Friday, February 6, 2009

How do you solve a problem like depression?

How do you catch a cloud and pin it down?

Well, it’s worrying, isn’t it. A drop in USA imports of over 20%, signs of deflation in the world’s biggest economy. The global economic crisis rumbles on.

So far, I think the actions taken are okay. Maybe not optimal, but okay. First, prop up the financial system. Second, undertake a huge stimulus package. This is the formula in all the developed western economies.

I was very pleased to see the New Zealand government go a step further, and demand that government departments make cuts to allow spending on new programs. We don’t want to cut benefits or total government expenditure to balance the budget - that will lead to more recession, as it did under Ruth Richardson in 1991. We have to keep government spending up to avoid worsening the situation, but we do need to move expenditure from less productive to more productive areas.

So security, stimulus, and efficiency. So far so good. But it may not be enough. There is a vicious circle of negative sentiment - people and businesses get worried, spend less, the economy declines, unemployment worsens, and it feeds back in to another round of loss of confidence. How do we get out it?

Increasing commodity prices or export receipts will do it, but that is unlikely if the whole world is in the same funk.

Increasing domestic demand based on rising incomes or rising asset prices will do it, but that seems out of the question.

In the 1930s it took a global war to stimulate investment and employment. We don’t want that.

So here is my long-term solution to a possible depression. Innovation. That sounds like a platitude, I know, but there is more to it than that.

Consider, why will people open their wallets? They will do so for a new technology that offers really substantial benefits - like flatscreen TVs. Or they will do so as it helps to improve their financial situation over the longer term. That is, if they have an existing cost that they can reduce by investment - insulating the hot-water cylinder, buying a breadmaker. Sometimes we get new technologies that are so good, there is a wave of adoption or substitution. Air-conditioners in hot countries, fax machines in the late 1980s, mobile phones, gaming consoles. It is the substitution of a new technology for an old technology that really stimulates investment and expenditure.

And if things get really bad, that’s what we need. Substitution of new technologies for old, at a price that pays for itself in cost savings or lifestyle improvements. The relative advantage of the new technologies should make their purchase low risk, so they can break the cycle of negative sentiment.

Governments can foster this through science and education policies. Lower interest rates will also help by making investment less costly. But we also need to start to look hard for new technologies that will save us money or improve our lives. If we find them and commercialize them, the wave of adoption will give a big boost to the economy, just as flatscreen TVs, fax machines, and rotary milking sheds have.

Here are some suggestions for technologies or actions that will improve our lot, and promote investment. I think these are all kind of obvious, so would be plesed to see creative suggestions in comments.

1 - Converting from AC to DC power transmission lines to minimize transmission loss, and give greater flexibility in using major generation sources like Manapouri.

2 - Engaging in large-scale Nuclear power plant building to meet power needs, provide employment, stimulate science eduction and reduce carbon emissions.

3 - Promoting the development of electric cars, by government purchase of electric cars for local fleets, and local government parking concessions for electric cars.

4 - Encouraging development local off-grid power generation, by legislating the right to sell excess power back to the grid, and providing subsidies for purchase. (This is already done in Australia for solar power.)

5 - Getting super-fast broadband in place as a platform from which to develop and deliver internet services.

6 - Seeing new technologies come through like flexible computer displays, quantum computing, truly integrated computer/home entertainment systems, and true convergence of laptops/iPod/phones.

Other ideas, please? New technologies or ways of doing things that could lead to a wave of substitution? Technologies that, when interest rates are 3%, will pay for themselves for those who buy them? The phone lines are open …

Time to end Black History Month?

Should Black History Month itself fade into history? Many have long argued that African-American history should be incorporated into year-round education. Now, claims that Black History Month is outdated are gaining a new potency, as schools diversify their curricula and President Barack Obama's election opens a new chapter in the nation's racial journey.

"If Obama's election means anything, it means that African-American history IS American history and should be remembered and recognized every day of the year," says Stephen Donovan, a 41-year-old lawyer.

Ending "paternalistic" observances like Black History Month, Donovan believes, would lead to "not only a reduction in racism, but whites more ready and willing and able to celebrate our difference, enjoy our traditions, without feeling the stain of guilt that stifles frank dialogue and acceptance across cultures."

Yemesi Oyeniyi, a 40-year-old stay-at-home mother, says that Black History Month feels like it's only for blacks, "and therefore fails to educate the masses of non-blacks."

