Pro Commerce

Firing people

By now the whole issue of Mayor and Governor Sarah Palin firing people seems to have disappeared from the news.  So I am comfortable talking about it.

The whole subject is one where the media has failed in its job.  When you see the results of a political poll you can usually get the cautionary data on the size of the poll sample and the definition of the sample (registered voters, likely voters).  I got that media disclosure movement started, thank you.

But there is a giant gap in disclosure about firing people.  If you do the firing, YOU CAN'T COMMENT  ON THE REASONS YOU FIRED THE SON-OF-A-BITCH because you can be sued for disclosing personnel information.

Why doesn't the media include such a disclosure when they are going gaga about someone being fired? The person or entity doing the firing can't rebut the nonsense spouted out by the person who was fired. 

Of course I understand the reason the media is so ill informed on this issue: the main press media are built on management structures from the 19th Century ...long before employment law existed.

Obvious

In case the obvious passed you by....this is the first really significant financial meltdown to ever occur during a national presidential campaign.  Just weeks before the end. No one can predict the effect and certainly the effect will be a surprise.

I expect a certain amount of individual craziness to be associated with the current few weeks of financial chaos, global conflict and legislative deadlock. 

We in San Francisco saw our mayor (George Moscone) and a supervisor (Harvey Milk) murdered by another supervisor (Dan White) after a week of similar chaos.

The Jim Jones' People's Temple in Guyana began to unfold in the local press on Monday the 20th, November 1978. The press was reporting the deaths of hundreds of families. As the week wore on, the number of dead climbed every day, the number finally climbed to over 900 dead by suicide, many from San Francisco. 

After exactly a week of a climbing death toll reported, on the following Monday morning, the 27th, Dan White carried out his two murders and walked around City Hall looking for a third person to shoot (Carol Silver). 

I connect the social chaos and the individual craziness.

Reaction to the bailout

I'm beginning to wonder if the financial markets are responding to an underlying issue unrelated to bank liquidity.

Could the real issue that started the financial decline in August of 2007 and which has continued unabated since then, globally, be more related to the emerging Iranian nuclear threat than anything about the declining domestic American residential housing market?

We are seeing the Arab countries, North Korea and Venezuela announcing their own nuclear plans. That signals an impending disaster for the commercial world and for the last 150 years of humanity.

Fuel cell: problem of time

Fuel cells appear to be an important answer to electric power generation.  Why aren't they more important?

I had a client in the mid-1990s who had a unique fuel cell system. In part of my work on the business related to his fuel cell I spent time in Japan investigating the matter.  The story I learned was that nobody could effectively test the lifespan of a fuel cell.  Fuel cells had a history of failing at the 100,000 hour (11.5 years of continuous operation).

On that same trip in Tokyo I went to visit an operating utility company fuel cell in an outlying suburb.  It was early in the morning and I couldn't find the place so I took a taxi.  When I arrived at 9AM I was welcomed by a large group, a dozen people and offered tea.  After tea the gang took me to the 3rd sub-basement to see the fuel cell power generator.  It was quiet and no dials seemed to be moving.  I asked what was wrong.

The answer was that I should know.  They thought I was the repair engineer who had come to fix the fuel cell.  I asked which dial showed when it had failed.  The dial they pointed to was at 100,000 hours.

I exited gracefully and wished them well.

TV tower had perverse outcome

On the top of Twin Peaks in San Francisco is a giant TV tower.

When the tower was proposed in the mid 1960's I was one of only two people to testify against it.  The other person testified that the tower might fall over and hurt people.  The architects showed that there were no houses within the falling radius.

My testimony was that the tower might be a hazard to small planes (I already had my private pilots license) because it would just appear as a few red lights in the air. 

Perverse consequence: what had previously been an elegant, delicate looking structure was given an outside sheath of metal and now looks more like a robot Godzilla.

Electronically controlled sails

I was out in the San Francisco Bay today when the Maltese Falcon came under the Golden Gate Bridge.

The crowd of boats on the Bay was the most I have ever seen from the water.  It was fairly crowded and sailing past each other was a challenge in a 25 knot wind.

The ship is owned by Tom Perkins a long time venture capital investor who, these days, is promoting green tech.

The ship has nice streamlined lines and only slightly resembles a square rigger.  The elongated protruding cabin looks like a standard yacht design. It is for sale for $170 million.

