It seems clear to Paul Greenberg that it's working. Has restored his faith, it has. Glory be!
What we seem to have actually proved is that with virtually every available American serviceman on the ground there, we can hold down the death squads. We've been able to reduce suicide bombers.
Meanwhile, with oil revenues estimated at up to $57 billion for 2008, Iraq has become one of the most corrupt countries on the planet and one of the least able to translate its wealth into meeting the needs of its citizens. Perhaps more effective than Nigeria, but definitely near the bottom. I'm a bit of a cynic. I think some of the political good will now being seen, what little there is, results from politicians recognizing that there is so much money that they can divide it up among themselves and all get rich. It will be necessary to provide some cover story for the masses, who will not do as well, but that's always possible, as George Orwell told us decades ago.
However, I'm dubious that the factions will ever trust one another enough that the U.S. can leave. The kleptocracy probably appreciates that degree of stability that having the U.S. Army constantly around the corner provides. For the U.S. taxpayer, the situation is pretty grim. It will get much worse if McCain wins in November.
Long ago, I figured the worst case for Iraq was 500 billion. How naive I was! We are now in a situation where the armed factions will agree not plunder the country rather than massacre one another if we kick in a quarter trillion a year forever. A trillion dollars is still a lot of money.
Sunday, March 09, 2008
Saturday, March 08, 2008
Elliott Waves -- The Delphic Oracle Approach to Investing
I am amused by the interest in Elliott Waves, particularly with respect to foreign exchange rates. The adherents of this nonsense are enamored with the possibility of discovering trends through systematic waves in charts of essentially anything. The arguments against are the same as rational people use in many circumstances. For example,
1) If true, this analysis would be self-defeating once discovered. If everybody could make money following the pattern, everybody would anticipate the pattern, destroying the pattern.
2) If true, then the practitioners would not be blogging about it. They would be sitting on the beach in the Bahamas, soaking up the sun. The exchange rate between the Euro and the US Dollar (known as EURUSD to the cognoscenti) has jumped so much in six months that anyone who could use Elliott Waves to predict the trend would now be rich. Many of these people appear not to be rich.
3) If true, there would be no reason, discarding the possibility of altruism, for anyone to spread the word for peanuts. You would not have people selling books or DVDs for $19.95, for Elliott Waves any more than making money from home for a small price, available at the address on your TV screen.
4) Correlation is not causation. It's a common error to try to fit a straight line through a graph of two variables and then discover a causal relationship. It is less often done with respect to wavy patterns, because they are so much more difficult to quantify. But mathematicians know that you can approximate any regular pattern with a series based on sine waves. If you allow enough slop, you can do this with a modest number of them.
History examines the past and offers explanations. It's interesting, but won't make you rich. Science examines the past through experiments and predicts future behavior. The Elliott Wave folks think they have science, but they just have history. Maybe not bunk, but close.
1) If true, this analysis would be self-defeating once discovered. If everybody could make money following the pattern, everybody would anticipate the pattern, destroying the pattern.
2) If true, then the practitioners would not be blogging about it. They would be sitting on the beach in the Bahamas, soaking up the sun. The exchange rate between the Euro and the US Dollar (known as EURUSD to the cognoscenti) has jumped so much in six months that anyone who could use Elliott Waves to predict the trend would now be rich. Many of these people appear not to be rich.
3) If true, there would be no reason, discarding the possibility of altruism, for anyone to spread the word for peanuts. You would not have people selling books or DVDs for $19.95, for Elliott Waves any more than making money from home for a small price, available at the address on your TV screen.
4) Correlation is not causation. It's a common error to try to fit a straight line through a graph of two variables and then discover a causal relationship. It is less often done with respect to wavy patterns, because they are so much more difficult to quantify. But mathematicians know that you can approximate any regular pattern with a series based on sine waves. If you allow enough slop, you can do this with a modest number of them.
History examines the past and offers explanations. It's interesting, but won't make you rich. Science examines the past through experiments and predicts future behavior. The Elliott Wave folks think they have science, but they just have history. Maybe not bunk, but close.
Oregonians are Math Challenged
It's not difficult. If you need a certain amount of money every year, which equals what you expect the long term average to be, then you can't discard the surplus in those years that exceed the average, because mathematically, there will be years below the average.
We didn't see it coming with PERS, and consequently told public employees when we had good years that they could keep the excess for their pensions and that the taxpayers would make it up during the bad years, i.e. when earnings dipped below 8%. The legislature passed the rules in the early 1990's when the money was relatively small and apparently just didn't work out the consequences.
Neither have they figured out the implications of having an almost entirely income-tax based general fund and no serious reserves. In the previous recession, the state was flushing out its treasury with "kicker" checks just as the projections for tax revenues were going south. We ended up with some schools becoming the butt of Doonesbury jokes.
Here we are again. We've sent out record kicker checks in the fall and now in winter, the handwriting on the wall is becoming evident again. The first decline in the revenue forecast was under $200 million. It was, however, enough to essentially eliminate the unappropriated amount in the state's ending fund balances. There are still some reserves, but those will be mostly wiped out with the next estimate.
This may just be the Republicans' blunt tool to achieve control of total government spending, but since it is likely to seriously impact schools, community colleges, universities, highways, and law enforcement, you'd think they would devise something more targeted.
We didn't see it coming with PERS, and consequently told public employees when we had good years that they could keep the excess for their pensions and that the taxpayers would make it up during the bad years, i.e. when earnings dipped below 8%. The legislature passed the rules in the early 1990's when the money was relatively small and apparently just didn't work out the consequences.
Neither have they figured out the implications of having an almost entirely income-tax based general fund and no serious reserves. In the previous recession, the state was flushing out its treasury with "kicker" checks just as the projections for tax revenues were going south. We ended up with some schools becoming the butt of Doonesbury jokes.
Here we are again. We've sent out record kicker checks in the fall and now in winter, the handwriting on the wall is becoming evident again. The first decline in the revenue forecast was under $200 million. It was, however, enough to essentially eliminate the unappropriated amount in the state's ending fund balances. There are still some reserves, but those will be mostly wiped out with the next estimate.