"I mean, now there is a Hispanic History Month and quite honestly I haven't paid more attention to the history of Spanish-speaking Americans any more now than I have in the past," she says. "I think it all should be taught collectively _ every month."

The black historian Carter G. Woodson founded Negro History Week in 1926, seeking to build self-worth in an oppressed people, preserve a marginalized subject, and prove to a nation steeped in racism that children of Africa played a crucial role in modern civilization.

Woodson chose February because it contained the birthdays of Abraham Lincoln and Frederick Douglass (which belies long-standing jokes about Black History Month being relegated to the shortest month of the year). Woodson's organization, now called the Association for the Study of African American Life and History (ASALH), expanded the observance to a full month in 1976.

It has now become a fixture in American education and culture _ complete with the requisite commercialism _ even as the shift in labels from Negro to black to African-American indicates the evolution of attitudes meant to be shaped by the event.

Obama released an official proclamation on Feb. 2 lauding "National African American History Month" and calling upon "public officials, educators, librarians, and all the people of the United States to observe this month with appropriate ceremonies, activities, and programs that raise awareness and appreciation of African American history."

Daryl Scott, chairman of the history department at Howard University and vice president of programming for ASALH, says Black History Month is still needed to solidify and build upon America's racial gains.

"To know about the people who make up society is to make a better society," he says. "A multiracial, multiethnic society has to work at its relationships, just like you have to work at your marriage."

"I don't see it going away," said Spencer Crew, a history professor at George Mason University, adding that a diverse year-round history curriculum can still be augmented in depth during Black History Month.

"There's a Women's History Month," Crew said. "No one would argue that we don't need to be reminded of women who have done things that are important."

Racial attitudes can also vary greatly from person to person and place to place.

Lee Eric Smith, the first black editor of the University of Mississippi student newspaper, isn't ready to get rid of Black History Month, "because, to start quoting cliches, those who don't know their history are doomed to repeat it."

"If Mississippi ranks last in more categories than I want to talk about, at the same time, so many issues we're facing are rooted in not understanding how these problems came to be in the first place," says Smith, a native Mississippian.

Mississippi memories point to a different America where, in response to institutionalized racism, concepts like Black Power and the Afrocentric holiday of Kwanzaa were created. As that racist reality faded, so did many of those creations.

Obama's triumph, to some, means that we can all put other assumptions _ like the need for Black History Month _ behind us.

"I propose that, for the first time in American history, this country has reached a point where we are can stop celebrating separately, stop learning separately, stop being American separately," Detroit Free Press columnist Rochelle Riley wrote in a Feb. 1 column calling for an end to Black History Month.

At Daniel Warren Elementary in Mamaroneck, N.Y., kindergarten teacher Jane Schumer has dedicated many hours this year to the story of Wangari Maathai, a Kenyan activist who won the Nobel Peace Prize in 2004 for leading a movement that planted millions of trees in Africa.

Schumer connected Maathai's story to Obama, who planted a tree in her program and whose father was from Kenya. She connected Maathai to Martin Luther King Jr., who like Maathai was jailed for fighting injustice.

Schumer doesn't have any special black history plans for February.

"It can't be contrived," says Schumer. "It's a way of thinking, a way of life ... to me, the whole year has built up to this month ... the emphasis we have is what people would want to accomplish with Black History Month."

Steve O'Rourke, who has a kindergartner at Warren Elementary, says his son wants to ask Maathai, "You and Dr. Martin Luther King Jr. both went to jail for doing the right thing. What did it feel like to be in jail?"

"Whenever we denote something as belonging in a certain month, it becomes tempting to say it belongs in that month alone ... ," says O'Rourke. "Ideally I would like us to have a common rather than compartmentalized history."

New York is among several states that have passed laws mandating or encouraging teachers to broaden their history classes. New Jersey was the first to do so, in 2002, after Assemblyman Bill Payne conceived and wrote the Amistad Commission bill, named after the Africans who took over their slave ship, ended up in Connecticut and won freedom in court.

Several years later, many New Jersey teachers were unaware that the law existed, and many who wanted to comply did not have the resources or knowledge to diversify their lessons, Payne says.

Next fall, New Jersey's Amistad Commission will deploy a new set of Internet-based lesson plans for teachers to use statewide.

"I'm concerned about black and white kids' education," says Payne, who is no longer in the legislature and travels the country lecturing about his Amistad Commission. "This is not a black history course. I'm taking about U.S. history. I'm an American."

Yet even Payne thinks that Black History Month should remain, because "we should not give up our heritage."

