Sonntag, August 31, 2008

The Big Lie & The Democratic Party...

Let's be blunt: the Democratic Party is the party of the Big Lie.

Look at this and behold The Big Lie:

Democrats are unwavering in our support of equal opportunity for all Americans. That's why we've worked to pass every one of our nation's Civil Rights laws, and every law that protects workers.

That is The Big Lie.

Just a few days ago I posted this:

Imagine a political party that was heavily supportive of slavery; which then supported segregation and was instrumental in passing Jim Crow laws; which even had a para-military organization serving the interests of the party to actively intimidate opponents (and enough times to kill them); which actively opposed the 13th, 14th and 15th Amendments to the Constitution (overturning slavery, reversing Dred Scott, giving blacks the vote); which actively tried to deny blacks with the right to own private property, sign contracts, sue and serve as witnesses in a legal proceeding; that were curiously silent on discrimination, lynchings and voting rights; which actively opposed integrating the US military; which formed 3/4 of the opposition to the 1964 Civil Rights Act; the party whose members unleashed dogs and fire hoses on protesters demanding their rights under the Constitution (and yes, I mean Birmingham's Bull Connor).
Anyone with a sense of history knows that this party is the Democratic Party.

How can the Democratic Party dare, then, say that they are "unwavering" in their support and that they've "worked to pass every one of our nation's Civil Rights laws"?

I don't have the faintest idea. There is no rational explanation. There is no rational explanation to using The Big Lie. Except that the Democratic Party is so sure that the press will not descend on them and that their clientele, their membership, is too stupid and/or venal to give a shit. Or can someone give me a better reason?

hat tip: Bob Park's Black & Right. Great blog and well worth reading.

Freitag, August 29, 2008

Hoooooooooooot Diggity Damn!

Sarah Palin is McCain's choice for vice president.

Sweet hot diggity damn. Do you know how much this is going to hurt Obama? One hell of a lot: she's gonna be hard to beat, damn hard to beat.

Fantastic choice, if I do say so myself.

Couldn't be better... Hot diggity damn! This election's gonna be fun, as McCain just reshuffled the deck and Obama hasn't even started to pay attention to his cards...

Mittwoch, August 27, 2008

Odd How The Democrats So Easily Forget...

In this day and age of internet retrieval, nothing disappears.

Even if certain people wish it could.

This, for instance.


This is from Sep. 11, 2003: talk about boomerang effects.

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

In other words, the Bush administration was on the ball. But Congress fucked it up.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

In other words: who allowed Fannie and Freddie to rack up the debts that they incurred? Who was asleep at the wheel?


The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

So: the ineptitude of Congress - and largely that of the Democrats when you look at who are players - in fiddling about whilst the problems were growing will be borne by... the US taxpayer. Isn't politics fun? No responsibility!

''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

In other words, the Bush administration wanted to set things right and remove the possibility of corruption, but...


Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

So, let's see: Barney Frank got it wrong, the ranking Democrat on the oversight committee.

The Democrats' obsession with "ensuring affordable housing" has led directly, I repeat DIRECTLY, to the virtual meltdown on the housing market and the massive write-offs. It's the proof, the incontrovertible proof, that meddling in markets leads to market inefficiencies that can be exploited and lead, as well, to market collapse.

This is something that should destroy the Democratic party and the idiots who pass for Congressmen.

Total and complete fucking idiots. This kind of stupidity, even in 20/20 hindsight, is the hangin' kind...

HT: Greg Mankiw

Broder, The Peace Movement and Polemics...

It's nice to see that my opinion of the Peace Movement is shared by others. Specifically, Henryk M. Broder says this (my translation...) here:

Hello Peace Friends!

For the first time, a war is over before you could run off to a demo. You guys were surprised not only be the Georgians, but also the Russians. Yep, if Putin and Medvedev would've let you know a week or so in advance, then you'd have had enough time to get organized, paint some posters ("No Blood For Oil!") and written a protest resolution. But everything just happened soooo fast. The human shields which showed up in Baghdad to protect Saddam and his gang from US bombs didn't even have a chance to get out of their pajamas; the Arafat Groupies, who barricaded themselves in the Mukata with the "Rais" in order to experience the final battle, I guess their trip to Georgia was a tad too difficult, and Konstantin Wecker, God's punishment for Christian Anders, is too old to give solo concerts in crisis zones. So you simply didn't do anything and let the Russians do their thing. Besides, it wasn't clear who started, and until that could be decided, you couldn't decide whom to protest.

Well, in the meantime we know a tad more. We know how the Russians have plundered and thieved in Georgia, how they - literally - rolled over anything in their way, and most importantly: what they think about the sovereignty of a sovereign nation which doesn't dance to Moscow's tune. You also don't believe that the Russians marched to protect the Ossetians, since you know that that when Chechnya wanted its independence, that the Russians flattened Grozny without hearing as much as a burp from y'all. But that doesn't bother you folks, dearest Peace Friends, because the fight for peace is just an excuse to go crazy, the do the crazy anti-imperialist, anti-american, anti-zionist leftist-alternative dance. You dance to the tune of Guantanamo, Gaza, Heiligendamm and dance to the tune of your ideologies, which haven't been aired out for years.

You can't think of anything to say about Darfur, and you can't be bothered to see a suicide bomber killing 43 in Algiers, but if a couple of terrorists have to sell their brand new laptops in order to buy themselves some used Kalashnikovs, then your knees get weak and you despair about the unfolding human catastrophe.

To call y'all degenerated primates is an insult to each and every proper gorilla. You're heartless zombies, headless mutants, ball-less carpet beaters. You are you. You deserve each other.

Now, I had to change some of the comparisons there because the idioms don't translate well (Lass den Sau raus = Let the sow out, doesn't cut the mustard, hence "do the crazy dance"), but Mr. Broder: BINGO.

Donnerstag, August 21, 2008

Connecting a few more dots...

A couple of days ago I wrote this.

Now we can connect a few more of the dots about who Obama really is when you read this.

Now you know why Bill Ayers is anyone but "a guy living in my neighborhood" and you can know understand better why he's, basically, untouchable:

"Bill Ayers—I've said this—his father was a great friend of my father," the mayor said. "I'll be very frank. Vietnam divided families, divided people. It was a terrible time of our country. People didn't know one another. Since then, I'll be very frank, [Ayers] has been in the forefront of a lot of education issues and helping us in public schools and things like that."

In other words, cronyism is the key factor: a hard-core left-wing agitprop guy who is fundamentally a traitor to the principles of democracy and the US constitution gets a job, gets his ass covered, is allowed to work further on ruining the schools (the project he worked on was a complete and total failure and actually made things worse), and all because this guy's father was buddies with the Mayor's father.

To repeat: the man is an unrepentant terrorist and believes in violent revolution...

They're friends. So what?

Obama has some odd friends:

Sam Graham-Felsen
, hired to run Obama's blog, is a hard-core leftist who publishes in the Socialist Viewpoint, a magazine of the Socialist Workers Organization, which: "was formed to advance the revolutionary Marxist political program in the United States."

This is not some wacko in the office, but the guy who runs Obama's blog. See this for more (oh, and for the record: that's from an anti-war blog...not some right-wing wing nut...). Of course, he also got his start in Chicago...

Connecting a few more of the dots? Crony politics, infiltration of the party by extreme there a pattern here either of extreme incompetence (in vetting these people) or of malice? Or does Obama simply not care because he couldn't give a shit, as long as he's elected?

To repeat: why is this even a contest?

Nukes, Tac Nukes and Doctrine...

We may be on the cusp of a rather disturbing development...