This may just be the Republicans' blunt tool to achieve control of total government spending, but since it is likely to seriously impact schools, community colleges, universities, highways, and law enforcement, you'd think they would devise something more targeted.
Where is John Maynard Keynes when we need him?
The prevailing political view on economics up until 1932 was that discipline and hard work would cure all that might ail us. After Roosevelt came to power, he changed his mind and adopted the Keynesian view that the economy needs discipline in good times and largesse during recessions and depressions.
We have a new theory, as wacky as the earlier views, which is that profligacy is the key to prosperity. We are now on the verge of recession and the politicians are simply recommending more hair of the dog that bit us. We're here because we didn't want to consider either that running a war would involve some domestic sacrifices, or that running out of petroleum would require us to change out consumption patterns. The consequence is that we are caught unprepared by oil at $105/barrel and the fact that foreigners regard U.S. debt as increasingly problematic.
We need to raise, not lower taxes, and spend the money where needed. We need to invest in infrastructure to employ some of those who were formerly building too many too large houses. We need to invest in research to develop energy-saving technologies. We need to hire bands of shiftless teenagers to accost people at Interstate rest stops and offer to check their tire pressure.
We do not need to write checks to people who are frightened for their futures. Those people, and by May that's going to be most people, will just put the money in the bank or use it to pay down credit cards. There will be a large transfer of debt from the private sector to the public, but there will be no surge in spending. Keynes advocated spending by government, not transfer to individuals who might not spend. This is nuts.
We have a new theory, as wacky as the earlier views, which is that profligacy is the key to prosperity. We are now on the verge of recession and the politicians are simply recommending more hair of the dog that bit us. We're here because we didn't want to consider either that running a war would involve some domestic sacrifices, or that running out of petroleum would require us to change out consumption patterns. The consequence is that we are caught unprepared by oil at $105/barrel and the fact that foreigners regard U.S. debt as increasingly problematic.
We need to raise, not lower taxes, and spend the money where needed. We need to invest in infrastructure to employ some of those who were formerly building too many too large houses. We need to invest in research to develop energy-saving technologies. We need to hire bands of shiftless teenagers to accost people at Interstate rest stops and offer to check their tire pressure.
We do not need to write checks to people who are frightened for their futures. Those people, and by May that's going to be most people, will just put the money in the bank or use it to pay down credit cards. There will be a large transfer of debt from the private sector to the public, but there will be no surge in spending. Keynes advocated spending by government, not transfer to individuals who might not spend. This is nuts.
Fortunately there are political minor leagues
It's unfortunate that Obama has lost an advisor who may have had good intentions and perhaps talents, but just wasn't ready for the discipline of actual power. It's bad enough for him that she was unable to curb her tongue during the campaign. How much worse would it have been if she'd stayed out of sight until January and then somehow became a high government official!
Maybe there is a benefit from long campaigns, because it exposes both the candidate and a lot of potential advisors to a lot of inconsequential scrutiny. Whether some Obama campaigner said something indiscreet to a Canadian official is a tempest in a teacup now. Rather like the Eugene Emeralds losing a baseball game. Not a big deal in itself and it serves to weed out those who don't have what it takes.
I'm actually not that distressed to see Obama ditch Samantha Powers since she seems to come from the "moral obligation to fix the world" school of international relations. That's what got us into Iraq and Afghanistan. We don't need to do it again in Darfur.
I accept the idea that bad outcomes are often inevitable and it isn't admirable to spend time and treasure vainly attempting to delay that fact. The people of Afghanistan are not going to have happy lives because there are 25 million of them, squatting in the middle of a stinking desert, with no export product to speak of apart from heroin. Iraqis might, since they have wealth, if we left them alone but it can't be forced on them.
Instead, we have intervened. A half decade later, they are less happy, we are less safe, and we're a trillion dollars poorer (including deferred costs). Knowing this, there are those who want us to save Darfur, militarily since there are no other options. Just goes to show that a fancy university education isn't always enough.
Maybe there is a benefit from long campaigns, because it exposes both the candidate and a lot of potential advisors to a lot of inconsequential scrutiny. Whether some Obama campaigner said something indiscreet to a Canadian official is a tempest in a teacup now. Rather like the Eugene Emeralds losing a baseball game. Not a big deal in itself and it serves to weed out those who don't have what it takes.
I'm actually not that distressed to see Obama ditch Samantha Powers since she seems to come from the "moral obligation to fix the world" school of international relations. That's what got us into Iraq and Afghanistan. We don't need to do it again in Darfur.
I accept the idea that bad outcomes are often inevitable and it isn't admirable to spend time and treasure vainly attempting to delay that fact. The people of Afghanistan are not going to have happy lives because there are 25 million of them, squatting in the middle of a stinking desert, with no export product to speak of apart from heroin. Iraqis might, since they have wealth, if we left them alone but it can't be forced on them.
Instead, we have intervened. A half decade later, they are less happy, we are less safe, and we're a trillion dollars poorer (including deferred costs). Knowing this, there are those who want us to save Darfur, militarily since there are no other options. Just goes to show that a fancy university education isn't always enough.
Sunday, February 10, 2008
The Archbishop of Canterubury and Sharia Law
He has shown that the only thing less relevant in Britain than the monarchy is the C of E. Apparently, he said in an interview that the incorporation of some aspects of sharia law into the laws of Britain was "inevitable." I assume he was just trying to be tolerant. At some point you need to stop being tolerant, particularly if you're the head of a Christian church, in a country where the development of laws unlike sharia over the past eight centuries has led to a system that guarantees the rights of minorities, against the majority and against troglodyte elements of their own minority. I think the man is simply daft, and since that evidently doesn't disqualify him from heading his church, it reflects on them as well.
Will the federal economic stimulus work? Ask Oregon.
The feds are planning a huge rebate plan to stimulate the economy. Before counting on it to restore growth, they should consider Oregon's experience. Due to its unique "kicker" program, through which Oregon rebates to taxpayers everything above its estimated revenues whenever that excess is more than 2% for the biennium, the Oregon economy was stimulated late in 2007 by the infusion of some $1.1 billion from the state treasury. In early 2008, we should be seeing the results.
