Month: September 2004

All the world’s a stage

Yawn. Let’s stop pretending there will be a Presidential Debate tonight, shall we?

Tonight is actually the first in a series of so-called debates, and the topic du jour is foreign policy. There will be a couple more of these before the big day in November. But this isn’t going to be like some of the decisive debates of the past. There will be no decisive I-can’t-believe-he-said-that moment, no clear winner except the man you favored to begin with. Don’t expect any “let me say this about that,” nor any “there you go again.” In fact, we’ll be lucky to get a “fuzzy math!” or a “gridlock!”

First of all, I think most of us are clear on where the candidates stand if we have paid attention.

More importantly, however, this isn’t a real debate. There’s nothing spontaneous being said, minimal interaction between the candidates, no truly independent arbiter, no deep issues, and an audience — required to be undecided and silent — that may as well be painted cardboard. It would be an improvement to let Mr. Bush and Mr. Kerry each run an infomercial instead. What a waste of time and money. If you really must watch, have one of these Bingo cards in hand. Hit reload if you want a better one.

I can only hope my pathetically low expectations will be exceeded.

Last Call

Here in the United States, the deadline for Voters Registration is rapidly approaching. This is your last chance to register to vote in the November 2 elections. It is vitally important that every concerned citizen register, and then carry through by voting. Do not let yourself be scared by stories of registrations being tossed out in Ohio or expected voting issues in Florida. If you don’t even try to register, none of that matters.

If you need help figuring out how and where to register, kottke.org has a nice page of information and useful links. If that’s too complicated, do a web search for “voters registration [insert your state here].” Rules may be a little complicated if you are a college student living in the dorms, so double check local requirements. If you have any questions about local rules, polling places, or whether you are already registered, add your county name to the search above and find the phone number of the local voters registration board.

Let me refute several common excuses:

I don’t want to be called for jury duty. Do you have a driver’s license? A telephone? Electricity service in your name? Then you may already at risk for being called to jury duty, depending where you live. If it really bothers you that much, bookmark this page of how legally to get out of serving on a jury.

It doesn’t matter how I vote anyway. There’s plenty of room for change in the electoral picture, as this graph shows. And that’s just the headliner. You’ve got a member of Congress to vote on, maybe a Senator, and a slate of State and local issues to vote on. Polls be damned, the voting booth is the one place your opinion really does matter. You may have “just one vote,” but that gets added in with everybody else’s just one vote. Ask your local voting officials or check your local newspaper for a voters guide of candidates and issues. You’ve got a month to study!

With my job schedule, I don’t have time to vote! Working twelve hour shifts, eh? If you seriously doubt you can leave for work a little early and vote on the way in, or get to the polls after work before they close, ask about an absentee ballot. Most states have liberalized their policies for such ballots. In fact, in some states with electronic voting, it has been suggested that absentee ballots at least have a paper trail.

I live on the West Coast. The election is long over by the time I can vote on the way home from work. By my count, Pacific Time Zone represents 78 electoral votes. Add another 7 for Alaska and Hawaii. This election may well be close enough that those 85 electoral votes are pivotal. But again, this attitude discounts the very important Congressional, State, and local issues every voter faces.

In short, if you do not vote, if you do not even bother registering to vote, people like me will have a hard time taking you seriously when you complain about the government, taxes, schools, roads, education, the environment, or the economy. Yeah, your vote impacts all that.

Please note that this post is free of partisan rhetoric. It is none of my business who you vote for, just vote.

Moneyectomy

Part One: A man’s home used to be his castle; now it’s somebody else’s bond portfolio

I’ve been critical of Fannie Mae (and by extension, Freddie Mac) before. Here’s the quick and dirty version of what they are, as condensed by Bloomberg:

“Fannie Mae and… Freddie Mac were chartered by the government to spur homeownership by purchasing mortgages from banks with the proceeds from bond sales. They own or guarantee almost half the $7.3 trillion mortgage market. Until 2002, the two companies were exempt from filing financial statements with the SEC…. Fannie Mae is the second-largest debtor in the U.S. after the government, with $942 billion as of July 31.”

So, Joe and Jane Average get a house/mortgage combo pack, their mortgage holder sells the mortgage to a quasi-government entity, which gives their mortgage holder money to lend for somebody else’s mortgage, racking up another set of origination fees in the process. There are several potential pitfalls. First, since the original lender doesn’t plan on holding the mortgage, there is the risk that they won’t screen applicants as well as might be desirable. After all, if the homeowner defaults, it’s Fannie Mae’s problem. Second, we are in the beginnings of a rising interest rate environment. This means that mortgage companies get to sell all their below-market-rate junk, which again becomes Fannie Mae’s problem. Finally, if you have any reason to believe there is a real estate bubble, you must believe it will someday be — you guessed it — Fannie Mae’s problem.

