neighbors and our country through hard times.

I will not lie to you and tell you that the road ahead will be easy. I will not insult you by giving you simple villains, simple heroes or simplistic solutions. As the song says, everybody wants to get to heaven, but nobody wants to die. My fellow Americans, all of us must sacrifice to endure the trials that history sends our way and to rebuild our nation on a solid foundation of honor, truth and plainspoken virtue.

I know something about sacrifice. And I know something about the way life can break your pride. I was a cocky Navy aviator who thought he was invulnerable. Then I was shot out of the sky and spent five years in prison. That experience did not kill me. It made me stronger. It taught me how much I loved my God, my family and my country - and what trials I could endure for the sake of that love.

I am a patriot. I believe we are a nation of patriots, of men and women who are ready and willing to put country first. But over the years, our leaders, Republican and Democratic, have asked us to do little more than to go shopping, to vote for them and to blame other people for what’s wrong with America. Anything to keep us from facing the truth and changing our ways.

As your president, I will ask you to do hard things. I, too, will do hard things for the good of this great nation. Serious times call for serious leadership. In his first speech as prime minister, with his free nation facing the might of Nazi Germany, Winston Churchill refused to mislead the British people about the gravity of their situation. We remember today his words to them: 'I have nothing to offer but blood, toil, tears and sweat.'

Churchill did not give cheap optimism. He, too, had fought and suffered for his nation, both on the battlefield and in Parliament. He had known the joy of victory and the humiliation of defeat. What Churchill, from his incomparable experience, could offer his people was the gold standard of hope. Hope is the conviction that whatever suffering we must go through, goodness and right shall prevail.

Today, when I survey the gathering storm, I am certain that if we, the people, stand together without fear or favor, victory will be ours. I ask you to give me the privilege of leading this great nation in a time when heroes will be made, and all good men and women must come to the aid of their country.

Thank you, and God bless America."

When the world gets a little overwhelming

Force as a governing philosophy as a logical fallacy

Aside from the limited circumstances in which force is necessary to intervene when harm is imminent from the aggression of others, force is not just counterproductive, often challenging others and leading to the very kind of behavior that one is trying to avoid, but as a general governing philosophy it is a logical fallacy.

The notion that force, or in modern parlance, regulation, can be used to avoid even very serious mistakes is not a logical possibility. Mistakes are made as a regular matter of judgment, as and until our judgment improves, often by our mistakes.

The notion that even very serious mistakes can be avoided by the use of force is not only contradicted by a long human history of often unparalleled and tragic mistakes, often with and around the use of force, it is not even a logical possibility given the nature of choices by human beings made always and without end with limited understanding and certainty. Mistakes are an important part of our learning process. And the notion that we can force them away assumes that we can learn without them. Which is not possible as a matter of fact of human existence.

Regulators, themselves, lawmakers, themselves, rule-makers, themselves, are subject to this often very serious mistake. In fact, many if not the most serious mistakes made over the course of human history have been made by those in power and around the use of power and the ways that it is wielded over people.

None of this can be eliminated by regulation or the use of force. The one and only source of our choices, our mistakes, our good judgment, our successes and our failures over the course of humanity has been independent conscience and judgment, informed, of course, by the independent consciences and judgments and other signals for behavior of others. This is and always has been and always will be the sole source of our choices, good and bad.

What force has often done is made much human decision-making that does not involve the immediate physical safety of others much, much more complicated and difficult to sort out, especially the way that it distorts communication and understanding by encouraging dishonest communication and understanding to cover for mistakes that might otherwise be punished or lead to harm to individuals.

Force is a tool that is only useful in very limited circumstances in the relationships we have with one another. It can prevent immediate physical harm. Otherwise, it very much complicates and often undermines our relationships and the goals we seek. And one of the most important ways that it does so is in undermining the honest communication and learning curve that people need to learn from mistakes, which are inevitable, and make better choices, with experience and understanding over time.

We are not just romanticizing a governing philosophy that has been the source of the bulk of the most serious tragedy over the course of human history and the 20th century, from which we are emerging, we are romanticizing a governing philosophy that is not literally possible as a means of preventing the kinds of mistakes and problems that we seek for it to prevent. It is not a possibility as a matter of fact, not as a matter of ideology, politics, religion, philosophy, or any other source of governing ideas.

It is not possible to force away even our most serious mistakes. We must learn from our mistakes and make better choices in the future. Learning, facilitated primarily by debate and discussion and other similar sources of serious engagement, can help us understand choices to avoid. But, ultimately, we learn from our choices and such learning and no amount of force can replace that development of independent conscience and judgment by learning, experience and understanding.

We are the most mature liberal democracy in the world. And we are governing by a logical fallacy, at this point. It is a fallacy that is reinforcing the ugliest impulses of the ugliest, most repressive regimes around the world, right now, who are looking to our debates and discussions as justification and reinforcement of their own repression and use of force for their own ugly ends.

And there is most definitely someone who is responsible for this mess. It is me. It is you. It is each of us who, in whatever way we are responsible, have reinforced this fallacious and ugly governing philosophy that has plagued humanity as likely its most serious and repeated tragedy since the dawn of humanity as an aggressive and predatory animal, who evolved into a more intelligent and civilized version of this predator, but carried with us the same aggressive instincts that undermined our most important ability and advantage in nature: our intelligence and the understanding it yields.

The kids and I talk all the time about how homo sapien's most serious predator, outside of bacteria and disease, has always been other homo sapiens. And it is the use of force and the failures of our reasoning and honest responsibility around our more predatory and aggresive instincts that is responsible for this failure more than any other.

The idea that we would romanticize this instinct as the solution for all of our most serious problems is comedy and tragedy embodied.

Our only hope is that we can learn despite ourselves on this matter.

That is how we have always make genuine progress.

Perhaps we are capable of the same today.