In fact, when the governor first noticed that there was some potential for declining state revenues two weeks ago, he figured it would be in the "low tens of millions" for the biennium. One of the Republican leaders in the state legislature, where Republican support for the kicker is institutionalized, knew why:
Senate Republican Leader Ted Ferrioli of John Day said the $1 billion in “kicker” rebate checks sent out by Oregon late last year probably served as stimulus to the regional economy, offsetting some of the downturn hitting other states.
Two weeks later, the actual revenue forecast that the governor had been hinting at was released and, behold, rather than low tens of millions, it was $183 million. The cash vanished into the pockets of taxpayers with hardly a ripple on the overall economy.
This is roughly what Keynes would have predicted. His point was that when people get nervous, they stop spending. They don't become significantly less nervous when they are given modest amounts of money, so they won't change their spending habits much. If you want stimulus, have the government borrow and spend.
Pretty much nobody is Keynesian these days, although a few claim to be. One economist remarked that ""From an economic stimulus perspective, it will have the short-term effect of increasing spending and there will be the Keynesian multiplier effect." But this isn't a Keynesian multiplier, which results from increased government spending. It's just a multiplier.
The Bush theory has been to never stimulate with spending, only tax reduction. Democrats like the idea of spending, but they ignore the other half of Keynes' strategy, which was to cut back spending when times were good. At the bottom, this is a strategy to make economic gains by consuming without working for the money. It plays well in an election year, but it's lousy economics.
In fact, when the governor first noticed that there was some potential for declining state revenues two weeks ago, he figured it would be in the "low tens of millions" for the biennium. One of the Republican leaders in the state legislature, where Republican support for the kicker is institutionalized, knew why:
Senate Republican Leader Ted Ferrioli of John Day said the $1 billion in “kicker” rebate checks sent out by Oregon late last year probably served as stimulus to the regional economy, offsetting some of the downturn hitting other states.
Two weeks later, the actual revenue forecast that the governor had been hinting at was released and, behold, rather than low tens of millions, it was $183 million. The cash vanished into the pockets of taxpayers with hardly a ripple on the overall economy.
This is roughly what Keynes would have predicted. His point was that when people get nervous, they stop spending. They don't become significantly less nervous when they are given modest amounts of money, so they won't change their spending habits much. If you want stimulus, have the government borrow and spend.
Pretty much nobody is Keynesian these days, although a few claim to be. One economist remarked that ""From an economic stimulus perspective, it will have the short-term effect of increasing spending and there will be the Keynesian multiplier effect." But this isn't a Keynesian multiplier, which results from increased government spending. It's just a multiplier.
The Bush theory has been to never stimulate with spending, only tax reduction. Democrats like the idea of spending, but they ignore the other half of Keynes' strategy, which was to cut back spending when times were good. At the bottom, this is a strategy to make economic gains by consuming without working for the money. It plays well in an election year, but it's lousy economics.
Oregon Budget Crisis -- 2008 meets 2002
Tom Potiowsky, the official Oregon state economist whose "Chinese water torture" method of estimating the declining state revenues six years ago were a staple feature of that crisis, is at it again. Tom is probably a good husband and kind to animals, but his inability to see the big picture meant that the legislature didn't grasp the magnitude of the previous crisis until it was upon them, and that the low-ball estimate of revenues led to a great flushing out of the state's coffers last fall (due to Oregon's kicker law, for those of you from out-of-state). Just as the country was starting to head downhill.
Oregon's economist is required to make public estimates of revenues every couple months or so. As the housing crisis was unfolding, Tom figured late last year that the effect on Oregon would be essentially nothing, despite the large role that forest products plays in the state economy. Now he's estimating that the state will take in $183 million (1.2%)less than expected between now and the end of the biennium on June 30, 2009.
State tax revenues in Oregon are overwhelmingly dependent on income taxes, which in turn are quite volatile. Property taxes are quite stable, sales taxes fairly stable, but income taxes depend on growth in a more leveraged fashion. The current estimate seems in line with the national consensus drop in estimates of GDP. Since income tax receipts are going to be much more volatile than that, this projection is probably still optimistic.
Here's my prediction. In six months, the estimate will be for a 3% fall in the 2007-2009 biennium. There will be some modest belt-tightening but tax receipts had a good head of steam at the outset and the shortfall will be manageable in this biennium.
I don't know when the estimate for 2009-2011 will be first released, but I'm going to guess it will be 5% below what the legislature had pencilled in at the end of the last session. The state's reserves, having been rebuilt modestly since the last recession, will have been wiped out by the shortfall in 2007-2009, and the legislature will again have the job of making serious cuts in services.
Of course, I'm the same guy who said the Republicans would have a contested convention in Minneapolis. I haven't given up hope, but it's a lot less likely than it was two weeks ago. So maybe I'm wrong again.
Oregon's economist is required to make public estimates of revenues every couple months or so. As the housing crisis was unfolding, Tom figured late last year that the effect on Oregon would be essentially nothing, despite the large role that forest products plays in the state economy. Now he's estimating that the state will take in $183 million (1.2%)less than expected between now and the end of the biennium on June 30, 2009.
State tax revenues in Oregon are overwhelmingly dependent on income taxes, which in turn are quite volatile. Property taxes are quite stable, sales taxes fairly stable, but income taxes depend on growth in a more leveraged fashion. The current estimate seems in line with the national consensus drop in estimates of GDP. Since income tax receipts are going to be much more volatile than that, this projection is probably still optimistic.
Here's my prediction. In six months, the estimate will be for a 3% fall in the 2007-2009 biennium. There will be some modest belt-tightening but tax receipts had a good head of steam at the outset and the shortfall will be manageable in this biennium.
I don't know when the estimate for 2009-2011 will be first released, but I'm going to guess it will be 5% below what the legislature had pencilled in at the end of the last session. The state's reserves, having been rebuilt modestly since the last recession, will have been wiped out by the shortfall in 2007-2009, and the legislature will again have the job of making serious cuts in services.