Perkins is described in a book on his ship: Mines Bigger.  Which relates to my reaction. This ship is a politically correct male erection of no historic or economic consequence.

From Expos to Olympics

In the early 19th Century agriculture began to change so fast and so many new products and technologies were being introduced that farmers need one place to see them all.  That was the origin of the Exposition.

Over that century expos expanded to include a wide range of technologies including architecture and home products.  By the end of the 19th Century we had national expos that displayed the technology of entire nations and we had religious expos that introduced new religions.  Buddhism, Hinduism and Bahai came to America with the great religious expo of 1893. 

By the end of the 19th Century the word fair and expo became interchangeable.

Have you noticed that by the 1960's the fairs and expos were becoming quite irrelevant and boring.  Merely show cases for national competition.

My key insight is that today, fairs and expos, which had gone from technology demonstrations to national technology competitions have now migrated to Olympics.  Olympics are the new national competitive scenes.

Mortgages: looking forward

(Apologies in advance for the length of this blog.  It is still short compared to most writing on this subject.)

 The history of the American economy has largely been a history of American finance.

I'm going to write about the immediate future and what we should consider for mortgage financing. First a reminder.

From its 13 state inception, the United States have suffered inflation and deflation, panics and depressions at very short intervals, usually every five years until after the Civil War.  After the Civil War, the intervals between the financial extremes became slightly longer as individual bank notes (currency) was replaced by Federally regulated bank notes.

 Bank panics, inducing other economic consequences in a largely scattered agrarian society, were only slightly moderated by the creation of the Federal Reserve Bank in 1913. The Federal Reserve Bank moderated the bank panics but the core banking system was not improved until the early 1930's when the United States went off the international gold standard, bank deposits were insured and banks were excluded from most non-banking business.

Still the Federal Reserve only gained control of the monetary system in 1948 when the Open Market capacity was created. Thirty five years after its founding. Since that time business cycles have been moderate and financial panics rare. Inflation has gotten out of control once.

 The United States government learns slowly how to moderate and control the financial system.

In the past twenty years we have had two mortgage induced financial panics.  The first one in 1984-87 was corrected by having the federal government buy-up and then eliminate the specialized mortgage banks (called Savings & Loans).

The current mortgage induced financial panic (second one) indicates that more corrective work needs to be done.

My analysis of this problem has been tempered by examining several other nations, particularly Japan's mortgage meltdown in 1991.

 The core problem is now associated with mortgages created in the residential building field.  The commercial building field (as opposed to the residential) has visible cyclic signs that seem to allow commercial builders  and commercial financiers to understand the cycles. (This was not the case in 1981 when S & Ls were first allowed to enter the commercial mortgage field.)

Residential building is subject to cycles that are not understood or anticipated by either the builders involved nor the financiers. There are long cycles, for which the larger economy seems able to respond.  There are short cycles which are now the problem.  These short cycles are 2 to 5 years long.  Because home building must start as much as three years before the final sale of the home, significant market errors occur. In 2007-08 the market was overbuilt by hundreds of thousands of homes.

With market demand currently fluctuating around an average of 1.3 million new residential units by as much as  half a million new homes...building three years in advance can generate a number of homes that is widely off the mark.  The market can easily overbuild, and has, with a consequent decline in home prices that rapidly spreads across the financial world.

Part of the reason for the rapid spread of the mortgage panic is because mortgages are based on long investment periods (20-30 years) that create a volatile multiplier in the current price of the mortgage.

 There is a solution to overbuilding in the housing market.  The politically impossible solution is to limit the number of building permits.  However, because the Federal Government is actively involved in the reselling and insuring mortgages, a politically viable solution is to limit the number of government backed mortgages.

How could a policy of limited numbers of government backed mortgages be done?

The approximate number of annual residential mortgages that are needed nationally can be generated from a straight line projection of the number of residential units built over the previous ten years.  This number (say 1.3 million) can be updated by an agency such as the Census Bureau.  The national number can be allocated to the individual states based on the same type of average straight line data derived from state residential housing growth.  These numbers can be generated and published annually. 

That is the solution. Annual national allocation of government mortgages, distributed among the states.

While this solution has many flaws it has the benefit of allowing the free market for home building and finance to operate outside the government mortgage market.  Since the free market will be inherently the smallest and most risky it will consequently be the most transparent.