First of all, remember what I wrote here: that the Soviets and the Warsaw Pact implemented, as their operative war orders, a pre-emptive tactical nuclear strike on NATO. As far as they were concerned, any nuke used tactically was per definition a tactical nuke, and hence part of a war-fighting strategy to fight the war with all possible means and to end the war as quickly as possible before NATO's superior war-making abilities could come on-line.

This in the WSJ points to the distinct possibility that this doctrine is now part and parcel of Russian operative war orders.

First of all: START reduced the number of strategic warhweads, and the Moscow Talks reduced them even further to a fairly small force. Still deadly, still capable of destroying the world's economy and in any given country a guarantee that nuclear war isn't really a strategic choice.

But what about the tactical nuclear weapons?

First of all, what is a tactical nuclear weapon? Put simply, it is a nuclear weapon on a weapons delivery system that lacks the range to be a strategic weapon, i.e. the delivery system is "local" and not world-wide. That's a tad moot to the people so targeted, but that was the logic of the Cold War.

After the end of the Cold War, the US reduced the number of its tactical nuclear weapons from "many thousands" to "around 500". Russia has also reduced the number, but asymmetrically: from "many many thousands" to "ca 5000".

Now, what does this mean and why is it important? Is it important at all, or is this simply the same kind of Cold-War mentality, a "Tac-Nuke gap"?

I'm not entirely sure.

First of all, there is the classic problem of intelligence analysis: capabilities and intentions. The former we know fairly well, the latter is much more difficult. This is where Russia's recent attack in Georgia raises questions: what are their intentions?

What rang a bell for me was the report that Russia has moved tactical ballistic missiles into South Ossetia.

What is the use of tactical ballistic missiles in such a conflict?

Tactical ballistic missiles are used for two reasons: relatively heavy payload that is enhanced by the speed of the warhead when impacting and the inherent speed of the attack. The Soviets have, in the past, planned on using massed firings of relatively short-range ballistic missiles to attack fixed positions of great value (which are also hence protected fairly heavily against air attack). Once fired, such rockets have relatively short flight times (less than 10 minutes, usually), and their speed is such that normal interception methods fail (this is where the Russians are worried about US mobile laser defense abilities), ensuring that such high-value targets can be taken out reliably within a set time frame: this is what makes ballistic missiles so interesting for the Russians. The US continues to use airpower to do the same thing on the battlefield (it's more cost-effective, given US air superiority and the fact that the ballistic missiles, once fired, are then gone forever, i.e. you can't re-use them; you can also acquire around 10 such missiles for the price of one aircraft, and operative costs are significantly smaller, since you don't have to rely on the quality of your trained pilots).

Having roughly 500 tactical nuclear weapons means that any planning for their use will not be the major part of your war-fighting doctrine: they are too conspicuous to move around a lot, meaning centralized storage.

Having 5000 means that you can decentralize their storage and having dedicated delivery systems for them means any air assets are freed up from having to be held in reserve for the possibility of nuclear use (and the number of air crews such trained are a real limitation...).

Hence my worry: that the large number of Russian tactical warheads, coupled with their increasing use of ballistic missiles, as well as the previous operational war plans, means that if push came to shove, that the Russians, as their Soviet predecessors had planned to do, would initiate the use of nuclear weapons to achieve tactical superiority, convinced that the strategic parity would prevent an escalation of such as war to the strategic use of nuclear weapons.

This is disturbing, to put it mildly: first that the Russians, like the Soviets before them, would view nuclear weapons as just one additional kind of artillery weapon, and second that the West is woefully unprepared for such usage, which even in a limited scenario would bring wide-spread devastation and place forces in a serious situation.

Fundamentally, this is exactly the scenario that the Soviets tried to achieve by setting up the SS-20s in Europe, to underrun US strategic doctrine and achieve real tactical superiority on the battlefield.

And that is a disturbing development.

Mittwoch, August 20, 2008

Reform Chicago Style...

I grew up some on the South Side of Chicago. I was the only white kid in my class back then, in the early 1960s. Was there for 6 years.

Chicago is a great town. My kid brother was born there, my sister and her husband used to live in Hyde Park.

But there's a downside to Chicago. The city's corruption is legendary, from back when health inspections at the meat packing plants was a question only of money, and where prohibition broke an already weakened tolerance for corruption.

Why does corruption survive in this day and age, where easily available documentation of public spending and payrolls can find the most obvious corruptions, such as hiring of political supporters - rather than competent people - and the like?

Corruption is tolerated when fundamental services are guaranteed: if you want to stay elected in Chicago, all you need to do is ensure that the garbage is always picked up, that the streets are in pretty good shape and, above all, that the streets are plowed in the winter.

Miss that and you'll be voted out.

The problem is that the system is so entrenched - and so completely dominated by the Democratic Party that it must be embarrassing even to them - and owns so many of the politically active that you basically need not only elect the non-corrupt, but also be able to do mass firings to get rid of the political cronies that would otherwise cripple any sort of new broom.

In other words, in Chicago, corruption pays: it pays for the middle class so that they receive the services they feel entitled to; it pays for the poor in the community largesse that they expect; it pays for the political class in terms of jobs and income where they are free to run their political careers.

It's inefficient, of course, and there are real-world problems: of the companies who fail to get contracts because they don't have the political connections; of the workers who can't get work because they won't join a corrupt union; of the income lost to higher taxes to pay for inefficiencies and waste; of the lost opportunities for improvements; of the social losses due to incompetent teachers and a truly rotten school system.

But what's to do?

Well, for Barack Obama, it's more of the same: the man who is selling himself as the great hope, the agent for change... the guy who has actively stopped reforms in the City of Chicago. All in the name of protecting the Democratic Machine in that city.

Take a look here: this isn't speculation, but rather facts.

1) Obama got himself elected by disqualifying his opponents on the ballot on technicalities, not because he was the best candidate for the yearning masses, as he likes to tell it.

2) He took the side of the party machine when reformers did try to get rid of at least the worst offenders in a bipartisan attempt to reduce corruption in Cook County: he endorsed the son of the worst offender as a "good, progressive Democrat" when in fact he was more of the same.

To quote:

Mr. Obama has never stood up against Chicago's corruption problem because his donors and allies are Chicago's corruption problem.

Mr. Obama is not the reformer he now claims to be. The real man is the one they know in Chicago -- the one who won his first election by depriving voters of a choice.

Why is this even a contest?

Obama is part of the problem, not the solution.

Dienstag, August 19, 2008

And This Is Even More Ironic...

Nice article in the WSJ here.

Imagine a political party that was heavily supportive of slavery; which then supported segregation and was instrumental in passing Jim Crow laws; which even had a para-military organization serving the interests of the party to actively intimidate opponents (and enough times to kill them); which actively opposed the 13th, 14th and 15th Amendments to the Constitution (overturning slavery, reversing Dred Scott, giving blacks the vote); which actively tried to deny blacks with the right to own private property, sign contracts, sue and serve as witnesses in a legal proceeding; that were curiously silent on discrimination, lynchings and voting rights; which actively opposed integrating the US military; which formed 3/4 of the opposition to the 1964 Civil Rights Act; the party whose members unleashed dogs and fire hoses on protestors demanding their rights under the Constitution (and yes, I mean Birmingham's Bull Connor).

Now, imagine this party demanding that there be an apology given to blacks in the US, in the name of the US government, for these perfidious acts and policies: not in the name of the party, but extending the guilt that is duly and heavily deserved for these actions from that party to the total of the United States.

Thus denying that the other major party was heavily critical of slavery; supporting the black franchise; which worked with the system and condemned the use of para-military thugs to intimidate; which sponsored and was able to implement the 13th, 14th and 15th Amendments; which actively supported blacks in their fight for the right to own private property; sign contracts, sue and serve as witnesses; which actively supported the integration of the US military; which fought for and passed the 1964 Civil Rights Act; the party that supported ordering in the US military to end segregation in Alabama...