Of course, I'm the same guy who said the Republicans would have a contested convention in Minneapolis. I haven't given up hope, but it's a lot less likely than it was two weeks ago. So maybe I'm wrong again.
McCain's Premature Celebration
The news of the death of the Republican nominating process, which has dwindled from four serious candidates plus Ron Paul to two serious candidates plus Ron Paul, may have been premature. After being anointed the nominee-apparent with the withdrawal of Mitt Romney, John McCain now needs to note that he subsequently lost two primaries to Mike Huckabee. This can't be good.
McCain has not been reaching 50% in primaries; in fact, apart from 48% in his home state of Arizona, the 42% in California seems to be about his high point, though I haven't seen a chart of all of them. This is not exactly a dominating performance.
In the end, McCain needs to get more than half the votes in primaries with only one other candidate, and he hasn't been doing that. Until now, voting for Romney meant voting for Romney. Now voting for Romney may mean casting your ballot for Huckabee and keeping the thing open. There's no way Huckabee is going to get the nomination, but if he can get enough to stall McCain, remember that Romney did not withdraw. He "suspended" his campaign.
At this point, the best hope for a convention battle seems to be on the Democratic side, however. Obama and Clinton are coming so close to splitting the elected delegates that the super delegates may have the final say. That would be fun to watch.
I notice Chelsea Clinton popping up from time to time. In many parts of the world, the principal progeny of the leaders would be primed for eventual succession to the mantle of leadership. That's how it would be done in India or Pakistan. Or Massachusetts.
McCain has not been reaching 50% in primaries; in fact, apart from 48% in his home state of Arizona, the 42% in California seems to be about his high point, though I haven't seen a chart of all of them. This is not exactly a dominating performance.
In the end, McCain needs to get more than half the votes in primaries with only one other candidate, and he hasn't been doing that. Until now, voting for Romney meant voting for Romney. Now voting for Romney may mean casting your ballot for Huckabee and keeping the thing open. There's no way Huckabee is going to get the nomination, but if he can get enough to stall McCain, remember that Romney did not withdraw. He "suspended" his campaign.
At this point, the best hope for a convention battle seems to be on the Democratic side, however. Obama and Clinton are coming so close to splitting the elected delegates that the super delegates may have the final say. That would be fun to watch.
I notice Chelsea Clinton popping up from time to time. In many parts of the world, the principal progeny of the leaders would be primed for eventual succession to the mantle of leadership. That's how it would be done in India or Pakistan. Or Massachusetts.
Monday, January 21, 2008
Recycling Asian Money
One of the bright spots in today's gloomy reporting is the following:
"Shares of Bank of China dropped 6.4 percent in Hong Kong after the South China Morning Post newspaper reported that the bank is expected to announce a "significant writedown" in U.S. subprime mortgage securities, citing unidentified sources. In Shanghai, the bank's stock declined 4.1 percent."
At times, I have been depressed at the spectacle of Americans rampantly running through their cash while savvy foreigners wait to pick up the pieces. It's nice to note that Asians haven't become entirely successful in their U.S. investments. They sure weren't in the 1990's, when Japanese invested huge sums in U.S. projects that went bust. Now it's the Chinese, trying to switch some of their cash from staid government debt into higher reward vehicles and getting screwed.
So this is how capitalism recycles cash. They sell us everything from shoes to lampshades and we sell them bad investments. Maybe this will work if they're really slow on the uptake.
"Shares of Bank of China dropped 6.4 percent in Hong Kong after the South China Morning Post newspaper reported that the bank is expected to announce a "significant writedown" in U.S. subprime mortgage securities, citing unidentified sources. In Shanghai, the bank's stock declined 4.1 percent."
At times, I have been depressed at the spectacle of Americans rampantly running through their cash while savvy foreigners wait to pick up the pieces. It's nice to note that Asians haven't become entirely successful in their U.S. investments. They sure weren't in the 1990's, when Japanese invested huge sums in U.S. projects that went bust. Now it's the Chinese, trying to switch some of their cash from staid government debt into higher reward vehicles and getting screwed.
So this is how capitalism recycles cash. They sell us everything from shoes to lampshades and we sell them bad investments. Maybe this will work if they're really slow on the uptake.
Asia Wakes Up and the Party's Over
Bad news from the Asian stock markets this morning (afternoon over there). They apparently are even less impressed with Bush's economic stimulus plan than Americans. It has occurred to them that the years of growing their economies at the expense of American manufacturing (China) or services (India) are coming to an end. All America can think of to do is pump more cash into the pockets of American consumers, so they can buy more things from foreigners with no intention of ever repaying them.
The big economic crashes occur when previous crashes recede far enough into the past that too many people are willing to belief convenient untruths. Such as the notion that it's possible to prosper by pushing pieces of paper around that say that everyone is richer without having produced anything of value.
Or that Keynes only applies during recessions. The other side of Keynes was his assertion that during prosperity, governments should run surpluses to offset their deficits during recessions. That, unfortunately, is politically unpopular, so we get stimulus during recessions and then, under Bush, stimulus during the good times as well. The real deficit, including the off-budget expenses for Iraq and Afghanistan and stealing from Social Security, has been running around half a trillion. During a recession, receipts fall, regular expenses for the economic safety net rise, and to this we are adding $145 billion in stimulus costs. Perhaps a trillion in one year?
Here in Oregon, the checks have been mailed out to refund our "overpayments" during the preceding and unexpectedly prosperous biennium. We dodged one bullet when the PERS recalculation of pension investments was made (I think) on December 31, just before the meltdown got really ugly, but sooner or later we'll be confronted, as we were five or six years ago, with annual state revenue forecasts going south. Our tiny "rainy day fund" is going to last about a year and then we'll be back where we were, cutting class days and getting unwanted attention from Doonesbury. It doesn't say a lot for the collective intelligence of Oregonians.
The big economic crashes occur when previous crashes recede far enough into the past that too many people are willing to belief convenient untruths. Such as the notion that it's possible to prosper by pushing pieces of paper around that say that everyone is richer without having produced anything of value.