Sounds like somebody else’s problem? When one company — worse yet, backed by government money — has their fingers in almost half of all American mortgages, their problems can quickly be an issue for everyone.

So, as if Fannie Mae doesn’t have enough problems, it has an accounting mess, including “clear instances in which management sought to misapply and ignore accounting principles….” Furthermore, they may not be the only folks in the mortgage industry with such problems. The results of an 8 month investigation by a government agency found little things like $200 Million in expenses nobody bothered to mention until months after the fact. The feds are unhappy. Congress wants hearings. Investors are unhappy. People who need mortgages will be unhappy as rates rise to reflect the fact that mortgage holders may actually have to hold the mortgage to maturity.

If you think the Savings and Loan scandal of the 80s was a big deal, better fasten your seat-belt.

Part Two: Oily to bed and oily to rise makes a man smell like $2 per gallon unleaded.

Crude oil hit record intraday prices today, and may well hit $50 a barrel Real Soon Now. As the Taipei Times reports, that’s a rise of 73% over the last year. Less than 24 hours ago, the Administration was still filling the Strategic Oil Reserves (buy high and sell goodness knows where) and saying this stockpile must not be used to manipulate oil prices. Flip-Flop! Today it turns out maybe some of it can be lent out. Oh, and if you are really interested in more than the soundbite, the folks at Reuters have done this nice item on Why Are Oil Prices So High.

Of course, the price of oil effects the price of gasoline, which is already high priced and supply constrained due to hurricanes. Unless you are a self-sufficient hermit — in which case, why are you reading this? — this effects you.

It’s a Small World

Let’s start from a point where we can all agree. We all live on planet Earth. It is the only place where our species lives, the only place we know for absolute certain can support our species, and at this point the only planet we know of with sentient life.

These things being the case, it makes sense to take care of our planet. Unless of course you are planning for Armageddon or some other End Of The World. I think I speak for most people when I say I have no desire for the world to end in my lifetime. People who look forward to the End Of The World scare me.

Far from “putting some endangered rodent ahead of the needs of real people,” responsible environmentalism is about making sure we all have clean and safe food, water, air, and land. Far from taking jobs from people and stifling the economy, environmentally friendly industries have the potential to make a lot of money and help the planet. Think about it this way: if we use alternative energy, somebody has to build and maintain the windmills and solar cells just like we would have to do with a coal power plant. There is no inherent reason that “green” technology cannot provide jobs and make money.

There’s trouble outside. There’s chemicals that can make our food unsafe and food sources that might no longer exist if we don’t do something about it and junk in the air making kids sick and fast melting glaciers that might put your favorite beach-side resort underwater. There’s an unusually large number of hurricanes — yes hurricanes! — hitting one fairly small area in a fairly small period of time, and only time will tell if this is the start of a trend. Debate why it might be happening all you like, they are noticing signs of possible global warming in rural America and even in what used to be Tibet. Don’t forget that even the Pentagon has done some projections of what might happen in the event of global warming, and they are not in the habit of spending lots of time and money on completely unlikely events. No, you won’t find a Pentagon report about what to do if Luxembourg falls to Communist religious fanatics and tries to invade the United States.

Keeping this planet in good repair has got to be cheaper than colonizing a new one. Remember that as we count down to Election Day. In fact, this is a darn good time to remind your elected officials that this is the only planet we’ve got.

Airport Strip Club

Alrighty folks, this is more important than whether or not Dan Rather got sucked in by some forgeries. It effects more American citizens than the fact that 1035 and still counting American soldiers have died in a war based on a faulty premise. In fact it falls somewhere between what will happen when Alan Greenspan announces an interest increase today and the current fear-mongering regarding terrorism and the upcoming elections.

Bruce Schneier has been a busy fellow, having a commentary on the Trusted Traveller system in The Boston Globe and this brilliant piece on the No-Fly List over at Newsday. If you only remember one thing from either of these items, let it be this quote:

Imagine a list of suspected terrorists so dangerous that we can’t ever let them fly, yet so innocent that we can’t arrest them – even under the draconian provisions of the Patriot Act. This is the federal government’s “no-fly” list.

There it is. If they are terrorists, arrest them and charge them with something. If they are not, get them off the list. But don’t pretend this list makes you safer. Not only does it assume that terrorists will fly under their real names, it shifts TSA attention from people acting suspiciously to people who happen to have a particular name. That’s right, it makes you less secure.

The Trusted Traveller system has similar fatal flaws. It assumes that only good guys can get the bit of paper. It forgets how many people live perfectly normal lives before turning to violence.

