Here's an idea

We could work together to fix stuff and not just to win elections.

Winning isn't everything if you think that governing is the point.

What it is

There's a very entertaining Twitter thread today about Nate Silver and his math magic that's developing as a super-nerd parody of the Chuck Norris tough guy jokes of recent years:

“The only reason Nate Silver runs statistical analyses on a computer is so he can laugh when it's wrong.”

“Nate Silver does not breathe air; he just periodically samples the atmosphere.”

One wag has also built a Web site that asks "Is Nate Silver a Witch?" (Conclusion? Likely he is -- there is no other plausible explanation for his uncanny ability to accurately predict yesterday's election.)

All this is due to Silver's NY Times blog, FiveThirtyEight, where he applies his extraordinary statistical abilities to political polling in the service of forecasting elections. In the run up to Tuesday's election, a number of Republican politicos accused Silver of a political bias against their guys. They didn't like his forecasts, so they began attacking his neutrality. He was cooking the numbers, they said. Silver's responses basically said "It's the numbers, people, not my wishes." His job is to solve math problems, not to inject opinions into his reports. Still Silver was poked and jabbed for being effeminate --that is, gay -- for inserting bias into the weighting of data from different national and state polls and so forth. (Some really smart stuff about Silver and his disruptive effects on political punditry can be found here.) This is rather typical of in-the-bubble partisanship: people who want to see the world in a particular way badly enough begin to see information that contradicts their beliefs as politically motivated, not as facts. Even when they really are facts. 

Silver's projections about Tuesday's election were nearly perfect.

Today, when an Internet acquaintance mentioned on FaceBook that the US stock market had declined 2% the day after Obama' election, I thought about Silver and his conservative antagonists. My acquaintance is conservative. His implication was that bad-for-business Obama's reelection was at the root of the 2% loss. I've seen several comments today that we're due for another recession, for inflation, for higher unemployment, and for a host of other economic ills because of Obama's fiscal and monetary policies. What is needed is a period of austerity like the Europeans have undertaken to pay down the debt. This is what Romney and Ryan planned to do. Their conservative ideology led them to believe it was the best way to get the country out of the economic doldrums.

So I was moved to look at some data.

My wife and I have some money saved for retirement. Some of it is in a Vanguard total market stock index mutual fund (VTSMX). Some of it is in a Vanguard European stock fund (VEUSX). Both funds track an index, and are not actively managed. That is, they reflect the health of the total markets they follow, and not the skill or luck of a manager. Both funds recorded five-year highs on December 3, 2007. Both then declined and later tumbled in value at the time of the Lehman bankruptcy and world-wide credit collapse in September of 2008. Later on, both hit five-year lows on the same day: March 2, 2009. Both have rebounded as the world's economy has begun to recover.


The Euro fund lost 65.3 % of its value between the end of 2007 and the beginning of March 2009. Ouch. The US fund lost 54.4% over the same period. Ouch again. These were terrifying losses.

Since that time, things have improved, but they haven't improved equally for the two funds. As of this afternoon, the US index is up 200% from its low, bringing it within 95.7% of its historic high. The Euro fund, however, has grown 165% -- impressive, but less so than its American counterpart. At today's close it was worth only 57.3% of its peak value.

America, where the Obama administration stimulated the economy, did better in this metric than Europe. It's Europe where austerity is the policy. In effect, we have a macro experiment underway: austerity vs stimulus. I've made more money from the stimulus than from Europe's austerity. Yet we continue to live with a persistent myth that tightening the budget is good for business. I can see no evidence.

It's essential that we not let theories about who's winning in the polls and about the realities of economic recovery impede our understanding of the facts we must navigate.

If Nate Silver says "You wanna bet?" the right answer is no.

Political Theology

Richard Mourdock, who might be elected to the US Senate from Indiana, said he was opposed to abortions in the case of rape the other day, and a whole lot of people got hopping mad. But it looks like more than a few missed his point. What the dude said was that the conception and not the soul-crushing violence of the assault was a gift from God.  All life is a gift from God. And one must take the gift that is presented. He said this. He looked into his heart and spoke from his core beliefs. We all have our beliefs. But he is working to get elected at present, to make governmental policy, and that is a problem.

Ancient representations of the Buddha often show him seated upon a lotus flower. This is because the pure white lotus blooms above water turbid with mud and slime. The Buddha’s enlightenment – like the lotus – was a form of purity arising out of a conundrum of filth. I suppose the dude in Indiana to have reasoned in a similar vein when he spoke of God’s gift arising even from a crime of humiliating violence and degradation.