Making their historical mistakes and party legacy not something that merely besmirches them, but rather to turn the tables on the other party, making it share the blame for their own errors and abhorrent behavior and policies.

Now, which party is which? Which party plays the role of the heavy-handed thug, the oppressor and supported of an intolerable status quo?

Anyone with a sense of history knows that this party is the Democratic Party.

It's one of the great, great ironies of US history. The party that fought for their rights is shunned by those, at the end of the day, benefited most from their actions. Blacks in the US vote heavily Democratic, although the Democrats did their very best to deny them the right to vote...

Let me quote form that article:

After all those Democratic platforms and conventions that championed slavery and segregation, what do you think the chances are they will use the occasion of Mr. Obama's nomination to have the Democratic platform formally apologize for the active, frequently violent and decidedly official support of the Democratic Party for slavery, segregation, lynching, the Ku Klux Klan and all the rest?

Better yet, do you think they'll pass a resolution promising to use the funds raised from all those Jefferson-Jackson Day fundraisers to pay reparations for slavery? (Did I mention that while the DNC discusses party co-founders Jefferson and Jackson, it neglects to mention that between them the two owned an estimated 360 slaves?)

Will the NAACP and other groups seeking reparations from nongovernment entities for their role in supporting slavery (companies like Aetna, Wachovia and Chase along with educational institutions like Brown University) finally zero in on the prime historical mover behind some of the worst chapters in American history? Will they sue the Democrats?

The Democrats are poised to nominate a black man for president of the United States. But will they apologize for slavery? Will they start paying reparations not from tax dollars but their own dollars for what they have done?

Do they have the guts to publicly admit what serious history records of their deeds? Are they capable of running a campaign without playing the race card as they have played it for the better part of two centuries? Can they even escape the race psychology that has indelibly branded them as America's Party of Race?

Or, when it comes to their own responsibility for race relations in America, will they order up more of what, under the circumstances, is a very appropriate word for the DNC website?


Now that's ironic.

Oh The Irony...

Looks like things are slowly changing in Cuba: today's FT (link here) has a story on the front page.

...Cubans had been "overprotected" by a system that subsidised food costs and limited the amount people could earn, prompting labour shortages in important industries.

"We can't give people so much security with their income that it affects their willingness to work," Mr Jam said. "We can have equality in access to education and health but not in equality of income."

He said the emphasis on equality had helped maintain social cohesion during the 1990s when Cuba's economy came close to collapse after the withdrawal of Soviet assistance. But "when the economy recovers you realise that there is [a level of] protection that has to change. We can't have a situation where it is not work that gives access to goods", he said.

Oh, the irony of this.

The country that has done the most to ruin its own people's lives - the abject poverty in Cuba is clear for anyone but tourists and True Believers - finally appears to realize that its system doesn't work.


We can't give people so much security with their income that it affects their willingness to work. That is an interesting translation of the old Soviet joke of "They pretend to pay us, we pretend to work." that encapsulated the fundamental absurdity of socialism, the fundamental contradiction of the system that invariably leads to its downfall.

We can't have a situation where it is not work that gives access to goods. That's an understatement: there are no goods under socialism beyond the basics, because there is no incentive to create them. They aren't necessary and hence are undesirable: each according to his needs - as defined by the State - and each according to his ability. But if the needs aren't met - as defined by the individual - then what is the point of working?


...Mr Jam's comments reflect growing frustration in official circles about poor performance in agriculture, construction and manufacturing. "There isn't motivation to work in these sectors," he said.

Good Lord, I think he's got it! Can it be?

There isn't motivation to work in these sectors.
No shit, Sherlock: there's no motivation to work if the only reward for performing well is ...

Well, there is no reward to performing well. If anything, there is an active disincentive to performing well: your higher performance then becomes your new basic work load. Talk about stupidity...

But that is systematic and system-immanent in socialism: it is a fundamentally flawed system of economics, with flaws that always lead to its failure. It is a system of economics, a system of political order, that fundamentally denies what motivates people to do the things they want to do.

The tragedy of Socialism is that it denies those who must live under it fundamental human rights: life, liberty and the pursuit of happiness. The irony of Socialism is that it takes such a long time for that lesson to trickle through.

Montag, August 18, 2008

Why Is This Even A Contest?

I really, really don't understand the attraction to Obama beyond his obvious charisma: the man is, otherwise, nothing.

Don't believe me?

Read this and prove it otherwise.

Take Obama's first general election ad. We are told that Obama "passed laws" that "extended healthcare for wounded troops who'd been neglected," with a citation at the bottom to only one Senate bill: The 2008 Defense Authorization Bill, which passed the Senate by a 91-3 vote. Six Senators did not vote-including Obama. Nor is there evidence that he contributed to its passage in any material way. So, his claim to have "passed laws" amounts to citing a bill that was largely unopposed, that he didn't vote for, and whose passage he didn't impact. Even his hometown Chicago Tribune caught this false claim.

In other words, he's been in the senate for three years, two of which have been spent campaigning to become President, and he hasn't actually done anything. And what he does claim, he didn't even vote for.

Why is this even a contest?

Or take one of Obama's standard lines: his claim of "twenty years of public service." As pundit Michael Medved has pointed out, the numbers don't add up. Shall we count? Three years in the US Senate (two of which he's spent running for President), plus seven years in the Illinois State Senate (a part-time gig, during which time he also served as a law professor) equals, at most, ten. Even if we generously throw in his three years as a "community organizer" (whatever that means, let's count it as public service), that still adds up to just thirteen.

You can't make this stuff up.

Why is this even a contest?

At his press conference in Hamas rocket-bombarded Sderot, Obama talked up "his" efforts to protect Israel from Iran:

"Just this past week, we passed out of the US Senate Banking Committee - which is my committee - a bill to call for divestment from Iran as way of ratcheting up the pressure to ensure that they don't obtain a nuclear weapon." (Emphasis added.)

Nice try. But as even CNN noted, Obama is not even on that committee.

Why is this even a contest?

Look at his record: he's now completed over half of a Senate term; yet, is there even one signature issue he has taken hold of, other than his own presidential run? Similarly, as the New York Times recently pointed out, Obama spent twelve years on the University of Chicago Law School faculty--singularly famous for its intellectual ferment and incubator of scholarship--and produced not even a single scholarly paper. He was President of Harvard Law Review, but wrote nothing himself. Even as a state legislator for seven years-or community organizer for three years, there is little that shows his imprint. OK, to be fair, he did write two books. About himself.

For all his glowing job titles, Obama has never gotten much done.

At the risk of sounding tedious: why is this even a contest?

This is ridiculous, and indeed it is amazing that he has gotten this far: 12 years (!!) on the Faculty and not a single scholarly paper; President of Harvard Law Review, but no articles...

Why is this even a contest?

Obama is someone who has had opportunity given to him on a silver platter: U of C Law School faculty member, President of Harvard Law Review, State legislator, now US Senator. What has he actually done? What has he really achieved? He's been given more opportunities to shine, to show what he is capable of, than probably any living politician.

But he hasn't actually done anything.

In the real world, he's a failure, a sad example of someone with enormous potential who should of gone very, very far in actually getting things done.

Why is this even a contest???

Mittwoch, August 13, 2008

History Sometimes Does Have Surprises...

In today's FAZ (link here, behind a paywall...) there is a fascinating article that I simply don't have time to completely cover here.

But let me cover it briefly...

Written by Dr. Hans Rühle and Michael Rühle (Hans was a Minister Director in the German Defense Department, Michael runs the Planning Division of the Political Directorate of NATO in Bruxelles), it documents, using ex-Warsaw Pact documents, the true strategy of the Warsaw Pact during the Cold War.