Or that Keynes only applies during recessions. The other side of Keynes was his assertion that during prosperity, governments should run surpluses to offset their deficits during recessions. That, unfortunately, is politically unpopular, so we get stimulus during recessions and then, under Bush, stimulus during the good times as well. The real deficit, including the off-budget expenses for Iraq and Afghanistan and stealing from Social Security, has been running around half a trillion. During a recession, receipts fall, regular expenses for the economic safety net rise, and to this we are adding $145 billion in stimulus costs. Perhaps a trillion in one year?
Here in Oregon, the checks have been mailed out to refund our "overpayments" during the preceding and unexpectedly prosperous biennium. We dodged one bullet when the PERS recalculation of pension investments was made (I think) on December 31, just before the meltdown got really ugly, but sooner or later we'll be confronted, as we were five or six years ago, with annual state revenue forecasts going south. Our tiny "rainy day fund" is going to last about a year and then we'll be back where we were, cutting class days and getting unwanted attention from Doonesbury. It doesn't say a lot for the collective intelligence of Oregonians.
Wednesday, January 16, 2008
A Reality Check for Kenya
In the 2.5 weeks of unrest in Kenya, the death toll is now reported to be 612. According to the CIA Factbook for Kenya, the population is 37 million. The birth rate is 39 per thousand annually, so 1.4 million a year or 4,000 per day. Infant mortality is 57 per thousand, so 228.
So this "crisis" is killing as many people in a week as there are babies dying in their mothers' arms from natural causes every day. It's a lot sexier to show violence in the media, but it's a minor problem for a country like Kenya.
The real problem is the mathematical fact that you cannot go on growing at the rate they have without eventually imploding from lack of food. Kenya has gone from 6.4 million in 1950 at rates that are dropping slightly as percentages but not in absolute terms. There isn't going to be any place left to grow enough food. They will overfarm until yields start to fall. There will be mass starvation. When? Who knows, but it will make the current dustup look like a Sunday School picnic.
So this "crisis" is killing as many people in a week as there are babies dying in their mothers' arms from natural causes every day. It's a lot sexier to show violence in the media, but it's a minor problem for a country like Kenya.
The real problem is the mathematical fact that you cannot go on growing at the rate they have without eventually imploding from lack of food. Kenya has gone from 6.4 million in 1950 at rates that are dropping slightly as percentages but not in absolute terms. There isn't going to be any place left to grow enough food. They will overfarm until yields start to fall. There will be mass starvation. When? Who knows, but it will make the current dustup look like a Sunday School picnic.
Oregon will matter to the Republicans at least
Unless John Edwards can start showing better results, the Democrats may have decided their nomination by May when Oregon has its primary. But with Romney's win in Michigan, the Republicans have set themselves on course for a convention showdown in Minneapolis. Romney, in his native state, spending hugely and getting no real participation from Giuliani, "won" with 39% of the vote.
Giuliani's swan dive has probably been too severe for him to reverse, and the new polls from South Carolina and Florida suggest that he can't hold the line in Florida, which was crucial to his strategy. But get this. McCain is leading in Florida with 22% of Republican support.
We are getting not yet getting any contests in which all candidates are both viable to local voters and committed in terms of money and organization. We've had Romney vs Huckabee in Iowa, Romney vs McCain in New Hampshire and Michigan. Next we'll have McCain versus Huckabee in South Carolina. Florida will have everyone's attention and somebody may get 100% of the delegates available (not all delegates because the RNC has penalized the state for its early timing) for a quarter of the popular vote.
This actually raises another question about Democracy in America. Those states that have winner-take-all formulas will disproportionately award the winners there compared with states like California that will disperse the results through the state. Since Giuliani is well positioned in several of these, he may get to Minneapolis with a large enough bloc to prevent any other candidate winning on the first ballot, but one which he will not be able to build on because of low national poll numbers.
Bringing us back to Oregon. In May, the modest number of delegates available will look a lot more compelling. I wouldn't want to predict a winner, and it may not matter, because the important point is that the second choices of the delegates will not be visible on the ballot and after the first round, that's what will matter.
I think there's only one news organization in Oregon large enough to investigate and report on this, and that's the Oregonian in Portland. I hope they take this issue on and tell us about the real people who will be running for delegates.
Giuliani's swan dive has probably been too severe for him to reverse, and the new polls from South Carolina and Florida suggest that he can't hold the line in Florida, which was crucial to his strategy. But get this. McCain is leading in Florida with 22% of Republican support.
We are getting not yet getting any contests in which all candidates are both viable to local voters and committed in terms of money and organization. We've had Romney vs Huckabee in Iowa, Romney vs McCain in New Hampshire and Michigan. Next we'll have McCain versus Huckabee in South Carolina. Florida will have everyone's attention and somebody may get 100% of the delegates available (not all delegates because the RNC has penalized the state for its early timing) for a quarter of the popular vote.
This actually raises another question about Democracy in America. Those states that have winner-take-all formulas will disproportionately award the winners there compared with states like California that will disperse the results through the state. Since Giuliani is well positioned in several of these, he may get to Minneapolis with a large enough bloc to prevent any other candidate winning on the first ballot, but one which he will not be able to build on because of low national poll numbers.
Bringing us back to Oregon. In May, the modest number of delegates available will look a lot more compelling. I wouldn't want to predict a winner, and it may not matter, because the important point is that the second choices of the delegates will not be visible on the ballot and after the first round, that's what will matter.
I think there's only one news organization in Oregon large enough to investigate and report on this, and that's the Oregonian in Portland. I hope they take this issue on and tell us about the real people who will be running for delegates.
Saturday, January 12, 2008
America's Financial Chickens Coming Home to Roost
There are moments in bubbles that afterwards everyone wonders why they weren't challenged at the time. From the Tulip Craze to 1929 to the dot.com bubble (remember Pets.Com?), there are strange happenings that seems crazy in retrospect. At this time, the bubble may turn out to be America's economic pre-eminence in the world, and we may wonder in ten years why we thought it wouldn't turn out badly.
For years, we have been shifting our manufacturing overseas, while continuing to import huge quantities of petroleum. The trade deficit should be enough to scare anyone, but the savants of Wall Street assure us that it's just an innocent sidelight to globalization, which clearly benefits the U.S. along with everyone else.