Summary.  When the new Federal mortgage institution is created over the next six months it should include a provision to functionally control the annual expansion of the mortgage market.  By doing this, we can remove an inherently volatile element in the financial world and avoid the expansion of that financial volatility into in our economic world.

Samizdat society

In the USSR and the conquered East European societies no one trusted the official press.  The alternative sources of information, books, manuscripts, copies of anything were called samizdat, the Russian word самиздат.

We now have a samizdat society in America.  Virtually nobody of any political persuasion trusts the official media. No need to cite survey data, the numbers of people who trust the media to be neutral in reporting on national and international issues is less than 20% and less than 12% have 'respect for journalism'.

Thus America has become a samizdat society. 

So what are our samizdat sources and what is the implication?

Our samizdat is always personally constructed from among the nearly infinite variety we have available.  To borrow from my last blog: "for some that will be TV and blogs, for others that will be newspapers and Fox TV, for still others that will be NPR and the Huffington Post."

You, my wonderful blog reader, are probably combining me with the Wall Street Journal, the Commentary blog, Weekly Standard magazine and the Jerusalem Post.

The consequence of being in an American samizdat society is that we are unreasonably opinionated and closed minded.

That is because we have multiple sources of information that appear independent but are in fact redundant.  The consequence is we believe we are dealing with authoritative information because we get it from multiple sources.

Sorry...we are getting more certain that we are right, others are wrong and the media is certainly wrong.

Inconvenient wind

Yesterday NASA released a report that says the solar wind has reached its lowest point in 50 years. Actually, the lowest point since satellites were available to measure it.  The inconvenient news is that the pressure of the solar wind has dropped 20% between the mid-1990s and the most recent four years. (Drop in temperature and density).

That correlates with the flat-to-declining global temperature in the same period. Could variations in the sun be more important to the earth's atmosphere than human industrialization? Are we really unimportant on a planetary scale?  Read the last sentence of the NASA report. "The potential for discovery is breathtaking."

The global warming story is wearing thin with each new bit of news.

I think the story of the boy who cried wolf wolf too many times (the townspeople stopped listening to him) needs an addendum.  After the townspeople stopped listening he started yelling about cougar cougar. This is the second big wolf wolf cry after the global population explosion, by the same people.

Nixon on press coverage

I worked as an advance man for Richard Nixon when he was running for governor of California in 1962.  Since this is election season I thought I'd pass on one of Nixon's interesting observations from that earlier era about campaigning.

Nixon said that 'it isn't news until it is duplicated in both print and on TV.'  Nixon crafted his statements to make sure there was a duplicate version available for both media.

Today, I would say the same rule still applies, but we have multiple media each with different audiences.  The target market therefore must see duplicate news stories on two media.  For some that will be TV and blogs, for others that will be newspapers and Fox TV, for still others that will be NPR and the Huffington Post.

Misogyny trumps racism?

  I woke up this morning shaking. I woke up to a nightmare.  I woke up realizing there is a national misogynist movement in America questioning whether my family and the women I know are good humans or bad humans.  Specifically the question is whether my mother, my ex-wife and my two daughters and all the other strong women we live with are bad humans because they have worked while raising children?

This national misogyny movement may seem to some as just a political attack on one woman VP candidate because she is a Republican and has conservative values. But its because of the combination that she is a working mother who has conservative values? 

I've read these public attacks on Governor Palin and the reason for the attacks is disturbing. I am swamped by emails attacking Governor Palin for being a mother and being a governor at the same time and having conservative values.  It is clear to me that only the part about being a mother is what singles her out for attack. 

 There are dozens of conservative governors who are not mothers and don't get such venom directed at them. And there are countless public women who were working mothers and are redeemed from misogyny by being Liberals.

The only redemption from misogyny for working mothers is to be a Liberal.  Proclaim your Liberalness and you can do the evil thing: be a working mother. You can be Nancy Pelosi, Madonna or Katie Couric.

I have compiled an abbreviated list of published attacks on Governor Palin by women who have additionally fabricated many outright lies about the female governor and had their attacks aired in the New York Times, Salon, The New Republic, CBS, AP and many other media outlets.

Every one of these attacks is founded on the idea that Governor Palin is a strong woman who works and raises her children and is a conservative.   I am 70 years old and I have never seen such anger directed at any presidential candidate (including Richard Nixon and Ronald Reagan) and certainly never directed at a Vice Presidential candidate (definitely not Geraldine Ferraro who was a working mother, but gained redemption from misogyny by being a Liberal).