And it does seem unlikely that it will disappear anytime soon.

"Yes, we do need it for the time being, if only because we're in uncharted territory," says Smith, the Mississippi native.

"We've just experienced a seismic shift in the identity of America," he says, referring to Obama's election. "We're in the process of transforming into something, we don't know exactly what that is yet. Until we have a better grasp on that, it's hard to understand how we should teach history."

Treasury Overpaid for Bank Assets in Bailout, Oversight Panel Says

The Bush administration received assets that were worth $78 billion less than the amount it invested as part of the massive infusion of capital into the country's banks, congressional investigators have found.

The investigators concluded that the Treasury under the federal bailout had invested $254 billion into companies but the preferred stock it got in return had a market value at the time of only $176 billion, or 69 percent of what the government paid, according to a congressional oversight panel report scheduled to be released today.

Elizabeth Warren, the chairwoman of the panel, said former Treasury secretary Henry M. Paulson Jr. had promised that the government would buy the assets at their market value and that it was alarming that he didn't do so. "At various points, Treasury has articulated policy objectives which could result in a program involved paying substantially more for investments than they appear to have been worth at the time of the transaction," she said in written testimony submitted to the Senate Banking Committee yesterday. "The American people want to know what's going on and they deserve answers.

The panel's findings do not imply that the government has lost money on the investment because companies are still required to repay the amount invested plus interest. The lower market value determined by the panel reflects the risk that companies will default on those obligations. The panel found that a private investor would have charged significantly more to invest the same amount in the companies because of the greater risk and that the government did not charge this premium.

Lawmakers were furious about the panel's findings and said they provided an example of incompetence and waste in the government's $700 billion bailout program.

"Isn't that a terrible way to look after the taxpayers' money and to make purchases anywhere?" Sen. Richard C. Shelby (R-Ala.), ranking member on the Senate Banking Committee, said at a hearing on oversight of the bailout.

Warren replied, "Senator, Treasury simply did not do what it said it was doing."

"In other words, they misled the Congress, did they not?" said a visibly flustered Shelby.

Michele A. Davis, a spokeswoman for Paulson, could not be reached for comment.

Paulson repeatedly said in announcing details of the bailout that the government would not lose money because of the plan and might actually profit from it. "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything," Paulson said in October.

Obama administration officials did not echo the congressional concerns about Warren's findings, saying that the goal of the investments was to calm the economy. These officials noted that the purchases had already yielded $271 million in dividend payments, though they added that they would reconsider how valuations are done for the next group of bailout purchases. "Treasury's efforts since the fall prevented a systemwide collapse, but more needs to be done to stabilize the financial sector, increase lending and protect taxpayer dollars," Treasury spokesman Isaac Baker said.

According to the analysis by the oversight panel, the Treasury invested $40 billion in American International Group, the insurance giant, and received shares of equal face value but worth only $14.8 billion, or 37 percent of the price it paid. It said the real value of the $10 billion in Morgan Stanley that the government purchased was only $5.8 billion, or 58 percent of what it spent.

The study was conducted for the panel by the international valuation firm Duff & Phelps, which analyzed the 10 largest bailout investments and then extrapolated. For the eight banks it studied that were relatively healthy, the Treasury received assets worth $78 for every $100 it invested. In the two transactions for the riskier firms, the government received preferred shares worth $41 for every $100 it invested.

Those findings follow a five-page report by the Congressional Budget Office last month that also determined the government spent more on the assets than they were worth, but that study was far less detailed and estimated the total discrepancy was $64 billion.

Lawmakers and outside analysts have previously criticized the government for purchasing the assets on terms that were far less profitable than those procured by private investors. The congressional oversight panel's analysis provided an example in which one private investor received $123 worth of securities for every $100 invested.

Warren said a major part of the reason for the discrepancy between what the Treasury paid and the value of the assets that it received was a uniform pricing scheme used by the government, which did not account for the relative health of each institution included in the bailout.

"The best way I can explain it would be is if we had 10 paintings in front of us and I announced that I was going to pay a million for each painting. And one was a Picasso, and, you know, one was a Rembrandt and the other seven were not," she said. "They did not price for risk. That's what markets do."

Wall Street CEOs, Investment Bankers Charged Prostitutes on Corporate Cards

Investment bankers racked up $100,000s in prostitution charges
Visa, Mastercard or American Express? Or maybe a credit card from JP Morgan Chase?