So while China and India build factories, we build bigger and bigger houses. And when they become so large and expensive that we cannot logically afford them, we get creative about mortgages. The only way that anyone could believe that this would work in the long term is by subscribing to the greater fool theory that there will always be someone ready to buy the house for enough money to justify the financing. Mathematically, it couldn't happen forever.
So rather predictably, the subprime (euphemism for junk) mortgage market has gone south and the banks need fresh capital to cover their enormous losses. Bringing us back to the first point. The sovereign funds, for which you should substitute "foreign governments," are coming to the rescue, having enormous reserves of U.S. dollars due to the trade deficit. These are the IOU's with which we've been maintaining our collective lifestyle and they are coming due. When China wanted to buy an American oil company, we were able to balk. We didn't need them. Now, we need foreign capital to keep our big financial institutions healthy and they are never going to be as American again.
It's not going to stop. The trade deficit rose again in November. Not a single presidential candidate of either party will tell the American people that they need an extra dollar or two of taxes on the price of gasoline to save the country (and perhaps Social Security) from ruin. In ten years, we'll wonder why.
For years, we have been shifting our manufacturing overseas, while continuing to import huge quantities of petroleum. The trade deficit should be enough to scare anyone, but the savants of Wall Street assure us that it's just an innocent sidelight to globalization, which clearly benefits the U.S. along with everyone else.
So while China and India build factories, we build bigger and bigger houses. And when they become so large and expensive that we cannot logically afford them, we get creative about mortgages. The only way that anyone could believe that this would work in the long term is by subscribing to the greater fool theory that there will always be someone ready to buy the house for enough money to justify the financing. Mathematically, it couldn't happen forever.
So rather predictably, the subprime (euphemism for junk) mortgage market has gone south and the banks need fresh capital to cover their enormous losses. Bringing us back to the first point. The sovereign funds, for which you should substitute "foreign governments," are coming to the rescue, having enormous reserves of U.S. dollars due to the trade deficit. These are the IOU's with which we've been maintaining our collective lifestyle and they are coming due. When China wanted to buy an American oil company, we were able to balk. We didn't need them. Now, we need foreign capital to keep our big financial institutions healthy and they are never going to be as American again.
It's not going to stop. The trade deficit rose again in November. Not a single presidential candidate of either party will tell the American people that they need an extra dollar or two of taxes on the price of gasoline to save the country (and perhaps Social Security) from ruin. In ten years, we'll wonder why.
Thursday, January 10, 2008
Lancet versus Iraq/WHO
The NE Journal of Medicine's article showing results from a joint study by the health ministry of Iraq and the World Health Organization, includes the following:
Mortality from nonviolent causes was significantly higher per 1000 person-years in the post-invasion period (4.92; 95% CI, 4.49 to 5.41) than in the pre-invasion period (3.07; 95% CI, 2.61 to 3.63)
A great deal is being made of the difference between the reported deaths by violence in the two studies. However, note that the Iraq/WHO study concludes that there has been a roughly 60% increase in the non-violent mortality rate. The Lancet article reported a rather small rise. If you compare total "excess deaths," and figure that the extra 1.85 deaths per thousand in a population of 27 million comes to essentially 150,000, you have the new study showing 300,000 excess deaths in three years, compared with the Lancet's 655,000. Lancet calculated a wide confidence range and, when you add the error range of Iraq/WHO, they probably overlap.
A couple of interesting points. If Iraq/WHO is to be believed, their respondents provided evidence of 100,000 more non-violent deaths than did those of the Lancet study. The participation of the ministry of health, which among other things forbade its morgues from revealing the number of bodies they were receiving, is a little suspect. It wouldn't be surprising that their employees would return from the field and report more deaths as non-violent. It also wouldn't surprise me if a few deaths were "lost," although I have no evidence for that.
Second, suppose that it was Lancet in 2006 that had reported 151,000 excess violent deaths and 300,000 excess total deaths. What would have been the response from the Right? Ridicule, of course. Now they have numbers that are more palatable than Lancet's and they embrace them, without mentioning that the new numbers are wildly worse than the estimates made by either President Bush or Iraq Body Count. A reasonable summary would say that by now, in early 2008, some half million to one million more Iraqis have died than if we had not invaded in 2003.
In closing, however, I can't say that I personally lose sleep over Iraqis dying. The CIA World Fact Book on Iraq gives a 2007 estimate of 2.6% annual population growth. In the midst of this war, the average Iraqi woman is giving birth to four babies. Evidently, procreation remains the Iraqi national pastime, and without our assistance in elevating their death rate, they would even sooner reach the saturation point of their land and experience a mass die off. With our help, that day of reckoning has been slightly postponed.
I still don't think it's worth a trillion dollars.
Mortality from nonviolent causes was significantly higher per 1000 person-years in the post-invasion period (4.92; 95% CI, 4.49 to 5.41) than in the pre-invasion period (3.07; 95% CI, 2.61 to 3.63)
A great deal is being made of the difference between the reported deaths by violence in the two studies. However, note that the Iraq/WHO study concludes that there has been a roughly 60% increase in the non-violent mortality rate. The Lancet article reported a rather small rise. If you compare total "excess deaths," and figure that the extra 1.85 deaths per thousand in a population of 27 million comes to essentially 150,000, you have the new study showing 300,000 excess deaths in three years, compared with the Lancet's 655,000. Lancet calculated a wide confidence range and, when you add the error range of Iraq/WHO, they probably overlap.
A couple of interesting points. If Iraq/WHO is to be believed, their respondents provided evidence of 100,000 more non-violent deaths than did those of the Lancet study. The participation of the ministry of health, which among other things forbade its morgues from revealing the number of bodies they were receiving, is a little suspect. It wouldn't be surprising that their employees would return from the field and report more deaths as non-violent. It also wouldn't surprise me if a few deaths were "lost," although I have no evidence for that.