Governor Palin is a strong, competent, working mother, like my mother, my ex-wife and my daughters.  Now I am wondering, was my mother, is my ex-wife and are my two daughters good humans or bad humans depending on their politics? They were all working mothers.

I just want to say to the memory of my mother...thank you for what you did and how well you did it, I'm grateful regardless of your politics.  Thank you to my ex-wife Helen, you are a brilliant, wonderful and successful mother, regardless of your politics and to my two daughters: you have both done an extraordinary job of raising your children, my grandchildren, and I love you for your magnificence, regardless of your politics. The ferocious attacks on conservative women who have done what you have done disgust me.

 

Below is a list of prominent women who have viciously attacked Governor Palin with a few links to their shocking denunciations.

Eve Ensler, Cintra Wilson, Mary Mitchell, Jane Mitchell, Deborah Haffner, Bonnie Fuller, Michelle Cottle, Judith Warner, Heather Mallick, Christine Pelosi, Wendy Doniger, Eleanor Smeal, Gloria Steinem 

Are the women in your live who have been working mothers good or bad?  Should the answer depend on whether they are conservative or liberal?

Misogyny trumps racism. I have not heard a single racist attack published except for an anti-white rant by Jeremiah Wright.

Expert needed

Are you an expert witness on solar energy?  I need to find an expert witness who can evaluate a large scale solar production facility to estimate the cost of electricity that can be produced.

An expert witness is someone who receives that designation from a court or a commission after surviving the challenges by the opposition lawyers.  It requires either a professional position in the field, an academic position, or an expertise supported by publications.

If you are already an expert witness in the field of solar energy, you need to know that I need the rarest of rare experts, one who will testify on behalf of poor people.  Poor people are the ones who will bear the extra costs of solar power.  As an expert you will be opposing the giant utilities who usually pay the bill for experts and are mighty vengeful.

I've been an expert witness on behalf of poor minorities for 20 years.  I can do it  because I can support myself without income from giant corporations.  Can you do that?  Please email me.

Some of it is good news

The current Federal loan to AIG has a silver lining.

The insurance industry is currently regulated by the states.  Since I testify in California State Insurance Commission hearings I can assure you that rational business interests do not always prevail.

I believe the Federal loan to AIG has effectively nationalized the insurance industry.  It may well be possible for an insurance customer who gets a different rate or a different contract in multiple states to sue for damages in a Federal Court, arguing that the Federal intervention in the insurance business means Federal laws takes precedence over state law.

This would be a good thing.  All insurance rates, including health and medical coverage have a good chance of going down if competition is national rather than state by state.

Pop quiz for Sunday morning

Name this church.
*This church is strongly and publicly opposed to abortion.
*This church is strongly opposed to homosexuality and gay marriage.
*One candidate for Vice President of the U.S. belongs to this church.
*This church has a membership that is 80% from one political party. The same party as the VP candidate.

Now for the clues that make it obvious.
*This is the single largest church in America. More than twenty times larger than the largest Evangelical church.
*This church is opposed to sex education teaching and condoms even to prevent AIDs.
*This church publicly campaigns in opposition to gays adopting children.
*This church is opposed to contraception.
*The Speaker of the House belongs to this church and, along with the VP candidate from the same party, is going to this church this morning.

*Yes, this is a photo of an ordination ceremony in this church. That is not blood, its a carpet.

OK what's going on in finance?

I get this question so often I have to answer it.

Every thirty years the financial markets have a day of reckoning and get new regulations.  Then the financial institutions set off afresh to invent new financial instruments that are unregulated.

We have four particularly dangerous instruments (and one accounting practice) that have been invented in the past 30 years that have come into wide usage. And failed.

1. Sub-prime mortgages bought by government agencies Freddie and Fannie and sold as bonds.  The bonds, built up around these mortgages, are government guaranteed..in effect, as was proven last weekend when the government took over the two companies.  Terrible idea to induce profit making companies to do anything guaranteed by the government. The same still remains true for student loans.

2. All sorts of bonds backed by mortgages have been cut into pieces with different risks (called tranches).  These bonds are called CMO's or generally CDO's.  Collateralized XXX Obligations.  You can buy one with low risk with a 3% yield or another with lots of sub-prime in it for 9% yield.  Bad idea if the risk is not properly calculated to include mortgages coming out of Las Vegas and Riverside where the whole market collapsed.