His expression of faith, while doubtless sincere, is a religious judgment. He speaks of the intervention of a supernatural being into the lives of rapists and their victims – into the lives of all women who conceive in love as well.  He speaks of a gift from God, a material interaction between the divine and the corporeal. And here the image of a gift is a metaphor. Conception does not come wrapped and ribboned. The word “gift” is a poetic expression of faith, of a way of ordering and understanding a world which is sometimes beyond ordinary understanding. Religious expressions frequently resort to metaphorical language because that is a way we can speak of wonderful and extraordinary things. 

There are a number of ways to speak of wonderful things.

The Buddha, sitting on his lotus flower, is also sometimes called a gift. Having achieved enlightenment, he was free from the cycle of birth and death and rebirth. He left our understanding of things behind, became something other than a man. And yet he remained among men, compassionately helping us with our suffering. Buddhists speak of a kind of giving that is perfect – dana paramita – a selfless giving that gains nothing for the giver. One teacher says you should practice giving so that you become like a fire that burns itself out, leaving no ash behind. Having no conception of a consciousness anything like this, we fall back upon poetic language. We can call it love, but we just don’t know. We are left with the wonder. We cannot be certain, because we are incapable of understanding the consciousness of the Buddha.

Would the dude in Indiana settle for a Buddhist conception of conceptions?

I think he would not. His is a religious conviction ossified in certainty. I have heard nothing of doubt from him or his supporters, nothing of the tolerance of alternative understandings. In this way he has hidden his metaphors from himself and largely done away with wonder and faith. Being certain is not believing. Being certain ends investigation and the desire to expand your understanding because the tale is already told. Being certain is also a sure way to extremism and intolerance.

Such certainty is perilously close to blasphemy to the extent that lays claim to a knowledge of the mind of God. “I know this is what is real, and I know it beyond all doubt.” Is a candidate for the US Senate from Indiana really so theologically gifted? Is anyone? How holy is the holy, anyway? I mean is anyone among us capable of certainty about God’s will? 

Generally speaking, strongly held religious beliefs are a very bad foundation for governmental policy.  Mourdock believes in his heart that the government has an interest in determining the legal and medical options available to the body of a woman who has been assaulted in the most demeaning, humiliating and depersonalizing way. And he believes this because of his theology.  That’s a crock. In theologies and biologies, alternatives exist. This is why we do not establish religion in America. This is why we do not predicate public policy and law upon religious conviction.

There are too many ways to understand our wonderful existences for us all to settle on the rock-hard certainties of some dude in Indiana who has learned not to doubt and so not to believe. We owe it to our conviction to that which is greater than us to be humble in our confidence.

Don’t get me started on the Popol Vuh.

This does not equal that, almost always

When I read this blog post, I was reminded (again) of something that happened in my youth. It was well after Joe McCarthy’s heyday, but still, it seems apropos.

When I was a freshman in college and Richard Nixon was President, I took a sociology course which sought to address some of the harsh political events and divisive opinions which were tearing the country apart. (The term ended with the killings at Kent State and – less remembered, perhaps – at Jackson State.) Over the term, a number of guest speakers offered their understanding of what was really going on locally and nationally in what seemed to me at the time to be a poisonous political climate.

One guest to the class was a local police official who told us the communists had infiltrated civil rights and anti-war groups to turn them against America. A fellow classmate – an upperclassman who was less inclined than I to grant that persons in position of authority were informed – asked the speaker “What is a communist?” I protested that everyone knew the answer, but he insisted that the official tell us over my objections. And lo, it turned out the man was ignorant: “They’re not like us; they don’t believe in freedom like we do; they’re…” His explanation petered out embarrassingly. He had no idea what he was talking about. He was almost totally innocent of the subject. And yet he had earlier produced a political thesis with the utmost confidence, a thesis which depended mightily on the presence of communists to justify both itself and his world.

While there were and are plenty of reasonable responses to the excesses of the anti-war movement of the late 60s and early 70s, lazily blaming them on a communist boogieman was patently stupid. It only served to shut down any reasoned examination of the opposition's motives.

This is of a piece with the “Obama is a Muslim” meme we live with today. Muslim is the new brand to freak out about here in America. Muslim is the new communist. What a Muslim is will not be pinned down in the current political discourse. It has become an unfalsifiable predicate. This is because being a Muslim is simply being other than me and mine. It's those other guys, who are not on my team. Islam exists for some only as a negative idea, the negation of their tribe which is engaged in some sort of Manichean struggle for “victory,” whatever that term may mean.

In this way, lazy thinking leads to violence.