For those too young or not really interested, the "true" intents of the Soviets during this time period were hotly debated back then: Soviet apologists and their ilk argued that the Soviets were merely reacting to the West, while those in the West who claimed that the Soviets didn't merely have concrete war plans, but were planning massed nuclear attacks as part of their military strategy were branded "war-mongers" and "sensationalists" by the left-wing press in Germany (which, of course, is almost all of the press).

What do the Rühles find out?

Again: this is based on actual documents, clear and unambiguous: their conclusions are based on the training documents of the East German Army (their tactical and strategic documents were shredded when that government collapsed), coupled with recently released tactical and strategic documents of the Czech regime under the Warsaw Pact. This is history unveiled, and we're now dealing with facts, rather than with speculation.

The answer is simple: the Soviets, until the 1990s, planned a nuclear first strike.

Let's look at the war planning in 1964: 131 targets alone in Germany, with 41 military targets along the Czech border and the line Würzurg, Erlangen, Regensburg and Landshut, another 90 for the US 7 Corps and its tactical nuclear weapons. At least 100 more to attack the strategic and operative reserves of NATO in order to force NATO to surrender. The nuclear first-strike was aimed at preventing a concerted NATO reaction to an attack by the Warsaw Pact, and the rates of advance planned for the Warsaw Pact forces were only sustainable in the absence of concerted reactions by NATO: by the 7th or 8th day, the Rhine was to have been crossed, and by the thth day the area Langres-Besancon was to be reached, with Lyons due to fall on the 9th day.

This was the plan for the "Attack Group Bavaria": the three Attack Groups in Northern Germany had similar, but currently unknown plans. However, what is interesting is that Austria was to be occupied - despite their neutrality - and the cities of Vienna, Münich, Verona and Vincenza were to have been destroyed by nuclear weapons.

Now, if you cross-reference the training documents, the Rühles come up with what those three northern Attack Groups would have used: 62 nuclear weapons in Schleswig-Holstein, 115 in Ost-Niedersachsen and 175 nuclear weapons in Nordkassel (the infamous "Kasseler Gap" area that would have been the first major battleground of the war.

These last numbers are from exercises held during the 1980s.

But wait: the first numbers are from 1964: does that mean that the planning and training in the 1980s hadn't changed?

No, it hadn't. The Warsaw Pact and the Soviets had planned and were planning a first-strike nuclear-based war against Europe.

The operative planning documents support this: the first troops to go into nuclear strike zones were Polish and Czech. And they were not thrilled about it.

To repeat: these were the operative plans of the Warsaw Pact to attack NATO. These weren't war games, these weren't theoretical war games, but rather the actual operative plans of the Warsaw Pact.

Let that sink in.

They were changed, apparently, in 1986 as Gorbatschow gave members of the Warsaw Pact veto rights to the use of nuclear weapons by the Warsaw Pact.

But the East Germans planned to use 76 nuclear weapons in Schleswig-Holstein during operative planning in 1989 (Exercise "Stabstraining 1989", a war game for the general staff of the East German Army or NVA), indicating that this took a while to be acted upon.

All of this points to one thing, and now an incontrovertible fact of history: The Warsaw Pact, for almost all of its history, planned a regional, preventive combined conventional and nuclear attack against NATO in Europe. Not planned in the sense of "let's think about it" but rather in the sense of "These are your orders."

This was not what NATO expected: it was their worst nightmare. What did NATO expect? A massive conventional attack that would have severely pressed NATO, designed to underrun NATO's ability to conduct a reactive NATO nuclear attack to stop the Warsaw Pact from winning such a war.

Now, this raises all sorts of questions, as the Rühles do point out: why didn't the Soviets attack? They were militarily capable of doing so from the 1960s onwards; during the 1970s and 1980s, the Soviet military increasingly warned that NATO technological superiority could be best dealt with by attacking; as late as 1982, General Ogarkow compared the situation in Europe to be that right before WW2, and that "in reality, NATO had already declared war on the Soviet Union and Warsaw Pact".

The reason that the Cold War didn't heat up was that the politicians of the Soviet Union didn't decide to go to war.

Their reasons can only be speculated about, and until the Soviet Archives here are available, there is little hope to do anything but speculate. The most likely reason is that the Soviets couldn't be sure that the conflict would remain regional, and indeed it was the doctrine of both the US and NATO to go after targets in the Soviet Union (legitimate military targets, of course) and ensure that the Soviets would realize that there would be no regional limitations in such a war.

That the Soviets didn't go to war is one thing: it's something else entirely that they bankrupted their country to ensure that they could do so, and planned on using over 1000 nuclear warheads in Europe alone.

That's where the article, basically, ends: this above is my synopsis..


Puts a lot in perspective: the sheer audacity of the lies of the Left during the Cold War; the importance of having won that one, and the key event that helped end the Cold War: The Strategic Defense Initiative of the US, aka "SDI", derided as "Star Wars": that was the event, according to the Soviets, that led them to believe that they would no longer have a military option that they could count on.

Made no difference that it wasn't built: it worked on the best minds of the Soviets. That's all that counted.

Dienstag, August 12, 2008

Oh, Like Democrats?

I'd forgotten this one, but it *is* a classic:


Montag, August 11, 2008

Putin, Georgia and American Culpability...

So, the so-called "thinkers" of the left mainstream have already decided who is to blame for the Russian attack on Georgia.

That's right, it's the US.

Sort of expected, isn't it?

But let's take a closer look, and I think you'll be surprised what you actually find...

Let's start here with Steve Clemons of The Washington Note.

Here's the money quote:

My own view is that the U.S. has displayed a reckless disregard for Russian interests for some time. I don't like Russia's swing to greater domestic authoritarianism and worry about its stiffened posture on a number of international fronts -- but Simes convinces me in his important Foreign Affairs essay, "Losing Russia," that much of what we are seeing unfold between Russia and Georgia involves a high quotient of American culpability.

But let's go take a look at that Foreign Affairs essay: what does it really say? And what is Steve and his fellow travelers failing to say?

The Reagan and first Bush administrations understood the dangers of a crumbling superpower and managed the Soviet Union's decline with an impressive combination of empathy and toughness. They treated Gorbachev respectfully but without making substantive concessions at the expense of U.S. interests. This included promptly rejecting Gorbachev's increasingly desperate requests for massive economic assistance, because there was no good reason for the United States to help him save the Soviet empire. But when the first Bush administration rejected Soviet appeals not to launch an attack against Saddam Hussein after Iraq invaded Kuwait, the White House worked hard to pay proper heed to Gorbachev and not "rub his nose in it," as former Secretary of State James Baker put it. As a result, the United States was able to simultaneously defeat Saddam and maintain close cooperation with the Soviet Union, largely on Washington's terms.

That's how US foreign policy works when grown-ups were in charge. But why, then, have things developed so very differently from that sublime state of affairs?

The Clinton administration's greatest failure was its decision to take advantage of Russia's weakness. The administration tried to get as much as possible for the United States politically, economically, and in terms of security in Europe and the former Soviet Union before Russia recovered from the tumultuous transition. Former Deputy Secretary of State Strobe Talbott has also revealed that U.S. officials even exploited Yeltsin's excessive drinking during face-to-face negotiations. Many Russians believed that the Clinton administration was doing the same with Russia writ large. The problem was that Russia eventually did sober up, and it remembered the night before angrily and selectively.

And this is where Clemons and the mainstream left are blind, blind, blind: it wasn't "American" blundering, but rather it was the express and deliberate way that the Clinton administration dealt with the collapsing Soviet Union.

In other words, that group of "clever policy wonks" fucked up royally.