3. Derivatives, also called leveraged options, are an instrument invented by mathematicians (mathematicians on Wall Street are called quants) to guarantee safe investments.  They used high level math to offset two different risk groups against each other.  The guaranteed safety of the offsetting options allow the owner to borrow (leverage) the 'safe bet.'  Bad idea unless you deeply understand the math, which always included a risk component. Long Term Capital found out about the tiny but perverse risk element when it went under because of the fall of the Russian ruble. Banks and other lenders got stuck with many of these leveraged options because the banks provided the leverage.

4. Hedgefunds.  These are funds that are unregulated because they were supposedly such high risk investments that they would only be favored by the very rich. Available on to the very rich so he U.S. government didn't care who got burned by bad investments in derivatives and other exotica.  Bad idea, hedgefunds invested in all of the above new financial instruments...consequence, when the investments went bad the rich investors demanded their money back and, surprise, the banks were left holding the bag.

5. Changes in accounting, intended to make assets on the books more transparent, have had a perverse effect as I've point out before.  When a mortgage loan misses three payments it is totally charge-off and charged against earnings or a reserve is taken from other assets to offset the loan. This wildly exaggerates a slow down into a massive disaster for the company holding the mortgage.

All this because bad mortgages have risen, so far, from .5% of all mortgages to 1.3%. One hell of a lot of leverage has been piled on top of this hand-full of mortgages.

Cool it

The currently proposed mortgage bailout is smaller than the S & L bailout of 1986 which was authorized at $500 billion.  Notice it is again caused by home loans. Also note, last time was a bailout of S & Ls which cost $125 billion in the end.  This is proposed as a direct buy-out of poor loans from any institution.

Follow the Yelp debate

My earlier blog on Yelp has become one of the centers of the debate about Yelp.  Check the comments to keep up to date.  Both sides are making arguments and submitting videos.

In praise of stereotypes

Being raised an extreme Lefty liberal I was quite surprised to be called a bigot.

The owner of a domestic chicken (Bonnie Sherk) called me on my bigotry. I had said something about chickens being stupid. She was infuriated. Her chicken was not stupid as she quickly showed me.

I came to see that stereotypes are a useful and statistically valid decision making device. I don't like green tomatoes. That is because 95% of green tomatoes aren't ripe. I don't step in empty holes in the street because 99% are real holes, only a few are optical illusions, especially in Cuba and China where big deep holes in the sidewalk are a constant problem.

What brings this up is that I don't ever eat sushi in a restaurant run by Chinese. Sushi must be served in very clean conditions and I've never been in a clean kitchen of a Chinese restaurant. That is clearly a stereotype and I believe it has helped my health and saved me from many bad sushi meals.

Stupid me, there is a bagel shop in San Francisco on Castro street run by Chinese. I ordered a bagel and lox with cream cheese and everything. It came with jalapenos in it. Unbelievably foul.

Using a simple stereotype would have saved me: don't order bagels & lox from anyone but white Europeans.

Biggest penalty

The California Public Utility Commission ordered the largest penalty in utility history today by fining Southern California Edison $146 million for creating deceptive data in order to earn higher utility rates.

What was my role in this consumer-victory management-loss?  I was an expert witness against So. Cal. Edison on the fraudulent nature of the survey data and the unethical behavior of top management.

So. Cal. Edison had convinced the California Utility Commission back in 1996, to grant them bonus fees for very good customer service which was to be measured by an outside survey research firm. The higher fees were actually awarded for six years until fraud was suspected and the awards were stopped.

 About 3 dozen employees were fired by top management for carrying out the fraud, employees who had no incentive to cheat, but no members of higher management were fired.  I testified against that classic 'fire the little guy, protect our own,' outrage.

Many efforts were made to slant the survey results in favor of So. Cal Edison bonuses, by Edison.  The important evidence showed how extensive these efforts were.

My own study of the surveys showed that the research methodology was so unreliable that the survey didn't actually measure anything.  So. Cal. Edison was gaming a system that was giving them the results they would have wanted even without their fraudulent efforts.

Venting

This blog is just a vent.

There is an old revolutionary's saying: 'after the revolution the old poison comes in the new sentimentality.'

It is time to get rid of the poison that the Left, the civil rights movement and feminism have brought into the domain of decent society. 