Wall Street CEOs, lawyers, bankers and media executives chalked up thousands of dollars in prostitution charges on their corporate credit cards -- swiping their cards for $2,000 an hour prostitutes, according to a New York madam who plead guilty last year.

Kristin Davis, the madam in question, went public to ABC News this week; ABC will be broadcasting her interview Friday at 10 pm. Davis says she has a list of 9,800 clients, many of whom she says New York prosecutors deliberately avoided when taking her case, even though she offered them her annotated client list.

In what's sure to create a media firestorm parallel to that of when a Washington, DC madam announced that she was publishing her client list (which included at least one senator), Davis' comments come at a time where incredible ire is already focused on Wall Street and banking executives. The pressure for her to release the list will certainly be immense.

Attorney General Eric Holder's message to the Department of Justice

After being sworn in on Tuesday, February 3rd, 2009, Eric Holder became the first African American Attorney General in the history of the United States. In a brief video address to the employees of the Department of Justice, he promises the beginning of a new era.

Abortion or Murder? Clinic Reportedly Delivers Live Baby By Mistake and Then Throws Her Into the Trash

A horrific case has emerged in Florida that may unleash a new round of legislative demands on restrictions of abortion clinics, a continual point of contention in the state. According to media reports, Sycloria Williams, 18, went to an abortion clinic outside of Miami and paid $1200 for an abortion. However, the 23-week baby was reportedly delivered live and simply thrown into a trash bag. The case has caused attention on the background and questionable skills of Dr. Pierre Jean-Jacque Renelique. The case has both challenging civil and criminal questions.

The problems began when Williams was giving drugs to dilate her cervix but Renelique arrived late. Before he did, Williams delivered a live baby girl.

Witnesses say that an unlicensed clinic owner cut the unbilical cord and threw out the baby in the trash. Williams said that Belkis Gonzalez actually knocked the baby to the floor from a stool and caused massive bleeding before it was scooped up and thrown into a trash bag.

Williams is now suing, which raises a novel wrongful death claim. Even though Williams did not want the baby to live, she would still have a claim as the mother when it lived by accident. Nevertheless, there seems a powerful case for negligent infliction of emotional distress, negligence, and other claims. Since the baby was live, there are questions of abuse and even murder.

In the meantime, Renelique’s license is being review — as is his history of malpractice. Renelique received his medical training at the State University of Haiti. In 1991, he completed a four-year residency in obstetrics and gynecology at Interfaith Medical Center in New York.

There have been no criminal charges filed, though they are reportedly under consideration.

Both pro-choice and pro-life advocates have expressed horror at the account. However, it is likely to be a case cited by pro-life advocates for decades to come.

Democrats Say Stimulus Plan Progressing

The Democratic leader says lawmakers have made progress on an economic recovery package and the Senate could vote as early as Friday afternoon. (Feb. 6)

Obama Creates Economic Advisory Board

President Obama has created an economic advisory board to help steer the economy out of a tailspin. The board is led by former Fed chair Paul Volcker. (Feb. 6)

The President, Congress and the Stimulus Legislation

Every day that the Congress plays around with the President's stimulus package is a day that America's confidence in government drops. The gall of the Republican Party to hold up this legislation with amendments and counter legislation and idiot calls for more disasterous tax cuts is almost to much to stomach. Their Republican president left this country totally in ruin. We are close to a Depression, have two wars to resolve, an environment in distress and civil rights in jeopardy. They had eight years to solve America's problems and on every count left us in shambles. They have lost the moral right to lead.

Without further delay, it is essential that we pass the stimulus legislation almost intact. Changing the legislation to bring it closer to the already proven failure of the Bush taxes cuts is just pure nonsense. The olive branch was extended to the minority party; they insisted on amending the bill, making it less effective. Then not one of them supported it.

For President Obama, there is an important lesson in this battle. We must lead from vision and not from fear. He innately knows this and yet somehow in this nasty process, he has forgotten that fact. This legislation should not only be about saving our collective economic asses but also about "Making America Great Again!" Americans want to believe that all this sacrifice will lead to a better world not only for themselves but also for the next generation.

That is why I was somewhat saddened not to see more tangible and modern infrastructure projects in the legislation such as a high speed national rail system. Not a big fan of tax cuts being the answer. The best tax policy is to create jobs and to get us out of debt. One time relief is going to be spent paying down rent or credit cards and not creating a powerful America. We need to build for the 21st Century in an environmentally safe way. That creates jobs.