Behind the façade of friendship, Clinton administration officials expected the Kremlin to accept the United States' definition of Russia's national interests. They believed that Moscow's preferences could be safely ignored if they did not align with Washington's goals. Russia had a ruined economy and a collapsing military, and it acted like a defeated country in many ways. Unlike other European colonial empires that had withdrawn from former possessions, Moscow made no effort to negotiate for the protection of its economic and security interests in Eastern Europe or the former Soviet states on its way out. Inside Russia, meanwhile, Yeltsin's radical reformers often welcomed IMF and U.S. pressure as justification for the harsh and hugely unpopular monetary policies they had advocated on their own.

Soon, however, even Russian Foreign Minister Andrei Kozyrev -- known in Russia as Mr. Yes for accommodating the West -- became frustrated with the Clinton administration's tough love. As he told Talbott, who served as ambassador at large to the newly independent states from 1993 to 1994, "It's bad enough having you people tell us what you're going to do whether we like it or not. Don't add insult to injury by also telling us that it's in our interests to obey your orders."

But such pleas fell on deaf ears in Washington, where this arrogant approach was becoming increasingly popular. Talbott and his aides referred to it as the spinach treatment: a paternalistic Uncle Sam fed Russian leaders policies that Washington deemed healthy, no matter how unappetizing these policies seemed in Moscow. As Talbott adviser Victoria Nuland put it, "The more you tell them it's good for them, the more they gag." By sending the message that Russia should not have an independent foreign policy -- or even an independent domestic one -- the Clinton administration generated much resentment. This neocolonial approach went hand in hand with IMF recommendations that most economists now agree were ill suited to Russia and so painful for the population that they could never have been implemented democratically. However, Yeltsin's radical reformers were only too happy to impose them without popular consent.

In other words: the Clinton administration fucked up relations with Russia, not because of any conflicts with Russia, but by being paternalistic and arrogant. By not bothering to listen to experts and learn what reality is, but rather to project their own reality and act on what they thought they were being so fucking cute and clever about.

And these are the folks who want to get back into the White House????

It get, as you can expect, worse:

Other aspects of the Clinton administration's foreign policy further heightened Russia's resentment. NATO expansion -- especially the first wave, which involved the Czech Republic, Hungary, and Poland -- was not a big problem in and of itself. Most Russians were prepared to accept NATO enlargement as an unhappy but unthreatening development -- until the 1999 Kosovo crisis. When NATO went to war against Serbia, despite strong Russian objections and without approval from the UN Security Council, the Russian elite and the Russian people quickly came to the conclusion that they had been profoundly misled and that NATO remained directed against them. Great powers -- particularly great powers in decline -- do not appreciate such demonstrations of their irrelevance.

In other words, NATO expansion wasn't the problem: it was the sheer bloody-mindedness of Clinton's foreign policy that has led us to where we are today.

Notwithstanding Russian anger over Kosovo, in late 1999, Putin, then prime minister, made a major overture to the United States just after ordering troops into Chechnya. He was troubled by Chechen connections with al Qaeda and the fact that Taliban-run Afghanistan was the only country to have established diplomatic relations with Chechnya. Motivated by these security interests, rather than any newfound love for the United States, Putin suggested that Moscow and Washington cooperate against al Qaeda and the Taliban. This initiative came after the 1993 World Trade Center bombing and the 1998 bombing of U.S. embassies in Kenya and Tanzania, by which time the Clinton administration had more than enough information to understand the mortal danger the United States faced from Islamic fundamentalists.

But Clinton and his advisers, frustrated with Russian defiance in the Balkans and the removal of reformers from key posts in Moscow, ignored this overture. They increasingly saw Russia not as a potential partner but as a nostalgic, dysfunctional, financially weak power at whose expense the United States should make whatever gains it could. Thus they sought to cement the results of the Soviet Union's disintegration by bringing as many post-Soviet states as possible under Washington's wing. They pressed Georgia to participate in building the Baku-Tbilisi-Ceyhan oil pipeline, running from the Caspian Sea to the Mediterranean and bypassing Russia. They encouraged Georgia's opportunistic president, Eduard Shevardnadze, to seek NATO membership and urged U.S. embassies in Central Asia to work against Russian influence in the region. Finally, they dismissed Putin's call for U.S.-Russian counterterrorist collaboration as desperate neoimperialism and an attempt to reestablish Russia's waning influence in Central Asia. What the Clinton administration did not appreciate, however, was that it was also giving away a historic opportunity to put al Qaeda and the Taliban on the defensive, destroy their bases, and potentially disrupt their ability to launch major operations. Only after nearly 3,000 U.S. citizens were killed on September 11, 2001, did this cooperation finally begin.

In other words, the royal screw up happened almost exclusively on Clinton's watch: he blew it. Everyone involved with Clinton's foreign policy - all of the mainstream left policy wonks - bears blame for what is happening. This wasn't some accident that sort of kind of happened, but rather was the deliberate policy of the Clinton Administration.

If you're gonna blame the US, let's be accurate about it.

Clinton fucked up.

And think on this: Obama's army of supporters, his 300 experts on foreign policy, how many of them were either directly involved with the above, how many still think that Clinton's foreign policy fiascos were the cat's meow?


On Just War, Georgia and Stupidity...

For background on the war now being fought between Russia and Georgia, see this for perhaps the best basic explanation around.

The important parts:

The goals behind Moscow's operation are threefold, each with its own time frame. The immediate goal is to re-establish the authority of Russian-controlled negotiating and "peacekeeping" formats. By firing on Georgian positions unremittingly and escalating the intensity of the fire with every passing day, Moscow hopes to force Georgia to turn to those Russian-controlled formats to relieve the pressure. Furthermore, Moscow wants to force Tbilisi to acknowledge a leading Russian role as "guarantor" of an eventual political settlement.

In other words, Russia wants a "win-win" situation and they have been working hard to develop the environment for one.

But the question becomes: which Russia? In this case, it's the St. Petersburg-based Russians who have close ties to the various intelligence agencies.

Moscow's next goal, on a timeframe overlapping with the first, is to capture Georgian-controlled villages in South Ossetia. The pattern of attacks since August 6 indicate the intent to reduce the Sanakoyev administration's territory to insignificance or even remove it from South Ossetia altogether. If successful, this undertaking may well be replicated in upper Abkhazia by Russian and proxy forces attempting to evict authorities loyal to Tbilisi.

In other words, both ethnic cleansing and creating the ability to draw clear lines on the map.

The strategic political goal is to dissuade NATO from approving a membership action plan (MAP) for Georgia at the alliance's December 2008 or April 2009 meetings. More immediately, Moscow seeks to derail the North Atlantic Council's assessment visit to Georgia, scheduled for September, or at least to influence the visit's assessment about Georgia's eligibility for a MAP. Since NATO's "Russia-Firsters" insist that unresolved conflicts disqualify Georgia from a MAP, Russia seeks to demonstrate that those conflicts are indeed unresolved. NATO's failure to approve a Georgian MAP at the April 2008 summit emboldened Russia to escalate military operations against Georgia.

This is where the classic Russian paranoia of being surrounded by enemies comes into play: by involving Georgia in a war, it is highly unlikely that NATO will consider MAP for Georgia at all, fulfilling one of Moscow's goals.

Moscow also seeks to bleed Georgia economically through protracted military operations. Russia can not tolerate the successful economic performance of a Western-oriented government on Russia's border. Aware, furthermore, that Georgia's government is accountable to public opinion, Moscow seeks to force the government to choose between yielding at the risk of a domestic backlash or, alternatively, fighting back in a costly confrontation.

Economic success in this area is, bluntly, everything, and indeed Georgia has made progress. Perhaps now all for naught?

How did the conflict start?