Second, suppose that it was Lancet in 2006 that had reported 151,000 excess violent deaths and 300,000 excess total deaths. What would have been the response from the Right? Ridicule, of course. Now they have numbers that are more palatable than Lancet's and they embrace them, without mentioning that the new numbers are wildly worse than the estimates made by either President Bush or Iraq Body Count. A reasonable summary would say that by now, in early 2008, some half million to one million more Iraqis have died than if we had not invaded in 2003.
In closing, however, I can't say that I personally lose sleep over Iraqis dying. The CIA World Fact Book on Iraq gives a 2007 estimate of 2.6% annual population growth. In the midst of this war, the average Iraqi woman is giving birth to four babies. Evidently, procreation remains the Iraqi national pastime, and without our assistance in elevating their death rate, they would even sooner reach the saturation point of their land and experience a mass die off. With our help, that day of reckoning has been slightly postponed.
I still don't think it's worth a trillion dollars.
New Iraqi Death Report Roughly Confirms Lancet
I haven't had time to research everything, but one thing stands out in the reporting of the new Iraq/WHO study of deaths since the invasion. The number of people now dying who would not have been dying without the invasion is in the hundreds of thousands, probably in the half million to million range. This is roughly what Lancet said more than a year ago, extrapolated for another eighteen months. It is wildly higher than either what the Bush administration said at the time or Iraq Body Count calculated.
It is also evident that people report statistics, where precision is extremely important, with very loose language. Contrary to the headline in the above-linked article, 151,000 is not the toll. It's where the toll stood, according to this report, through June 2006. We're in January 2008, and the last two years have been very violent. It doesn't even claim to be "all deaths as a result" but just "violent deaths as a result."
The difference between Iraq/WHO and Lancet is not as great as has been reported. Lancet looked primarily at excess mortality and concluded that it was almost entirely due to violence. Iraq/WHO says that it was a lot less violence but that there was 60% or more increase in non-violent deaths. On the back of an envelope, I get a gross number for them that is within the error range for Lancet. The disagreement seems to be primarily why people die.
This will require more analysis and I'll have another post later.
It is also evident that people report statistics, where precision is extremely important, with very loose language. Contrary to the headline in the above-linked article, 151,000 is not the toll. It's where the toll stood, according to this report, through June 2006. We're in January 2008, and the last two years have been very violent. It doesn't even claim to be "all deaths as a result" but just "violent deaths as a result."
The difference between Iraq/WHO and Lancet is not as great as has been reported. Lancet looked primarily at excess mortality and concluded that it was almost entirely due to violence. Iraq/WHO says that it was a lot less violence but that there was 60% or more increase in non-violent deaths. On the back of an envelope, I get a gross number for them that is within the error range for Lancet. The disagreement seems to be primarily why people die.
This will require more analysis and I'll have another post later.
Sunday, January 06, 2008
The Surge is Working! Whatever that means.
John McCain seems extremely proud of his position on Iraq. In particular, he is hoping to capitalize on the "success" of the surge. He describes this as saving American lives, which is the most important thing that any policy change in Iraq could achieve.
This seems a little odd, because the greatest number of lives could be saved if we simply packed everyone into military transports and got them out. We presumably have a mission and in warfare, achieving the mission is generally more important than minimizing casualties. Perhaps the problem is that no one can enunciate a mission anymore, at least one that is plausible enough not to provoke snickers.
My personal crystal ball for Iraq is very cloudy right now, but I'm getting ready for one of my outbursts of relative optimism. In the past, I've soon regretted them, but the law of averages says that sooner or later, I'll be right.
My relative optimism is based on the fact that at $100/barrel, there's enough wealth in Iraq's oil reserves to make every corrupt politician in the country rich. Not every Iraqi, but every politician ("corrupt" is redundant). And it may sooner or later occur to them, as a class, that the only obstacle to being rich is being dead, and some accommodation should be reached. I view the Sunni rejection of al-Qaeda as being in this vein. The jihadists don't want compromise, and we may have passed the point where the Sunnis view their alliance with them as productive, even as a counterbalance to the Shiites and Americans.
From this understanding there might emerge an Iraq comparable to Saudi Arabia. Wealthy enough to make the guys at the top stinking rich and keep the guys at the bottom from starving. Except for a different combination of politicians, not that much different from where we started. There weren't any WMDs and at the outset, there weren't any terrorists. There also was no democracy and few human rights.
But right now, my optimistic view is that we'll end up, a trillion dollars poorer, with the status quo ante. If McCain seriously has a more attractive outcome in mind, I'd like to hear him. If not, it's not a really strong position from which to run for President.
This seems a little odd, because the greatest number of lives could be saved if we simply packed everyone into military transports and got them out. We presumably have a mission and in warfare, achieving the mission is generally more important than minimizing casualties. Perhaps the problem is that no one can enunciate a mission anymore, at least one that is plausible enough not to provoke snickers.
My personal crystal ball for Iraq is very cloudy right now, but I'm getting ready for one of my outbursts of relative optimism. In the past, I've soon regretted them, but the law of averages says that sooner or later, I'll be right.
My relative optimism is based on the fact that at $100/barrel, there's enough wealth in Iraq's oil reserves to make every corrupt politician in the country rich. Not every Iraqi, but every politician ("corrupt" is redundant). And it may sooner or later occur to them, as a class, that the only obstacle to being rich is being dead, and some accommodation should be reached. I view the Sunni rejection of al-Qaeda as being in this vein. The jihadists don't want compromise, and we may have passed the point where the Sunnis view their alliance with them as productive, even as a counterbalance to the Shiites and Americans.
From this understanding there might emerge an Iraq comparable to Saudi Arabia. Wealthy enough to make the guys at the top stinking rich and keep the guys at the bottom from starving. Except for a different combination of politicians, not that much different from where we started. There weren't any WMDs and at the outset, there weren't any terrorists. There also was no democracy and few human rights.
But right now, my optimistic view is that we'll end up, a trillion dollars poorer, with the status quo ante. If McCain seriously has a more attractive outcome in mind, I'd like to hear him. If not, it's not a really strong position from which to run for President.
Mike Huckabee? -- Think George W. Bush
You don't need a really long memory to recognize the pattern. A guy who has served as the governor of a Southern state, talks with this homey Southern accent, talks about being a compassionate conservative (although in 2008 that particular phrase has fallen out of favor). And knows absolutely diddly about world affairs. And doubts evolution.