There is enough in the legislation right now about modernizing our healthcare system, rebuilding our schools, packages for alternative energy and making safe our existing infrastructure to create a vision. We need to hear more about it. Much to his credit, the President is working day and night to pass this critical legislation. There really, at this point, is no other alternative.

We must support him.

Pakistan frees nuke scientist who helped Iran, Libya, and North Korea with nuclear technology

A song for Pakistan, and a few others

Khan confessed in 2004 to being involved in supplying nuclear weapons technology to Iran, Libya and North Korea. This is the dawning of the Age of Obama: note that Khan emphasizes that he doesn't care what Bush or Cheney thinks about his being freed. The idea that Obama might object doesn't even seem to enter his mind. And note his pointed response to the possibility that the international community might object to his being freed: "Are they happy with our God? Are they happy with our Prophet?"

"Pakistan nuclear scientist 'free,'" from the BBC, February 6 (thanks to all who sent this in):

A court in Pakistan has freed disgraced nuclear scientist Abdul Qadeer Khan from house arrest.
Dr Khan, who has been under tight restrictions since 2004, can now leave home and receive visitors.

Dr Khan welcomed the ruling and said he was not bothered what the international community thought of his release.

Dr Khan admitted transferring nuclear secrets to other countries in 2004 but was later pardoned by former Pakistani President Pervez Musharraf.

The US has repeatedly said it wants to question Dr Khan but Pakistan has always refused access....

When asked about what the international community would think, he said: "Let them talk. Are they happy with our God? Are they happy with our Prophet? Are they happy with our leaders? Never, so why should we bother what they say about us?"

He added: "I would be more worried about what you (Pakistani journalists) say about me, not what Bush says or what Dick Cheney says. I don't damn care."...

In January, the US imposed sanctions on people and companies linked to Dr Khan.

Last July, Dr Khan told the media that Pakistan had transported uranium enrichment equipment to North Korea in 2000 with the full knowledge of the country's army, then headed by Gen Musharraf.

The former leader has repeatedly stated that no-one apart from Dr Khan had any knowledge of the transportation of nuclear technology....

The Other Unemployment Rate: 13.9%

The Labor Department’s official unemployment rate hit 7.6% in January, and its jump from 4.9% a year earlier marks the largest annual increase in the unemployment rate since 1975.

But the government’s broader measure of unemployment hit a more stunning level: 13.9%, up from 13.5% in December.

The figure, which largely accounts for people who have stopped looking for work or can’t find full-time jobs, is the highest since the Labor Department started the data series in 1994. It’s just shy of a discontinued and even broader measure that hit 15% in late 1982, when the official unemployment rate was 10.8%. (That data series goes back to the 1970s.)

How does the government calculate two unemployment rates? The widely followed figure is based on people who do not have a job, are available for work and have actively looked for work in the prior four weeks. The official definition of “actively looking for work” includes contacting an employer, employment agency, job center or friends; sending out resumes or filling out applications; and answering or placing ads, among other things.

The 13.9% unemployment rate — known as the “U-6″ for its Bureau of Labor Statistics classification — includes everyone in the official unemployment rate plus “marginally attached workers,” who are neither working nor looking for work but say they want a job and have looked for work recently, and people who are employed part-time for economic reasons — they want and are available for full-time work but took a part-time schedule because that’s all they could get.

Because it’s a relatively young data series, the U-6 doesn’t get much attention beyond researchers. But it may deserve more focus over the coming year as the labor market continues its purge. Many employers are still focused on cutting jobs quickly to get through this downturn, pushing job-seekers aside for an extended period. After long searches — we’re in the fifteenth month of this recession — some job hunters are likely to give up and wait out the recession. Without the broader unemployment rate, many of them wouldn’t be counted. –Sudeep Reddy

Google’s Book Project Goes Mobile - Will iPhone Kill the Kindle?

Google’s Book Search Project launched mobile editions of its 1.5 million book virtual library Thursday, immediately turning iPhone and iPod Touch into compelling options for those looking for a good eReader.

Of course handy free apps for Apple’s mobile devices, such as Stanza and eReader have already established iPhone and iPod Touch as viable competitors to Amazon’s pricy Kindle and even more costly next-gen readers such as those from iRex and Plastic Logic.

Even those apps, however, are predicated on the idea of consumers buying “books” to read on their mobile devices, and offer access to something like 50 - 60 thousand titles. Google has opened the doors to a library with over a million and a half public domain books, a catalogue that’s growing as fast as Google’s scanners can scan, and the reading is free.