By August 6 and 7, heavily armed proxy troops opened fire on Georgian villages, while the secessionist authorities refused to talk with Tbilisi. The attacking forces began destroying the transmission antennae of Georgian mobile telephone systems. Arms and paramilitary groups poured in from Russia to South Ossetia through the Russian-controlled Roki tunnel. Russian officials in Georgia claimed that the attacking forces were out of Russia's control. Officials in Moscow, meanwhile, justified the attacks directly and indirectly by accusing Georgia of aggression (Interfax, Itar-Tass, Russian Television, August 4-7).

At 7:00 P.M. local time on August 7, Georgian President Mikheil Saakashvili spoke live on national television, announcing a unilateral ceasefire and asking the other side also to cease hostilities. In highly conciliatory words, Saakashvili called for talks "in any format"; reaffirmed the long-standing offer of full autonomy for South Ossetia; proposed that Russia should guarantee that solution; offered a general amnesty; and pleaded for international intercession to stop the hostilities (Rustavi-2 TV, August 7).

Following Saakashvili's address, attacks on Georgian villages intensified. The village of Avnevi was almost completely destroyed, Tamarasheni and Prisi shelled, and the police station in Kurta, seat of the Sanakoyev administration, smashed by artillery fire. Civilians began fleeing the villages.

These attacks forced Tbilisi to take defensive action. By 10:30 P.M. local time on August 7 the Georgians returned fire. During the night, Georgian forces including armored columns began advancing toward Tskhinvali, the secessionist authorities' administrative center.

So, let's talk about Just War, which is scarcely what is going on here...

The Russians are behaving like their good old bad selves: use a proxy to trump up reasons for conflict, escalate via proxies so that they can't be blamed, then intervene "to stop the killing" that they themselves started up. The justifications and the propaganda are virtually indistinguishable from the Soviet era.

Just war: let's look at what Wiki has to say.

Jus ad bellum (before the war)

Just cause
The reason for going to war needs to be just and can therefore be recapturing things taken or punishing people who have done wrong. A contemporary view of just cause was expressed in 1993 when the US Catholic Conference said: "Force may be used only to correct a grave, public evil, i.e., aggression or massive violation of the basic human rights of whole populations."
This is where both sides claim the upper hand: the Georgians to stop the shelling of their villages by the South Ossetians, the Russian to stop the "killing of Russian civilians". There's a difference, though: the South Ossetians, from what I have been able to glean, placed their artillery close to civilians, who then suffered when Georgian counter-battery was fired to stop the artillery, since counter-battery here was rocket launched and hence not nearly as precise as it should be. Here the South Ossetians violated the Rules of War, which prohibit, basically, putting military resources in a civilian environment for this exact reason.
Comparative justice
While there may be rights and wrongs on all sides of a conflict, to override the presumption against the use of force, the injustice suffered by one party must significantly outweigh that suffered by the other.
This one seems to be a toss-up: we simply don't know - or understand - the situation on the ground well enough to make a judgement here.
Legitimate authority
Only duly constituted public authorities may wage war.
Ouch. This is where the Russians have severe problems: the South Ossetians are not a duly constituted public authority, and hence they have a problem here...
Right intention
Force may be used only in a truly just cause and solely for that purpose—correcting a suffered wrong is considered a right intention, while material gain or maintaining economies is not.
This doesn't seem to apply: neither wants to plunder or pillage, unless we count the bombing of the oil pipeline to be a negative of the right intention, i.e. not maintaining an economy, but rather preventing the other country from maintaining theirs...

Probability of success
          Arms may not be used in a futile cause or in a case where disproportionate measures are required to achieve success;

This is where the Russians will have problems: their response is disproportionate.
Last resort
Force may be used only after all peaceful and viable alternatives have been seriously tried and exhausted or are clearly not practical. It may be clear that the other side is using negotiations as a delaying tactic and will not make meaningful concessions.
This is where the Russians also have problems: the Georgians here have a fairly long documented history of trying to do exactly this, and the Russians do not, ignoring as well calls for a cease-firer.
The anticipated benefits of waging a war must be proportionate to its expected evils or harms. This principle is also known as the principle of macro-proportionality, so as to distinguish it from the jus in bello principle of proportionality.
Here both sides have problems: the Georgian response to the initial shellings was disproportionate, but the Russian response is even more ham-fistedly so.

If you've been keeping score: 7-4 in favor of the Georgians...

Now, if you go to the MSM, you get a fair mishmash of reporting. There's some fairly blatant party-line toeing going on on both sides, but the real problem is plain and simple ignorance and, to certain extent, stupidity involved.

Like here.

Ostensibly fair-handed, that NYT article includes this whopper:

The risks were intensified by the fact that the United States did not merely encourage Georgia's young democracy, it helped militarize the weak Georgian state.

Oh give me a fucking break.

C.J. Chivers of the NYT, providing training so that a small country's military can achieve a certain amount of professionalism and can be considered to be effective is not militarization of the Georgian state.

Real militarization of Georgia would have entailed massive arms purchases, the creation of a draft so that Georgia could field the largest number of troops possible, as well as a re-orientation of society to serve the needs of the military.

None of the above is the case: Georgia simply rebuilt its military from the dregs of what was left over after decades of Soviet military training.

This isn't a fact, it's an opinion, and I think it's a stupid one at that.

But the real stupidity is this war itself: there is no good reason for it. There are plenty of reasons that the war is being fought, but let me reiterate: there are no good reasons.

The Russians are fighting the war to trumpet to the world that they can do this, will do this, and don't really give a rat's ass about what anyone says. It's a typical jingoistic war.

The Georgians are fighting the war because they can't be who they want to be without being able to deny the Russians their ability to do what they have been doing: interfering in Georgia because they can. The problem for the Georgians, of course, is that they have traded one intolerable situation for another intolerable situation, making their position worse.

What makes this so stupid is that no good will come of this: the right intention for both sides will be far more heavily outweighed by the negative consequences. If Russia wins, forcing Georgia to fully back out of the regions that have belonged to it, Russia will have created a permanent cause of dispute between the two countries, one that will not be resolved; if Georgia were to win, regaining control over the regions, then Russia will view this as a major setback and will continue to play their Realpolitik games.

There are a number of ways that the war can go: the Russians have a limited troop contingent, dependent on supply lines that in South Ossetia are fragile at best (Roki tunnel), and cannot afford to have a large-scale battle that might go the way of the Georgians, who, after all, are trained by the US and could be considered potentially superior to the Russian forces currently arrayed against them. If the Georgians could cut the Russian supply line in the mountains, the Russians could only dig in and hold on; the Georgians could then deal with the problem on their western flank (
Abkhazia and 9000 Russian paratroopers) and then return to prosecute the battle in South Ossetia against a Russian division that is effectively cut off from supply.

The Russians, of course, can escalate by landing even more troops in Abkhazia and conducting holding operations against the Georgian army, which is fairly small (ca 28 000 troops), keeping the core of the Georgian troops near Gori and environs, and then launching a strong attack from Abkhazia over land to lure the core of the Georgian army out into the open where it could then be savaged by Russian air power.

In any case, everyone loses: this is a stupid war. It is the result of Russian meddling and provocation not because they genuinely fear a resurgent Georgia, but because they simply don't want one. Their behavior is that of a bully and a meddler, inflaming sentiments and emotions because they can and feel it is in their interest to do so. The Georgian leader is not the sharpest knife in the drawer and has allowed himself to be bullied into reacting this way.

The whole region needs prosperity to achieve peace and development: the Russians have been the greatest hindrance to this, preferring chaos and anarchy to cover up how incompetent their own economy is in the region.

I'll reiterate: it's a stupid war. It's not what the area needs, it's not in the interests of economic development, and it's most certainly not going to be one that results in clear winners and losers: to go to war over the petty feuding and thievery of the region is like trying to command the waves to stop. Futile at best. It's a stupid war.