Making a monster

Back in 1998, two big corporations merged. Citibank joined Travelers Insurance Group in the biggest merger of financial institutions in US history. The merger was most likely illegal. After the disastrous crash of 1929 and the coming of the Great Depression, Congress enacted a law (Glass-Steagall) forbidding banks from entering into brokerage businesses. Travelers owned Salomon Smith Barney, an investment bank and brokerage firm. So the merger brought together financial interests that had been separated by law since 1933 when Glass-Steagall was enacted.

No matter. By 1999, Glass-Steagall was repealed, and the new Citigroup was safe to bungle the economy in innovative ways. An informative timeline of these and related events can be found here.

Yesterday, in testimony before the Senate Banking, Housing and Urban Affairs Committee, John Reed, who was CEO of Citibank at the time of the merger, came out in favor of reinstalling at least some of the divisions between banks and brokerages he and Sandy Weill (Travelers CEO) effectively ignored and eventually got overturned 11 years ago. It wasn't the first time Reed had made noises to that effect: last fall he wrote a brief letter to the NY Times on the topic. But Reed seems to be on something a tear this week. He granted an interview with the NY Daily News yesterday as well:

Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said.

“I would compartmentalize the industry for the same reason you compartmentalize ships,” Reed said in the interview in his office on Park Avenue in New York. “If you have a leak, the leak doesn’t spread and sink the whole vessel. So generally speaking you’d have consumer banking separate from trading bonds and equity.”

It's an interesting, if too short, article. But for compression, there's nothing like this from his testimony before the Senate: “There’s no question that when we put Travelers and Citi together we created a monster.”

Reed's prepared statement to the committee is here.

Culture and cultivation

Okay, Alice Waters makes me tired. She’s domineering, precious and the product of much privilege – privilege she appears incapable of unlearning. In Thomas McNamee’s Alice Waters biography she is quoted regarding the end of her marriage to the effect that she knew her ex was unhappy and felt she made all the big decisions in their lives without his input, but she’d always thought they could work it out. (My paraphrase is probably harsher than her actual words, but the point struck me pretty hard.)

Yet I’m not ready to toss out the Waters' Edible Schoolyard idea like Caitlin Flanagan. And I can not equate gardening with field hand labor, as Flanagan does in her Atlantic article. There is much to learn from the experience of gardening, and it doesn’t necessarily conflict with educational achievements in math and language arts. Flanagan’s piece doesn’t mention that Waters is a trained Montessori teacher when she writes of “her decision in the 1990s to expand her horizons into the field of public-school education.” Regardless of one’s estimation of the Montessori method – I’m agnostic on the subject – Waters is not a dilettante in educational matters.

I know about Waters’ Montessori training because, like Flanagan, I read McNamee’s biography. Presumably Flanagan does, too. And yet she writes that Waters is “someone whose brilliant cookery and laudable goals may not be the best qualifications for designing academic curricula for the public schools.” Cherry pick facts much?

Much of Flanagan’s point revolves around the issue of class. After introducing us to a farm worker’s son who goes to school only to pick lettuce in the hot sun, she writes : “[Waters’] goal is that children might become ‘eco-gastronomes’ and discover ‘how food grows’—a lesson, if ever there was one, that our farm worker’s son might have learned at his father’s knee—leaving the Emerson and Euclid to the professionals over at the schoolhouse." That the farm worker’s son has knowledge on the topic is an interesting point to my mind, and not the least because his knowledge empowers him to own and teach the lesson. He is one sort of expert in the field of study. Leaving geometry and American Transcendentalism to others in favor of lettuce-picking, however, is surely not at issue because there is a garden in the schoolyard. The two are in no way incompatible.

I do not advocate accepting low academic achievement while teaching gardening in schools. That would be just plain stupid. But how much time do the children spend gardening in the project? Ninety minutes a week, according to Flanagan. And then they work in academic classrooms on related projects, which Flanagan believes interferes with mastering the basics of math, science and language arts. I don’t know if this is so, but if it is, it must be improved. Checking the Edible Schoolyard Web site showed me a couple of sample middle school math problems related to the garden and cooking: solving for x and y in a problem that asks the student to double a recipe, and building a model of a garden structure that has these interrelated polygons in these proportions. I’d be interested to see how they stack up against lessons in other 7th and 8th grade math curricula. If they are not up to snuff, then they should be improved. That they refer to the general topic of gardening and food is not itself reason to reject them, however.