Only the names have been changed. Huckabee feels good. He is a much more polished speaker than W. and is about as successful at self-deprecation as I can remember any politician being. I would not write him off simply because the big-money Establishment must be deeply unhappy at the thought of a Southern baptist hick leading the Republican ticket. It reminds me of a New Yorker cartoon from the 1930s, showing a couple of society dames speaking to each other while a wild-eyed man is haranguing a crowd from a soap box in the background. One of them says, "I never knew people like that could be Republican!"
But Republican he is and the nomination is not inconceivable. Unlikely, because I think W. may have chilled the prospect for Southern evangelical governors for a while, but not inconceivable. We should keep a wary eye open. Just remember how long it took for W. to decide that the best man for veep would be Dick Cheney. The convention wasn't even over before he had sold himself to the Dark Side.
Only the names have been changed. Huckabee feels good. He is a much more polished speaker than W. and is about as successful at self-deprecation as I can remember any politician being. I would not write him off simply because the big-money Establishment must be deeply unhappy at the thought of a Southern baptist hick leading the Republican ticket. It reminds me of a New Yorker cartoon from the 1930s, showing a couple of society dames speaking to each other while a wild-eyed man is haranguing a crowd from a soap box in the background. One of them says, "I never knew people like that could be Republican!"
But Republican he is and the nomination is not inconceivable. Unlikely, because I think W. may have chilled the prospect for Southern evangelical governors for a while, but not inconceivable. We should keep a wary eye open. Just remember how long it took for W. to decide that the best man for veep would be Dick Cheney. The convention wasn't even over before he had sold himself to the Dark Side.
Saturday, January 05, 2008
Off to Minneapolis
I'm not sure about the Democrats. With only two true credible candidates at this time, and John Edwards hoping to be a compromise, there is a decent chance that one of them will start pulling away. Caveat: In a couple hundred years, the Democrats have never nominated a woman or a non-white. Racism and sexism may not be fashionable, but they are real and the barrier for either Clinton or Obama may be quite high.
However, it's looking like a cat fight on the Republican side. The latest national poll shows McCain leading with 22% support. That's among Republicans, who represent about a third of the vote, with the others being Democrats or Independents. So the top Republican today is favored by perhaps 10% of the voters, throwing in a few indies and no Democrats to speak of.
The irrelevance of Iowa is shown by the fact that the top two -- Huckabee and Romney -- are third and fourth in the national polls. The irrelevance of New Hampshire is similar, with the Giuliani and Huckabee being effectively no-shows. Then there's South Carolina, where McCain will fight it out with Huckabee. Eventually, Giuliani will emerge to win the Big States, he hopes. Romney will take Utah and Idaho. Ron Paul will get a delegate somewhere.
It all adds up to too much chaos. In the last half century of American history, there has been no brokered convention. I predict that Republicans will break that tradition in Minneapolis next September. I'd lay a 50:50 bet. Takers?
However, it's looking like a cat fight on the Republican side. The latest national poll shows McCain leading with 22% support. That's among Republicans, who represent about a third of the vote, with the others being Democrats or Independents. So the top Republican today is favored by perhaps 10% of the voters, throwing in a few indies and no Democrats to speak of.
The irrelevance of Iowa is shown by the fact that the top two -- Huckabee and Romney -- are third and fourth in the national polls. The irrelevance of New Hampshire is similar, with the Giuliani and Huckabee being effectively no-shows. Then there's South Carolina, where McCain will fight it out with Huckabee. Eventually, Giuliani will emerge to win the Big States, he hopes. Romney will take Utah and Idaho. Ron Paul will get a delegate somewhere.
It all adds up to too much chaos. In the last half century of American history, there has been no brokered convention. I predict that Republicans will break that tradition in Minneapolis next September. I'd lay a 50:50 bet. Takers?
Friday, January 04, 2008
Iowa to New Hampshire, Most Irrelevant to Second
I have an aunt, a retired school teacher, who once told me that at the end of junior high school, all students should be thrown out, the gates locked, and only those who climbed over the wall to get back in should be taught. Maybe we should do the same with presidential elections. Only those people who will put up with something equivalent to the Iowa Caucuses should have their votes counted.
However, this isn't the case, so the results from the Iowa caucuses are irrelevant. They show the impact of very expensive campaigns in a small, unrepresentative state where only the most dedicated show up at all. If someone were to announce next November that a candidate who was ahead after .3% of the vote was tallied from some outlying corner of the country and most of the polls were still open, was "winning big," we'd all laugh. But the equivalent happens in Iowa in January and pundits are busy reading the tea leaves.
On to New Hampshire. There, the turnout will be a large percentage of a smaller state, equally unrepresentative. If Obama carries NH, they'll all be talking about his momentum, with far less than a percent of the voters heard from cumulatively.
We talk about Hillary being third, but the difference between her and Edwards must be in the range of 2000 votes. Next November, it will top a hundred million. This is absolutely nothing but statistical noise. The difference between her and Obama is hardly anything more. I just wish someone would say, "But let's wait for a state that matters, like California or New York." But that wouldn't be news, I guess.
However, this isn't the case, so the results from the Iowa caucuses are irrelevant. They show the impact of very expensive campaigns in a small, unrepresentative state where only the most dedicated show up at all. If someone were to announce next November that a candidate who was ahead after .3% of the vote was tallied from some outlying corner of the country and most of the polls were still open, was "winning big," we'd all laugh. But the equivalent happens in Iowa in January and pundits are busy reading the tea leaves.
On to New Hampshire. There, the turnout will be a large percentage of a smaller state, equally unrepresentative. If Obama carries NH, they'll all be talking about his momentum, with far less than a percent of the voters heard from cumulatively.
We talk about Hillary being third, but the difference between her and Edwards must be in the range of 2000 votes. Next November, it will top a hundred million. This is absolutely nothing but statistical noise. The difference between her and Obama is hardly anything more. I just wish someone would say, "But let's wait for a state that matters, like California or New York." But that wouldn't be news, I guess.
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