Donnerstag, August 07, 2008

More on Fair Value...

Today's FT has a piece by Anthony Rayman, who writes on Accountancy, about the perils of Fair Value. You can find it here.

Fundamentally, you can get the gist of what he is saying via the title: Bad Financial Practice Can't Exist Without Bad Theory.

And boy is he right.

Let's start here:

Traditional historical accounting is a wonderful system for counting beans.

Absolutely correct. The problem is that counting beans doesn't give you the real story: anyone who has ever had anything serious to do with a company's balance sheet, either in creating one or in analyzing one, needs to understand, fundamentally, that a balance sheet is the picture of the status of the company's financial standings at a set point in time. There's enormous problems with this: choosing a point in time right before deciding to write off investments, or right before deciding to invest heavily, or any one of a huge number of scenarios, can lead to a rather distorted picture of a company's relative success.

The accountants decided to try to change this, rather than trying to live with it and accept the fact that sometimes you need more than accountants to understand how a company is doing, or more exactly, you need hard work and significant talent to give you good analysis.

And this is, of course, also correct:

Because they routinely send such totally false signals, accounts prepared strictly in accordance with International Accounting Standards Board standards probably cause more economic damage than all the high-profile financial scandals put together.

But I'd expand on that point a tad further: it's not so much the accounts as much more the inability of analysts to do their jobs properly. Let me repeat at the risk of being boring: you need hard work and significant talent to give you good analysis of the future value of a company. This is not something that can be learned (the basics can be, but only experience is the true teacher), but rather takes time and costs money, something that the business is usually not prepared to pay. You used to be able to get the analysis you paid for: this industry was destroyed because it is damned hard to differentiate between pablum put out by a horde of 20-year olds under the control of an experience analyst and right and proper analysis prepared by someone who has 15 years' experience. The mass-production of such analysis put the careful analysts out of business, as they couldn't compete.

Instead of repairing this fundamental defect, "fair value" accounting - where some items are marked to the market price at which they could be sold or transferred - is liable to make matters worse. Since the mere presence of an item in a company's accounts is conclusive proof that its sale or transfer has not, in fact, taken place, a fair value represents the hypothetical proceeds of an imaginary transaction. This risks introducing further distortions.

The problem is not merely "further distortions" but procyclical distortions that make things vastly worse than the situation before such valuations.

The conventional academic wisdom that an increase in an asset's value necessarily represents a gain to its owners is a fallacy: it may actually make them worse off. Not only does fair-value accounting encourage even more exaggerated swings in the economic cycle, it might misreport actual losses as fair value gains and actual gains as fair-value losses.

There is no objection to the disclosure of fair values on company balance sheets (best practice under the historical system); but to incorporate them throughout the accounts produces a mishmash of actual transactions and hypothetical market values - sometimes unintelligible even to the company's own financial directors.

Since the reporting of changes in fair value as gains or losses in the profit and loss account can make a low investment return look better than a high one, fair value accounting is useless for comparisons of corporate performance. By promoting the fallacy that an increase in the value of an asset necessarily makes its owner better off, it has repercussions throughout the economy.

Put bluntly, the conventional academic wisdom here is an ass. Rayman's analysis is spot-on: there is no objection to the disclosure of fair value, but to incorporate them as profits and/or losses is sheer idiocy. It goes beyond that: it is criminal stupidity, because it creates losses and profits where there are none.

I can't underscore that enough: reporting profits and losses that do not really exist is, usually, a reason to jail an accountant for fraud. This is what makes these "reforms" so criminally stupid.

Let's take an example to show the stupidity of this "reform": suppose I buy a house, privately, with a mortgage of 80% of the value of the house. I make my 20% down payment, move in, and start writing those monthly checks to continue to live in the house.

But let's suppose that my loan is no longer based on my actual purchase price, but rather on the fair value of the house: after all, this does change over time, and may as well go up as down. The bank owns the house, and is interested in knowing the "fair value" of the property that it retains title to until the mortgage has been fully paid off.

The value of the house therefore changes everytime the house is given a new "fair value" and the amount remaining on my mortgage changes as well: either the number of payments increases, or the value per payment increases.

Would anyone ever buy a house?

Or, more importantly, why would a bank ever finance the purchase of a house?

If the fair value of its holdings increase, but the value of the mortgages that it holds don't, then the bank is worse off financially - the ratio of value at risk increases without the bank being able to increase risk premiums - than it would have been if it wasn't in that business.

...the only lasting cure for bad financial practice is the elimination of bad financial theory. Removal of the perverse incentives of the accounting system requires a clear distinction between what is fact and what is opinion. That would make possible a system for publishing the return on capital that companies are actually planning to deliver and for continuously monitoring progress towards the goal.

Irresponsible lending can be discouraged by making legal enforcement of loan contracts, particularly repossession of property, conditional on due diligence on the part of the lender. Faulty risk analysis can be corrected by the exposure of wishful thinking masquerading as mathematical rigour. But false accounting cannot be eradicated as long as the IASB insists on promoting as "fair value" a system that is, quite frankly, fraudulent.

Amen. The whole point of accounting is to remove opinion from facts: what has happened, instead, is that the accountants, after seeing how much money can be made with opinions, have decided that is the area where they want to be in business.

To the vast, vast detriment of their profession.

Mittwoch, August 06, 2008

Obama, the Man of the Masses...of Cash, That Is...

Obama is telling everyone how he got lots and lots of money "from the little guys".

What he isn't saying is that he got nearly as much from the rich.

Look here.

Look at this:

An analysis of campaign finance records shows that about two-thirds of his bundlers are concentrated in four major industries: law, securities and investments, real estate and entertainment. Lawyers make up the largest group at about 130, with many working for firms that also have lobbying arms. At least 100 Obama bundlers are top executives or brokers from investment businesses - nearly two dozen work for financial titans like Lehman Brothers, Goldman Sachs and Citigroup. About 40 others come from the real-estate industry.

The biggest fund-raisers include people like Julius Genachowski, a former senior official at the Federal Communications Commission and a technology executive who is new to big-time political fund-raising; Robert Wolf, president and chief operating officer of UBS Investment Bank; James Torrey, a New York hedge fund investor; and Charles Rivkin, an animation studio head in Los Angeles.

In other words, these are the groups to whom Obama is going to be beholden to, and looking at them ... it ain't gonna be pretty if he gets elected. Investment banking bailouts galore, along with loopholes for the rich in the tax code...

Obama has pledged not to accept donations from federally registered lobbyists or political action committees. But some top donors clearly have policy and political agendas. Hedge fund executives, for example, have bundled large sums for Obama at a time their industry has been looking to increase its clout in Washington.

So he continues to say one thing and pretty much do the opposite. Mr. Flip-Flop indeed...

Acorn, the Democrats and Putting Things Together...

I've covered the cause of the Subprime crisis before: without subprimes, there'd be no crisis.

Read here, here and here.

The activist group ACORN is one of the key causes of the subprime crisis.

Now, in a normal world, we'd stop listening to the folks of ACORN, who have had some monumentally bad ideas that have led to the current problem.

Now, the President has signed into law legislation aimed at helping those caught in the Subprime crisis in order to avoid worse effects. It's not the greatest policy, but it should help things from becoming worse.

The problem?


Jesus H. Fucking Christ on a Harley. I know that politics is the art of compromise, but this one really reeks.

ACORN is going to get $16mn from the Democrats to register voters.