Of course, the idea that a bit of paper makes you Not-A-Terrorist is under assault from others as well. Take the case of John Gilmore, who not only wants to know why the airline wants to see his identification, he wants to know why he’s not allowed to see the law that allegedly requires him to show it. The Justice Department still wants to keep the whole case secret. But how can ordinary citizens follow secret laws? Indeed, one editorial asks “Are we even to be arrested for violating ‘secret’ laws, which we couldn’t possibly know existed?”

In the meantime, anybody who needs to fly had better have their bits of paper in order and be prepared to remove their shoes and jackets, and be prepared for a pat-down. Strangely, this particular story, which effects millions of air travelers, is being covered primarily by local tv news teams, rather than the big news sources. By way of comparison, CNN’s top news stories as I write include details of a murder trial, a man falling at the Grand Canyon, and Bill Gates getting a raise. With no disrespect to the people involved, odds are very good none of these stories has any impact on you whatsoever.

Even more bothersome to me is the public reaction to this treatment: “It’s alright, as long as it makes us all safer.” I fail to see any way that removing jackets makes anyone safer. As for pat-downs, I would be very interested in seeing the guidelines deciding who must be physically searched in this manner. I would also be curious to see how the rules are applied, as there is plenty of room for abuse of this opportunity to feel up random strangers.

Finally, do you remember when a series of bad storms or other disasters would have been considered a Sign From God? This guy does.

But Doesn’t the Free Market Do Everything Better?

We are told again and again that the free market does an inherently better job than the government on just about anything that the private sector can legitimately do. This being the case, I am puzzled by charter schools. No, not by the conflicting research on whether public schools do a better job than charter schools (commentaries that disagree here, here, a particularly obnoxious one here, and the best one here, showing that charter schools might be 2-4% better, and commentaries that agree or at least find the data comparable here and here).

No, what has me puzzled is the fact that charter schools seem to be more costly to run than expected. Whether we are talking about $15 Million dollar grants in Minnesota or fundraisers to build facilities in Chicago, more than one person thinks it is time to have a critical look at what charter schools cost. Maybe this kind of questioning is why Edison Schools became a privately held company. Yeah, they’ve got problems.

These foibles are nothing compared to the collapse of a 60 campus charter school system in California. This system closed suddenly in the late summer, leaving parents to scramble finding new schools for children, leaving teachers to scramble for new jobs, leaving student records and other valuable assets to rot in abandoned facilities. Granted, there appears to have been some “misunderstanding” of the law — and I have no patience for businessmen who do not know the laws that pertain to their businesses — but this situation is absurd. This system received about $5000 per student, some systems receive as much as $9000 per student. Nevertheless we are still talking about charter schools going bankrupt, having massive fundraisers, and pulling down multi-million dollar government grants. Is too much money being put in corporate pockets instead of educating students?

That’s a whole lot more than the average per pupil spending of about $7500, let alone what the Cato Institute thinks* private schools cost on average.

Charter schools cost more money, and do not appear to do a statistically significantly better job than public schools. Let’s stop wasting taxpayers’ and parents’ money.

* I have discussed this more in-depth elsewhere. To be brief, the Cato Instutute includes schools that provide partially subsidized education, non-accredited schools, and schools with very low enrollment. This drives average cost down.

“Economic Agenda”

Today, I saw for the first time a Bush campaign ad titled “Economic Agenda.” It is viewable on their website, if you have not already seen it. The substance of the ad was broken into convenient, numbered bullet points. If I may, I would like to address the specific issues listed. I promise to do this with a minimum of snark, in an attempt to raise the overall level of political discourse.

1. Lifelong Learning. That sounds great. Really. I am one of those people who would really love to follow the old maxim of “Learn something new every day.” Unfortunately, people who are paid to pay attention to such stuff say there’s no program to go with these words. In fact, a search for “Bush lifelong learning” reveals mostly comments from First Lady and former Librarian Laura Bush. What does lifelong learning mean, anyway? Does it mean continually training for the jobs of the future, whatever they may be? Until we have some idea what we are talking about, there is very little to say.

2. Invest in Education. Another “how can you disagree” sort of statement. Everyone except the most diehard Libertarians agrees that it is important to have adequate investment in education if we are to have workers who can do what needs to be done in the coming decades. And the President actually has something he can brag about in the realm of education, “No Child Left Behind.” Unfortunately, that’s one of those things that sounds better than it has worked out. Now, it has reached the point where high performing schools are finding themselves “Failing” under the federal standard of “better,” and are facing sanctions. It sure feels like the ultimate goal is to make schools ineligible for federal funds. I’ve spoken on education before.