The Rosenbergs were guilty, guilty guilty; Sacco  and Vanzeti were murderers; Mumia abu abu should be killed by his fellow inmates, he's a monster.

There never was a glass ceiling, as soon as there were enough women in management they progressed to the top; there hasn't been unequal pay for women for 20 years, the data only shows the choices of professions women have made and their choices against climbing the corporate ladder.

There has not been a minority pay differential for 20 years, what we have reflects differences is merit and skill.

There is no amount of money that will raise the low education scores of Blacks, Latinos or Hawaiians, the problem has nothing to do with teachers, schools or money. Nothing will lower the high education scores of Japanese, Chinese and Jews.

We have harmed our language with vocabulary perversions. From here on it is he when the unknown person could be male or female, it is waiter, chairman, Englishmen, policemen and human.  I'll accept firefighter and Ms, because they are both positive additions to the language.

Lastly abortions simply are not a political or cultural issue. If abortions are a decision the States can make (the only Supreme Court alternative to Roe v Wade) then the 15 largest cities will have State legal abortions and private charity can pay to fly pregnant girls from rural states to the urban abortion clinics.  Most importantly, private foundations can also pour money into making sure that every 12 year old girl knows about the morning after pill and how to get it on the Internet.

Kids use the Internet, I think pro-abortion advocates are competent enough to reach young girls through the Internet, to avoid abortions with the morning after pill, if they try?

Not what you expect

Democratic candidate Obama has said in his biography that while a student at Columbia he found Edward Said a mentor.

I liked Said's book Orientalism when I first read it. It was a social thought idea, that modern Middle Eastern studies were shaped by colonial experience. I slowly came to realize that Said's ideas were not social thought but warmed over Marxist views of imperialism in a new guise.

I came still later to learn that Edward Said was a consummate liar and made up his autobiography with no regard to facts readily available in official documents in Israel and Egypt. Consistent with that Arab quality of deception he was also pro-Palestinian anti-Semite.

Does this reflect on Obama? Not at all. Obama was a young lonely man trying to figure out who he was and like others in that sad dilemma he was a Lefty. He has probably outgrown much of that 19^th Century foolishness.

The problem with this story is that tenure, an unmitigated disaster for universities, is to blame. Too much of the tenured faculty of America is bigoted, intolerant, narrow minded and flat out dishonest, like Edward Said, and they can not be removed from their teaching jobs. They become mentors for the gullible.

Example of the evils of tenure: Ward Churchill. It took two faculty committees and a State Board of Directors committee two years to remove tenure from Churchill, though he was a blatant scoundrel.

WTO opposition died

I don't take credit but I may have played a role in the death of the American WTO opposition movement. 

It started at San Francisco Zen Center's Tassajara Mountain retreat center.  I attended a lecture on the evils of the WTO in 2000; it was after the 1999 anti-WTO protests in Seattle.

I stood up after the talk and criticized the speaker's complete lack of knowledge on the subject, made an argument pro the WTO and promptly drove most of the peace-and-love audience away.

S.F. Zen Center, being a sensible and balanced organization, scheduled a genuine debate on the issue in the Fall of 2000. Zen Center was only able to get one person willing to debate me.  The gentleman was flown out from the Public Citizen Nader group in D.C. , he was the main national organizer against the WTO.  I presented the argument that I had written (posted online here) and he tried to rebut me.  He gave up, because he couldn't rebut my points.  He quit his job less than a month later.

There has been no significant domestic anti-WTO movement since then. Did my arguments play a role?  

The authoritative source

I read this week's National Inquirer. The newspaper of record for the cognoscenti. The Inquirer sent seven crack gossip journalists to Alaska for two weeks to find dirt on the Palin family.  These are the best investigative journalist in the business. These are the people who found the John Edwards story 8 months before the rest of the press, and had plenty of photos.

What did they find on Palin in Alaska?

Nothing, nada.  I could find out more about the mayor of Ft. Collins Colorado in three phone calls than the team of journalists sent by the National Inquirer for two weeks. They found what I would find in Ft. Collins, small town gossip with no one willing to talk for attribution.  Rumors and gossip, mostly ten years old and denied by the people involved who's names can't be used for fear of libel law.

Now we know, Sarah Barracuda Palin is clean. She is everything the American people are hoping for. A real person, a real fellow American with intelligence, skill, honesty and good morals.