I participated in establishing a community garden last year, and the community part of the enterprise amazed me. People who otherwise would never have met collaborated with one another. An artist became the friend of a plumber and a county commissioner. A Glen Beck fan worked along side Obama voters. A Church of the Nazarene preacher assisted non-believers and even a few Hindus make raised beds and plant vegetables. An agricultural science professor and a photographer spread mulch and composted manure.

All these diverse individuals came together because they were inspired by a common project. In one sense any common project – fire house, art gallery, or public restroom – would have done the trick. But that the task involved raising food added meaning to the work beyond a simple common purpose.

Food is important.

Beyond providing mere fuel, food is a part of the external world which has been selected according to custom and tradition, purified by fire and taken into our bodies. What we eat is subject to a symbolic, even spiritual dimension. Not for nothing do Christians profess communion though the symbolic act of eating and drinking. Not for nothing is Passover observed with a meal. Not for nothing is Ramadan a time of fasting. Not for nothing are there dietary laws associated with many great religions.

Alice Waters can be irritatingly foodie-righteous. Anthony Bourdain once compared her to the Khmer Rouge because of her intractability. But I believe she has a point when she asserts out that many of us have lost a meaningful sense of belonging to the earth because of the ways we approach food: industrialized, anonymous, processed beyond recognition. In this she is not alone. We are witnessing a cultural shift in America with respect to food and our relation to it. Alice Waters is only part of the change we are experiencing. Michael Pollan’s books on the subject echo and elaborate on many of her ideas. The connection between processed food and obesity has been researched and documented in physical anthropologist Richard Wrangham’s excellent book “Catching Fire: How Cooking Made us Human.” Michelle Obama’s White House Food Initiative is also part of our changing system of beliefs on the topic.

What I have called a cultural shift Flanagan terms “Food Hysteria.” I assume the difference boils down to duration as much as anything. If my cultural shift jumps the shark next year, it’s Flanagan’s “Hysteria.” It is entirely likely that I am wrong and that I'm merely a faddist, but I am glad we built our community garden. And I’d like to see an edible schoolyard in my little town.

Connecting the dots; counting the beans

One of the ugly things that precipitated the current financial mess involved large financial institutions holding assets that turned out to be a lot less valuable than they wanted them to be when they had to state what stuff they held was worth against what they were obliged to pay out. Specifically big finance found itself holding a lot of paper last year that should by rights be worth billions, but turned out to be illiquid in the skeptical market that followed the credit meltdown. So a bank with a buttload of collateralized mortgage obligations in its portfolio that they valued at a buttload of bucks had to let the world know every once and a while that their buttloads were basically half assed. Or worse. This made them less able to borrow money themselves and so they began to contract. Stating the market value of their holdings was integral to the current meltdown because a lot of their holdings were considerably less valuable than they'd thought. But the rules said they had to tell the truth.

I've blogged about this before -- over a year ago, in fact -- but some bad ideas just won't go away. Now the money boys want to put the Financial Accounting Standards Board (FASB), the folks charged with setting standards for honesty in accounting, under an oversight committee that will have leeway in calling for honesty in assessing the value of "distressed" holding during times of extraordinary financial conditions. There's to be normal honesty and another -- abnormal -- sort of honesty, when conditions mandate.

Last night at a gallery in Dallas, I spoke with a woman who, informed that the painting we were admiring was on sale for $95,000, asked why it cost so much. My answer was that was what the market would bear. It is worth what can reasonably be expected, given prior sales and the condition of the market so far as the artist and his dealer can assess it. Under those conditions, the painting was offered at that price.

Will it sell? Hell, I don't know. I own a six-year-old car. It is available for a price. If I set the price too high, it won't sell. Price it low enough, however, and I make a sale. Will that painting sell? It will if $95K is the right price.

The same is true for a CMO. Its value is what you can sell it for. A financial institution with illiquid assets on its books can not arbitrarily assess the value of its holdings apart from what they will sell for. What does it cost to buy it? Well, that's what it is worth. This is what is called mark-to-market accounting.

And yet it would appear there are arguments for another valuation system -- one based on the wishful thinking of bankers, not their much loved market. There is a move underfoot to move FASB into another realm, a realm devoted to loosening standards of valuation when "systemic risk" is abroad in the land and children are routinely devoured by wild things. The story is discussed here.

Meanwhile, check this:

(Image from Ritholtz)

The people of our nation are not working. This is because of a financial crisis. The crisis was caused by inadequately comprehending the values of assorted financial instruments and consequent recklessness in trading them.

Two thirds of all the economic activity in America is consumer spending. Jobless folks are way less likely to spend than their employed counterparts. And even employed folks who fear unemployment are less likely to buy stuff.

Loosen accounting rules? Sure. That's a great idea.