3. New Skills for Better Jobs. That ties in nicely with the “lifelong learning” thing, doesn’t it? Unfortunately, training for a job does not guarantee that you will get a job doing what you have trained to do. What job training does, however, is get people temporarily out of the labor pool, and benefit publicly traded schools such as Corinthian Colleges, ITT, and DeVry. Remember, the official Department of Labor standard for being Unemployed is very, very narrow. I am not saying that there is no point in training for a new job, just that job training programs will not fix the fact that not enough jobs are being created. I have spoken on this far too many times to list them all.

4. Fairer and Simpler Tax Code. Actions speak louder than words. And so far the Bush Administration has said that complicated taxes are just fine (thank you, The Daily Mis-lead). Oh yeah, and he made sure that big SUVs are tax deductible for businesses. That brings us very nicely to his next bullet point….

5. Reduce Foreign Energy Dependance. Drilling holes in the Arctic isn’t going to fix the fact that we use too much oil, and burn too much coal. And frankly, the current administration has not done a whole lot to change that for the better. Clean air rules that were meant to phase out older, more polluting plants have been relaxed. Car milage standards have not been raised to levels that would reduce our need for foreign oil. There’s talk about alternative energy, but what about action? And the time for action is now, since at least one major oil company has announced that they just don’t have as much oil in the ground as they thought they did.

6. Fairer Trade. Another one of those phrases you would have to be some kind of nut-job to disagree with. Even John Kerry thinks fair trade is a good idea. President Bush clearly means “free and fair,” which might be different. Unfortunately, the price of the dollar is being used as a weapon in this quest for free, fair trade. And this has not had a positive effect on the American economy. It will be interesting to see what the two candidates have to say in their debates, and more interesting to see what the assorted columnists and other experts have to say about it.

7. Job Incentives. Um, the economy has lost a net 915,000 jobs during the Bush Administration. If there’s a brilliant idea, in the works, we could sure stand to hear it, maybe even do it. Better yet, let’s do it two years ago, since the administration has missed it’s own job creation targets for the last two years.

8. Comp/Flex Time. It is a bad idea. I have said this until I am blue in the face. It means your boss gets to work you as hard as he wants, pay you nothing extra, and promise to give you some time off someday, at his whim.

9. Strengthen Social Security. It seems like I just talked about this last week.

10. Legal Reform. President Bush talks about ending frivolous lawsuits. But what he means is capping damages. Damage caps would tell big businesses exactly how much money it will cost to break the law, harm people, and pollute the environment we all live in. If you think Big Chemical Co doesn’t dump dangerous carcinogens in your backyard because they are such good people, go ahead and lobby for damage caps. If you suspect that they follow the law because it’s cheaper than lawsuits, then caps are a bad idea. Of particular note, Vice-President Cheney’s former company, Halliburton, stands to gain quite a bit should damage caps be enacted.

11. Tax Relief. Again, that tired bit of political framing. Tax “relief” implies that taxes are onerous, that President Bush wants to rescue you from the IRS. He’s had 3 years to work on this. Are you better off? Have you benefitted from the rise in Estate Tax exemption from half a million dollars to a million and a half? Maybe you have benefitted from some of the other tax breaks? Don’t bet on it.

In closing, I love this chart of commonly used words at the two conventions. It sure looks like the Republicans think John Kerry is more important than Health Care.

Cantor Fitzgerald, the Movie

It sounds like a moderately compelling political thriller: the Government agency that was supposed to figure out what happened to your dead colleagues dropped the ball. Nobody will give you a straight answer about why. So you take matters into your own hands: you research; you examine documents; you figure it out and decide to make things right.

But this isn’t a movie. It’s the real life story of Wall Street firm Cantor Fitzgerald, a company that lost 658 of its 1050 employees in the World Trade Center. Delving into the murky depths of Al Qaida’s financial affairs — where the 9-11 Commission feared to tread — they have filed suit against a variety of Al Qaida financiers. The most notable of these is the nation of Saudi Arabia.

Cantor Fitzgerald is just big enough, just influential enough, and has just enough accountants in house to actually follow the money trail and make this stick. They are also big enough and have enough lawyers to push things to a higher court should the Department of Justice once again claim that the Alien Tort Claims Act is a relic and have the case thrown out.

This company knows how important it is to follow the money, a lesson that a young Senator named John Kerrry learned while investigating and closing down a corrupt bank and, incidentally, uncovering useful information on a wide range of drug dealers, terrorists, and other criminals. As Cantor Fitzgerald’s case unfolds in the courtroom, expect impeccable detective work and stunning revelations. This could tell us more about how and why September 11 happened than is currently known. It could also have disastrous consequences for the United States’ diplomatic ties with Saudi Arabia.

Speaking of raw figures and money, if you haven’t seen this list of Bush Administration accomplishments, it’s worth a read.