Lies for 45 years

The Julius and Ethyl Rosenberg case has risen its ugly head again with the New York Times riding its same pathetic brain-dead horse with a broken left leg. They claim Ethyl was framed.

I have lived for 45 years listening to the ceaseless moaning of the Left that the Rosenbergs were innocent.  The Rosenbergs were proof, for 45 years of my life, that America was corrupt and Nixon was a monster. Both my parents died believing the Rosenbergs were innocent. Forty-five years of lies is what bothers me.

Julius Rosenberg was a spy according to the Venona transcripts (known to the intelligence agencies at the time) to his brother who gave him atomic secrets to pass on to the USSR, according to KGB records opened up since the mid-1990s and now according to Julius's close friend and fellow spy Morton Sobell.

Ethyl knew all about the spying and helped Julius, but she wasn't a spy.  The prosecutor in the case, William Rogers, admitted that Ethyl was given a death penalty sentence to get Julius to admit his guilt and her innocence.  It didn't work. Julius and Ethyl jointly decided Ethyl should die, leave her sons to live without parents to protect Soviet communism.

I've lived 45 years with the lies that Julius and Ethyl Rosenberg jointly created. These bitter lies were kept alive by the entire, note the words, the entire wide spectrum of the Left including the national TV media, Walter Cronkite and the NYTimes.

Yes, I'm sentimental

This video brought tears to my eyes.  It also lets me know that the McCain's deeply understand the Internet.

Don't see much of this

I looked at Meghan McCain's blog and found this picture.  This was taken at Ground Zero, a day off from the campaign.

It is strange that we have so little sense of these two men as gentlemen who deserve respect.  The political hatred toward both men resembles the horrible, almost shocking, extremist responses toward the past two presidents.

Core issue of our time

The core issue of our time is the relationship between commerce and democracy.

We all look at the thriving economies of many non-democratic countries from Russia and China to traditional Singapore and wonder: 'How long can commerce thrive without democracy'?

Let me answer that question by creating five categories of nations:

1. Driving forces in commerce: U.S., Israel and Japan

2. Actively supporting forces in commerce: Holland, Germany, Sweden, Finland, England, Scotland, Italy, Denmark, Switzerland, the rest of Europe, Taiwan, Australia, New Zealand, Canada and South Korea.

3. Riding along on the wagon of commerce: all other countries that are not completely closed tyrannies listed in 4) and 5) below.

4. Cabooses, being pulled along by the power of commerce:  Russia, Vietnam, Arab oil countries, most of the trash-can-i-stans and China.

5. Hopeless economic losers:North Korea, Burma, Cuba and Venezuela.

I will briefly go over the categories, but the answer to the question of how long a country can thrive on commerce without democracy is answered by these categories: indefinitely. Russia and China are carried along as a caboose on a train by the economic engines of categories 1) and 2).  They can never be engines or supporting forces in commerce, without democracy but they can be cabooses indefinitely.

The reason is best understood by observing the USSR over its seventy year history.  The USSR had no internal commercial market to set price and carry out productive work. Communism is a meaningless economic system unless it is functioning inside a larger commercial system that sets prices by supply and demand and harnesses human genius in productive innovation.

So the USSR used international prices for all its internal products, bought factories and transplanted them to Russia and used espionage to get all of Russia's technology including methods for making ice cream.

To put it another way: communist systems survived only by copying and using models found in the open commercial world.

What makes the engines of commerce?

Three elements put a country in category 1.) Meritocracy, diversity and openness.  Japan is a little weak on diversity but it is so far ahead of every other country on the other two elements that it is a driving force in commerce, constantly innovating and contributing new industries, new technology and new markets.

Those same elements put a country in category 2.) but to a lesser degree.  Most European countries and former members of the United Kingdom have surviving class structures that significantly suppress merit and openness.

Democracy is necessary to be in category 1) and 2).  Democracy stimulates meritocracy, diversity and openness though it can not guarantee it in the forms that it thrives in the U.S. and Israel.

Does that answer the initial question?  Yes.

When a tyrannical form of government opens itself to the world of commerce, as China and Russia have, they ride the positive tides of commerce and raise their national income.  Russia and China can survive as tyrannies much as a cork floating can survive on the surface almost indefinitely.