To quote:

What most riles Republicans about the bill is the symbiotic relationship between the Democratic Party and the housing advocacy groups, of which Acorn is among the biggest. Groups such as the National Council of La Raza and the National Urban League also lobby to secure government-funded services for their members and seek to move them to the voting booth. Acorn has been singled out for criticism because of its reach, its endorsements of Democrats, and past flaws in its bookkeeping and voter-registration efforts that its detractors in Congress have seized upon.
Democrats on Capitol Hill have helped to steer millions of dollars in housing and other grants from the federal government toward Acorn and groups like it. The groups must qualify and compete for the money, which is typically doled out from the federal government to states and municipalities. The housing package includes a new, permanent source of affordable-housing money that congressional Democrats and grass-roots groups have sought for years. The Affordable Housing Trust Fund and the Capital Magnet Fund will be funded by a tax on mortgages backed by Fannie Mae and Freddie Mac, the government-sponsored mortgage titans.

That tax eventually will channel upwards of $600 million annually in grants for developing and restoring housing, mostly as low-income rentals, available to Acorn and other groups. Democrats on Capitol Hill and housing groups say the housing-assistance money is vital to helping Americans hit hardest by what some call the largest drop in home values since the Great Depression. But they acknowledge the perception of political conflict in giving federal funds to an organization that does political work.

They acknowledge the perception???

Good lord, this is rewarding the very folks responsible for the idiocy of subprimes.

But it gets worse:

It's difficult to track Acorn's finances because of its group of legally separate offshoots, nearly all of which use an address in New Orleans in their tax filings with the Internal Revenue Service. Project Vote, with which Acorn has a "joint-effort agreement" to do voter registration, also uses the New Orleans address on its IRS forms. Acorn is providing one-quarter of the effort's budget for this election, and the canvassers are members of Acorn's staff.

Acorn Housing Corporation, the group's housing-aid arm, has released a copy of its 2007 tax form, but the main group, National Acorn, won't release financial statements and isn't required to. Unlike several Acorn subsidiaries, it doesn't seek tax-exempt status. "We're a private organization; it's our members' business, basically," Mr. Jackson said.

Overall, the main national Acorn entities for which tax information is available -- including its Housing Corporation -- spent $14.7 million in 2006. That information is gathered from IRS filings submitted by a half-dozen separate entities. The filings show that Acorn Housing raised $6.9 million for its activities in 2006, of which $1.7 million, or nearly 25%, came from government grants.

I believe it was Lenin who said that capitalists would sell the communists the rope that they would use to hang the capitalists with.

The lunatics here are running the asylum:

Acorn has had a number of missteps. This month its founder, Wayne Rathke, resigned after news emerged that his brother Dale had embezzled nearly $1 million from Acorn and affiliated groups eight years ago -- information the group kept from law-enforcement authorities and most members. Dale Rathke left the organization only last month.

Late last year, a handful of Acorn canvassers in Washington state admitted that they had falsified voter registrations by illegally filling out hundreds of forms with names such as Dennis Hastert, Leon Spinks and Fruito Boy Crispila. In April, eight Acorn workers pleaded guilty to similar charges in Missouri for falsifying forms.

Good lord, doesn't that fundamentally disqualify them for ANY federal aid or financing??? The founder's brother embezzles $1mn and all he does is resign because it leaked? Convenient that this was kept from the authorities until AFTER the statute of limitations ran out.

What isn't mentioned in the story is that the group has been implicated in at least 12 other states for the same kind of voter fraud.

So let's put this together: Acorn, the advocacy group whose policies led to the Subprime Crisis, is an activist group that the Democrats are now using for voter registration, and who are going to profit from the very crisis that they created...

The lunatics are running the asylum...

Montag, August 04, 2008

On Choosing A President...

When choosing a President, looking at who the candidate's Economic Advisor is gives you a pretty good idea of what their economic policy will be.

Obama? A law professor with no formal economic training.

McCain? A Stanford PhD in economics who taught economics nine years at Yale.

This isn't even a choice.

Sonntag, August 03, 2008

Models, Climate Change and Credibility...

A number of the AGW crowd insist that all the evidence is on their side, and that none of the skeptics can get anything published in a refereed journal, proving that they have science on their side.

Nice try, fellows.

If you go here, you can find this.

Hydrological Science Journal, Aug 2008.

On the Credibility of Climate Predictions

From a team of authors from Greece.

Department of Water Resources, Faculty of Civil Engineering, National Technical University of Athens, Heroon Polytechneiou 5, GR-157 80 Zographou, Greece

Here from the Abstract:

Geographically distributed predictions of future climate, obtained through climate models, are widely used in hydrology and many other disciplines, typically without assessing their reliability. Here we compare the output of various models to temperature and precipitation observations from eight stations with long (over 100 years) records from around the globe. The results show that models perform poorly, even at a climatic (30-year) scale. Thus local model projections cannot be credible, whereas a common argument that models can perform better at larger spatial scales is unsupported.

This is a critical paper: not merely critical in the sense of asking questions, but also critical in the sense of being a peer-reviewed paper that is being published.

In other words, it can't be ignored by the AGW crowd: they can say that the writers of the paper have things wrong, but they're going to have to show how that is so.

The key point here is: there have been no reliability assessments. None.


What else do they say?

In all examined cases, GCMs generally reproduce the broad climatic behaviours at different geographical locations and the sequence of wet/dry or warm/cold periods at a monthly scale. Specifically, the correlation of modelled time series with historical ones is fair and the resulting coefficient of efficiency seems satisfactory. However, where tested, replacement of the modelled time series with a series of monthly averages (same for all years) resulted in higher efficiency.

This means that the GCMs do a good job at what they were originally supposed to do: model changes on a monthly scale. But with a slight problem: when they replaced the original time series with a series of monthly averages, the same for all years, the models were more efficient.


You know what this means?

That the model results are, generally speaking, the result of the models, rather than the data: the models were more efficient with made-up data than with the original data. Tthis can only mean that the results of the models were programmed into the models themselves.

In other words, the data is irrelevant: you will always get the same results. Anyone remember the Hockey Stick, that lovely model that reported the same results when fed with ... noise?

At the annual and the climatic (30-year) scales, GCM interpolated series are irrelevant to reality. GCMs do not reproduce natural over-year fluctuations and, generally, underestimate the variance and the Hurst coefficient of the observed series. Even worse, when the GCM time series imply a Hurst coefficient greater than 0.5, this results from a monotonic trend, whereas in historical data the high values of the Hurst coefficient are a result of large-scale over-year fluctua-tions (i.e. successions of upward and downward "trends"). The huge negative values of coefficients of efficiency show that model predictions are much poorer than an elementary prediction based on the time average. This makes future climate projections at the examined locations not credible. ... However, the poor GCM performance in all eight locations examined in this study allows little hope, if any. An argument that the poor performance applies merely to the point basis of our comparison, whereas aggregation at large spatial scales would show that GCM outputs are credible, is an unproved conjecture and, in our opinion, a false one.

Double ouch: the model results, when run with historical data (GCM interpolated series), are irrelevant to reality.

The implications of the Hurst coefficient greater than 0.5 reflects on the results being built into the model: this means that the models themselves have a monotonic trend, i.e. produce the desired upwards trend regardless of the data.

Such modelled results are the result of scientific fraud on a grand scale: we're not talking a single GCM model, but six of them: CGCM3-A2, PCM-20C3M, ECHAM5-20C3M, CGCM2-A2, HadCM3-A2 and ECHAM4-GG.

These are, from what I can tell, the core of the current set of deterministic GCM models in place.


Let's condense the above: the models have a built-in trend and a time-trend average gives better results.

Orchids to the authors and those who peer-reviewed and to the publisher for their commitment to scientifc research. This is how the science should work: onions galore to those who haven't bothered to check the reliability (and hence plausability) of the models that gave them the results that have been in use, ideologically, for years to try and force political and economic changes in the world economy.