For a country to become a driving or supporting force in the expansion of commerce it must have meritocracy, diversity and openness, all of which occur only in a functioning democracy.

Creationism vs trade barriers

In the Left-Right battles of modern politics, the Right is often singled out and attacked by the Left for the few adherents to the theology of Creationism. 

This makes little sense to me.  The problem with Creationism is that it isn't about science. Since most scientists have no idea of what science is, it is hard to defeat Creationism. 

Science for our era was defined by Karl Popper as a theory subject to falsifiability.  Creationism can't be disproved so it isn't a scientific theory.  Until scientists understand their own field...the issue is muddled and silly.

That is not true for the popular view on the Left in favor of trade barriers.  Trade barriers are the lifeblood of Lefty thinking, advocated strongly by labor unions, environmentalists and ordinary Democrats.   Trade barriers are proposed as mechanisms to keep jobs and industries from leaving the country...the siren call is often heard as 'No more outsourcing'.

This trade barrier idea was disproved by economists in the 19th Century and by every form of experience in the 20th.  The great stalwart countries with trade barriers in the 20th Century were communist and socialist countries that all stagnated. The communist and socialist survivors such as Cuba, North Korea, Burma and India (until recently) are still perfect examples of countries with trade barriers.

Creationism as science is a trivial and harmless diversion.  Trade barriers on the other-hand is a widespread Lefty idea that is harmful to any country that tries it and particularly to that citizens of that countries .

Could be bigger fraud at Tides

The S.F. Chronicle had an article about Jason Sanders a former employee of the S.F. based Tides Foundation who embezzled $132,600 and has been indicted by a federal grand jury.

This article by the Chronicle is almost a word for word copy of the press release from Tides Foundation.

I looked at the Board of Directors of the Tide Foundation and the management team of the Tides Foundation.  There is a single person with a financial background at a software publishing company and a CFO with no prior accounting background.  Otherwise not a single person with serious accounting experience on either the Board or the management team.

It is surprising that a large financial institution is so devoid of a person strong enough to stand up and confront potential financial problems.

This is a Foundation that manages $270 million in assets and grants of more than half that amount.  I think the $132,600 is only the tip of the iceberg.  Tides may have much bigger financial problems.

The Tides press release describing the embezzlement was a pure white wash.  It didn't name the organization that purportedly did the outside audit.  It doesn't say what managerial or control changes were made to prevent future embezzlement. The press release was a white wash.

Tides appears to me to have much bigger problems with fraud than they are acknowledging and there is no one on the Board or in management who can get a handle on it.

Eminent domain...my experience

We, in our modern industrial commercial society are still in the middle ages, the pre-industrial period when it comes to vital property rights.  We allow the King, or modern government to commandeer property.  We have some modest protections and we demand reasonable compensation but eminent domain is still wrong.

The modern argument for government use of eminent domain consists of two segments.  One segment of the argument is that a single hold-out can destroy or prevent, even a private developer from creating a viable coherent plot of land for development.  Segment number two is that, for some projects, such as freeways, a few hold-outs can be so costly and difficult to deal with that the costs to the common good are harmed.

Neither of these segments turn out to be true from my experience. 

First, I was on the Bank of America committee to buy and build the 50 story dark sheathed (I was a single vote against the dark sheath) Bank of America Headquarters building on the corner of Kearny St. and California St.  The original plan was to have the building face Montgomery St. but two office buildings were hold-outs and couldn't be bought at a reasonable price.

The Bank simply decided to build the new Bank building using the space we had acquired so far, re-orient the new building and ignore the hold-outs.  The building was and still is a financial success. The two hold-outs are irrelevant small buildings that don't now and won't for 50 years have any significant market value.

Second, I have seen many instances where very good land acquisition operators have bought large parcels of property in the heart of a city, out smarting hold-outs with options and other simple tools.  The best example is the complex of 4 Embarcadero buildings, the Alcoa buildings and Golden Gateway all built on a former cluster of dozens of separate parcels that were the old, smelly, moldy, outmoded wholesale food market.

I have said nothing about the actual generations-long battles of urban renewal. Urban renewal is built on frequent failures of government to make any improvement despite the use of eminent domain.  I would guess that the failures of government used eminent domain for urban development out number the successes by a large ratio.

No argument in favor of eminent domain based on hold-outs is viable.  The hold-outs can't succeed against good private investment strategy.   Lets get rid of the arcane laws of eminent domain.